This article first appeared on GuruFocus .
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Revenue:Q3 revenue up 12% year-over-year to $258 million, at the high end of guidance range.
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International Revenue:Q3 international revenue up 22% year-over-year, driven by account expansion, listings upgrades, add-on product adoption, and like-for-like price increases.
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U.S. Karsid Growth:Up 7% year-over-year in Q3, driven primarily by add-on product adoption, followed by listing upgrades.
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U.S. Paying Dealers:Added 659 paying U.S. dealers year-over-year; net U.S. dealer adds up 251 sequentially, strongest quarter of net adds this year.
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Non-GAAP Gross Profit:Q3 up 10% year-over-year to $237 million.
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Non-GAAP Gross Margin:92% in Q3, down about 90 basis points year-over-year.
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Adjusted EBITDA:Q3 up 9% year-over-year to $89.7 million, near high end of guidance range.
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Adjusted EBITDA Margin:Roughly 35% in Q3, down about 90 basis points year-over-year.
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Non-GAAP Operating Expenses:Q3 totaled $156 million, up 13% year-over-year, reflecting higher sales and marketing expense and sales organization growth.
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Non-GAAP Net Income Per Diluted Share:$0.70 in Q3, up 17% year-over-year.
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Free Cash Flow:$74 million in Q3, representing 82% conversion of adjusted EBITDA.
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Cash and Cash Equivalents:$165 million at quarter end, up $43 million from end of Q2.
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Share Repurchases:$21 million in Q3; $25 million remaining on 2026 authorization; new $250 million repurchase program authorized through December 31, 2027.
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Q4 Revenue Guidance:$258.5 million to $263.5 million, up 7.2% to 9.3% year-over-year.
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Q4 Adjusted EBITDA Guidance:$93 million to $101 million.
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Q4 Non-GAAP EPS Guidance:$0.73 to $0.79; diluted weighted average shares approximately 90 million.
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Full Year 2026 Revenue Guidance:$1,011.5 million to $1,016.5 million, growth of 11.5% to 12.1% year-over-year.
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Full Year 2026 Adjusted EBITDA Guidance:$347.5 million to $355.5 million, margin change of negative 80 to negative 20 basis points year-over-year.
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Full Year 2026 Non-GAAP EPS Guidance:$2.66 to $2.72; diluted weighted average shares approximately 92 million.
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue grew 12% year-over-year to $258 million, at the high end of guidance, driven by dealer expansion and new product adoption.
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Adjusted EBITDA margin remained strong at 35%, near the high end of guidance, with robust free cash flow generation.
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Net U.S. dealer adds re-accelerated, up 251 sequentially, the strongest quarter of net adds this year, indicating share gains despite macro pressures.
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U.S. paying dealers subscribing to at least one non-listings product grew approximately 16% year-over-year, showing successful cross-selling and wallet share expansion.
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New products like VINMAX and StockVantage are gaining rapid adoption and delivering tangible dealer benefits, such as 85% higher likelihood to sell without price reductions and 57% more leads per day.
Negative Points
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Dealer enthusiasm has not returned to 2025 levels due to margin pressure, leading to deliberate spending decisions and lighter new bookings in the first half of the year.
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Consumer affordability remains stretched with rising borrowing costs, pressuring demand and potentially slowing engagement growth.
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International dealer count was lower than expected, with macro challenges and pricing actions leading to churn in those markets.
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Non-GAAP operating expenses increased 13% year-over-year, reflecting higher sales and marketing and headcount investments, which weighed on margins.
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Full-year adjusted EBITDA margin is expected to decline 80 to 20 basis points year-over-year, indicating ongoing investment drag on profitability.
Q & A Highlights
Q: Andrew Boone (Citizens JMP) asked about the impact of AI search evolution on traffic and how CarGurus is driving cross-selling, noting that dealers with at least one additional product grew 16%. A: CEO Jason Trevisan explained that LLM search remains very top-of-funnel and represents less than 1% of traffic, with no cannibalization seen; CarGurus ranks highest in AI visibility and destination traffic. On cross-selling, he said multi-product attachment now increasingly refers to software and data products beyond marketplace tiers, and that new product attach drives engagement, performance, and retention. Recent launches like PriceVantage, VINMAX, and StockVantage have facilitated this adoption.
Q: Marvin Fong (BTIG) asked whether the sequential increase in U.S. dealer adds reflected pent-up demand from FTC-related disruption, and how to think about the trend into Q4. A: President and COO Sam Zales attributed the improvement primarily to modest macro improvement and a much broader product set rather than the FTC. Dealers facing profit pressure had held back spending in the first half, but new offerings like VINMAX, PriceVantage, and StockVantage give dealers compelling reasons to join and upgrade, driving the strongest net adds quarter of the year.
Q: Marvin Fong (BTIG) asked about lower-than-expected international dealer counts and pricing actions in those markets. A: Sam Zales said international markets have been hit harder by macro pressuresdeclining dealer profits, consumer affordability, inflation, interest rates, Chinese EV imports, and tariffs. Because CarGurus's absolute dealer base is smaller internationally, holding pricing discipline causes more visible churn. However, the company is gaining share: Canada dealer growth is beating competition, and UK traffic grew 25% faster year-over-year than its biggest competitor. The playbook is to bring U.S. products to Canada and the UK over time.
Q: John Babcock (Barclays) asked which recently launched products are seeing the highest attach rates and driving Carsid growth. A: Jason Trevisan noted PriceVantage and New Car Exposure, launched at the end of Q4 2025, are on pace to be an eight-figure combined business in 2026. VINMAX has been one of the fastest-growing product launches, faster than either of those. He also highlighted non-a-la-carte products like Shopper Signals, which drive retention, performance, and indirect upsells, including upgrades to premium listings tiers.
Q: John Babcock (Barclays) asked for early thoughts on 2027 strategic objectives and modeling considerations. A: Jason Trevisan declined to provide 2027 guidance but said the three value creation levers from 2026 remain foundational: deepening value with dealers, creating a longer and stickier consumer journey, and disciplined capital deployment. While the environment may shift emphasis, the company will not pivot away from these core priorities.
Q: Naved Khan (B. Riley) asked what share of U.S. leads originate from Guru or conversational experiences and how conversion compares with other channels. A: Jason Trevisan said Guru unique usage reached new highs, up 24% sequentially, with AI usage growing rapidly as adoption expands and new use cases are introduced. Guru users are more engaged, submit more conversational exchanges, and convert better. He added that Shopper Signals profiles are far richer for consumers who have interacted with Guru versus those who only used drop-down filters, which also helps dealers improve conversion.
Q: Joseph Spak (UBS) asked about the balance between investment and efficiency gains into 2027, given that 2026 was framed as an investment year. A: Jason Trevisan said the company has not guided on 2027 but emphasized that product velocityone to two significant product introductions per quarterspeaks for itself and was achieved while being more efficient, not by holding back. CarGurus expects to continue investing in 2027 across dealer pillars (new software and data products) and the consumer journey, while remaining disciplined on margins and free cash flow. He stressed that product innovation and long-term growth are even more important than near-term margin optimization.
Q: Joseph Spak (UBS) asked about attribution risk if consumers find CarGurus listings through LLMs and click through to dealer sites rather than to CarGurus. A: Jason Trevisan explained that if a consumer clicks through to CarGurus and submits a lead, CarGurus gets credit; if they go directly to the dealer site, credit is indirect at best. However, he noted that car shopping is a multi-week research process, and consumers rarely stop at two LLM-returned listingsthey want pricing intelligence, trust and safety, all-in pricing, trade-in, and financing guidance. This is similar to Google vehicle listing ads, which are typically just a starting point. CarGurus also has apps on most LLM platforms to capture that traffic.
Q: Jash Patwa (JPMorgan) asked for quantification of the real estate tax reassessment true-up benefit in the quarter. A: CEO Jason Trevisan stated the true-up benefit was $1.3 million.
Q: Jash Patwa (JPMorgan) asked what Guru's evolution into a full-service agent would look like, what capabilities it would have, and how far it could extend into the transaction, given growing consumer acceptance of online vehicle purchases. A: Jason Trevisan said Guru's evolution toward an agent focuses on the consumer pain point in research, back-and-forth, and information validation with dealersnot on completing the transaction, since 97%98% of consumers still want to finalize in the dealership. Guru is a vertically specific, automotive-focused experience that brings together inventory, pricing intelligence, and dealer connectivity to help shoppers narrow down visits and shorten them with more information. Test drives, document finalization, and financing remain largely human-supported.
Q: Andrew Boone (Citizens JMP) asked about softer U.S. unique visitors and sessions in Q3 versus Q2 and whether search changes were a factor. A: Jason Trevisan attributed recent softer consumer demand not to LLMs or search shifts but to higher gas prices, higher interest rates, and some FTC-related pricing guideline changes that created confusion and a one-time softness in consumer demand. He reiterated that LLM traffic remains a small percentage and that CarGurus continues to perform well in
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
