Cargurus, Inc. · NASDAQ:CARG
Cargurus — Investor Day (June 2019)
108 slides from Cargurus's investor day presentation, Jun 12, 2019
Slide 1: CarGurus Investor Day June 11, 2019
Exhibit 99.1 CarGurus Investor Day June 11, 2019Exhibit 99.1 CarGurus Investor Day June 11, 2019
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements Certain information contained in this presentation, other matters discussed today and answers that may be given in response to questions may include “forward-looking statements.” We may, in some cases, use terms such as “anticipates,” “believes,”
Slide 3: Today's Speakers
Today’s Speakers Langley Steinert Kyle Lomeli Tom Caputo Founder, Chief Executive Chief Technology Officer Chief Product Officer Officer Sam Zales Sarah Welch Jason Trevisan President, Chief Operating Chief Marketing Officer Chief Financial Officer and Officer Treasurer Technology Data Driven Financ
Slide 4: Transparency in Considered Purchases
Transparency in Considered Purchases COST OF FAILED PURCHASE 4 NEED FOR TRANSPARENCYTransparency in Considered Purchases COST OF FAILED PURCHASE 4 NEED FOR TRANSPARENCY
Slide 5: Global Trusted Marketplace, Powerful Network Effect
Global Trusted Marketplace, Powerful Network Effect Unbiased Price More More Car Shoppers Engagement Dealer Reputation Transparency 1 38 M 62M Vehicle Condition 2018 US US unique average connections Inventory Ranking monthly visitors Dealers Marketplace and Peer to Peer More More Inventory Dealers 3
Slide 6: Optimized for Consumer Relevance vs. Paid Inclusion
Optimized for Consumer Relevance vs. Paid Inclusion • How did Google disrupt Yahoo? • Relevance over economics • Algorithms provide best answers to consumer • CarGurus ranks listings based on unbiased algorithms • Organic listings ranked by Deal Ratings • Instant Market Value considers make, model,
Slide 7: From Upstart To Market Leading Audience in Under 10 Years
From Upstart To Market Leading Audience in Under 10 Years (MILLIONS) US Monthly Average Sessions US Monthly Average Visitors Major Google Algorithm Changes 105 70% CAGR 55% CAGR 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 7 Source: Google Analytics, MozFrom Upstart To Market Leadin
Slide 8: Our Freemium Marketplace Can't Be Replicated by Classified Models
Our Freemium Marketplace Can’t Be Replicated by Classified Models 1 1 LARGEST US AUTO INVENTORY OF 5.5M+ LISTINGS FROM OVER 40,000 DEALERS Car Price Information Dealer 2 • Instant Market Value Information Information 2 • Deal Rating • Vehicle History • Qualified Dealer Reviews • Price History 2 • Ti
Slide 9: Potential Product Universe
Potential Product Universe INSURANCE P2P FINANCE TRADE-IN WARRANTY LISTINGS DEALER MANAGEMENT CONSUMER LIFECYCLE MARKETPLACE MULTIPLE COUNTRIES 9Potential Product Universe INSURANCE P2P FINANCE TRADE-IN WARRANTY LISTINGS DEALER MANAGEMENT CONSUMER LIFECYCLE MARKETPLACE MULTIPLE COUNTRIES 9
Slide 10: We Have Rapidly Introduced Products and Tools on Both Sides of our Marketplace
We Have Rapidly Introduced Products and Tools on Both Sides of our Marketplace Existing Product Future Opportunity INSURANCE P2P FINANCE TRADE-IN WARRANTY LISTINGS MARKETPLACE DEALER MANAGEMENT CONSUMER LIFECYCLE Enhanced Featured Search Service and Vehicle Display and Shopping Social Engine Feature
Slide 11: Potential Product Universe Unlocks Large TAM
Potential Product Universe Unlocks Large TAM 1 US NEW AND USED CAR RETAIL SALES: $1.4T INSURANCE P2P FINANCE TRADE-IN WARRANTY $6B $3B 2 Total US Value US Used Car Loan 3 Commissions LISTINGS DEALER MANAGEMENT CONSUMER LIFECYCLE MARKETPLACE Increase Consumer $13.9B $5.3B $3.3B US Dealer US Dealer US
Slide 12: 2019 Strategic Initiatives
2019 Strategic Initiatives INITIATIVE Company-Wide Grow Connections and Brand Initiatives Long-Term Expand MRR Focused Scale International Accretive to Enterprise Value $ Launch Consumer Finance Platform Board-Vetted and Approved Digitize Peer-to-Peer (P2P) Marketplace 122019 Strategic Initiatives I
Slide 13: Auto Financing Lacks Transparency and Efficiency
Auto Financing Lacks Transparency and Efficiency 1 TIME SPENT AT DEALERSHIP CAR SHOPPER SATISFACTION WITH 2 DEALERSHIP PROCESS Negotiation and Financing Everything Else Process Satisfaction Level Test Drive 45% Car shoppers Interaction with Sales 37% Staff spend more than 90 minutes on Price Transpa
Slide 14: 2019 Strategic Initiatives: Launch Consumer Financing
2019 Strategic Initiatives: Launch Consumer Financing Integrated Loan Pre-Qualification Consumer Gains Clarity on Financing Dealer Retains Ability to Offer Other Options F&I Economics Not Impacted Next Step Towards Robust Digital Retailing 142019 Strategic Initiatives: Launch Consumer Financing Inte
Slide 15: Peer-to-Peer Deserves an Innovative Solution
Peer-to-Peer Deserves an Innovative Solution 15Peer-to-Peer Deserves an Innovative Solution 15
Slide 16: 2019 Strategic Initiatives: Peer-to-Peer Marketplace
2019 Strategic Initiatives: Peer-to-Peer Marketplace 11M Cars Sold Peer-to-Peer 1 Annually in US Giving Sellers Access to Large Audience of Buyers Focusing Efforts on Digitized Experience Secure, Safe, Transparent Transactions 16 1. NIADA (2018)2019 Strategic Initiatives: Peer-to-Peer Marketplace 11
Slide 17: CarGurus Core Values
CarGurus Core Values We are We move Pioneering Quickly We are We are Transparent Collaborative We have We are Data-Driven Integrity 17CarGurus Core Values We are We move Pioneering Quickly We are We are Transparent Collaborative We have We are Data-Driven Integrity 17
Slide 18: Our Product and Engineering Team Structure Enables Rapid Innovation
Our Product and Engineering Team Structure Enables Rapid Innovation 225+ EMPLOYEES Consumer UX/UI Product Data Science International Process Innovation Dealer Product Analytics Product Platform Engineering Pricing Emerging Analytics Product IT Operations 18Our Product and Engineering Team Structure
Slide 19: Our Technology Foundation Creates Powerful Moats
Our Technology Foundation Creates Powerful Moats Rapid Making Sense of Data-Driven Flexible Development and Large, Messy Analytics Platform Innovation Data Sets 19Our Technology Foundation Creates Powerful Moats Rapid Making Sense of Data-Driven Flexible Development and Large, Messy Analytics Platfo
Slide 20: We Develop, Test, and Deploy Products Efficiently
We Develop, Test, and Deploy Products Efficiently Daily Balance of Innovation Rapid Prototyping Development and Swift Execution of New Code Data Analysis Data Collection User behavior data, industry data, performance data 20We Develop, Test, and Deploy Products Efficiently Daily Balance of Innovatio
Slide 21: We Make Sense of Large, Disparate Datasets
We Make Sense of Large, Disparate Datasets ! Sessions Vehicle Data Data User Transaction Dealer Data Reviews Consumer Software Marketing Systems Data Data Keyword Data + $ 21We Make Sense of Large, Disparate Datasets ! Sessions Vehicle Data Data User Transaction Dealer Data Reviews Consumer Software
Slide 22: Our Technology Drives Transparency for Consumers
Our Technology Drives Transparency for Consumers UNSTRUCTURED CAR DATA FROM HUNDREDS OF Proprietary Algorithm SOURCES ACROSS THOUSANDS OF DEALERS 52M Used Car Data Points BMW BMW Make IMV 3-Series Coupe 328 Model 20+ Ranking Signals Instant 2011 2011 Year 100+ Normalization Rules Market Value 328 xi
Slide 23: Our Technology Drives Transparency for Consumers: Deal Rating
Our Technology Drives Transparency for Consumers Deal Rating $2,688 BELOW CarGurus IMV of $28,142 $1,755 BELOW CarGurus IMV of $46,482 IMV = + User Dealer Instant $921 BELOW CarGurus IMV of $33,910 Ratings Market Value $1,363 ABOVE CarGurus IMV of $15,232 $3,947 ABOVE CarGurus IMV of $18,351 23Our T
Slide 24: Our Technology Enables Rapid International Expansion
Our Technology Enables Rapid International Expansion DATA AVAILABILITY AND INVENTORY BUILDING A DYNAMIC TECHNOLOGY PLATFORM ARE ESSENTIAL FOR A SUCCESSFUL HAS ALLOWED US TO REDUCE MARKETPLACE LAUNCH OUR TIME TO MARKET COUNTRY-LEVEL LAUNCH TIME (IN MONTHS) 12 12 9-12 3-6 Inventory Auto Data Availabil
Slide 25: Our Focus on Innovation Has Led to a Robust Product Set and Successful Launches
Our Focus on Innovation Has Led to a Robust Product Set and Successful Launches in New Markets MARKETPLACES LAUNCHED CANADA ITALY & SPAIN UNITED KINGDOM US GERMANY 2006 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 • Trackable phone NEW • Instant Market • Audience • Established a leads and roboc
Slide 26: We Have Rapidly Introduced Products and Tools on Both Sides of our Marketplace
We Have Rapidly Introduced Products and Tools on Both Sides of our Marketplace Existing Product Future Opportunity INSURANCE P2P FINANCE TRADE-IN WARRANTY LISTINGS MARKETPLACE DEALER MANAGEMENT CONSUMER LIFECYCLE Enhanced Featured Search Service and Vehicle Display and Shopping Social Engine Feature
Slide 27: Our Dealer Offerings
Our Dealer Offerings $ Basic Paying Dealer Dealer Digital Listing Dealers Dashboard Marketing Suite Enhanced Listing Performance Summary Dealer Display Featured Listing Dealer Insights Audience Retargeting Featured Priority User Review Management SEM Plus Delivery Pricing Tool Market Analysis 27Our
Slide 28: Basic Listing
Basic Listing Anonymous Only 12 Photos E-mail Leads No Dealer Branding or Contact Information 28Basic Listing Anonymous Only 12 Photos E-mail Leads No Dealer Branding or Contact Information 28
Slide 29: Enhanced Listing Unlocks a High-ROI Marketing Channel
Enhanced Listing Unlocks a High-ROI Marketing Channel Opportunity Text/Chat available Up to 100 photos per E-mail form sends listing, can include contact information dealer branding Full dealer location, website, and contact information 29Enhanced Listing Unlocks a High-ROI Marketing Channel Opportu
Slide 30: Featured Listing Boosts Dealer Visibility while Maintaining Transparency
Featured Listing Boosts Dealer Visibility while Maintaining Transparency A limited number of Great, Good, and Fair deal vehicles that match the search criteria are placed above organic results 30Featured Listing Boosts Dealer Visibility while Maintaining Transparency A limited number of Great, Good,
Slide 31: Delivery Unlocks More Shoppers for Dealers
Delivery Unlocks More Shoppers for Dealers 31Delivery Unlocks More Shoppers for Dealers 31
Slide 32: Paying Dealers Get Access to Five Dealer Dashboard Tools
Paying Dealers Get Access to Five Dealer Dashboard Tools that Improve Customer Acquisition PERFORMANCE DEALER USER REVIEW MARKET ANALYSIS PRICING TOOL 1 SUMMARY INSIGHTS MANAGEMENT • Provides dealers with • Tool for dealers to • Allows dealers to track • Informs dealers of • Helps dealers evaluate r
Slide 33: Dealer Dashboard: Market Analysis
Dealer Dashboard: Market Analysis Improve Pricing Strategy with Local Market Supply and Demand Insight Make Informed Inventory Acquisition Decisions 33Dealer Dashboard: Market Analysis Improve Pricing Strategy with Local Market Supply and Demand Insight Make Informed Inventory Acquisition Decisions
Slide 34: Dealer Dashboard: Pricing Tool
Dealer Dashboard: Pricing Tool Proprietary Pricing Tool Dealers Control Merchandising Identify Inventory Missing Key Information 34Dealer Dashboard: Pricing Tool Proprietary Pricing Tool Dealers Control Merchandising Identify Inventory Missing Key Information 34
Slide 35: Building a Digital Marketing Suite to Serve Dealer Needs
Building a Digital Marketing Suite to Serve Dealer Needs (MILLIONS) 1 1 US AUTO MARKETING SPEND DEALER MARKETING MIX LONG GROWTH RUNWAY 58% $11,900 Share of 2 Visits $8,000 <5% $21,800 Share of Wallet $13,900 $390 Dealers OEMs Online Offline 2018 CarGurus US Marketplace Revenue 1. Borrell (2018) 2.
Slide 36: Dealer Display
Dealer Display Increased Dealer Branding Consumers That Have Viewed Inventory Are Retargeted Native Templates Drive Better Engagement 36Dealer Display Increased Dealer Branding Consumers That Have Viewed Inventory Are Retargeted Native Templates Drive Better Engagement 36
Slide 37: Audience Retargeting
Audience Retargeting Target More of Reach in-market CarGurus Drive engaged shoppers directly to Maximize results through shoppers who haven’t yet dealer’s website with dynamic ads real-time optimization of the CarGurus connected with a dealership customized to dealer’s available inventory ads and au
Slide 38: Search Engine Marketing
Search Engine Marketing Data-Driven Search Engine Marketing Focusing on the Long-Tail for Down-Funnel Traffic Leveraging CarGurus’ Bidding Strategies 38Search Engine Marketing Data-Driven Search Engine Marketing Focusing on the Long-Tail for Down-Funnel Traffic Leveraging CarGurus’ Bidding Strategie
Slide 39: Our Search Engine Marketing Scale Creates a Strong Value Prop
Our Search Engine Marketing Scale Creates a Strong Value Prop NUMBER OF KEYWORDS 1,000,000+ 500 150 DIY Dealer Dealer with Dealer with CarGurus SEM Plus SEM Vendor 39 Source: CarGurus Study Q2 2017 –Q4 2017, among average keyword generation of SEM dealers on CG compared with their previous SEM strat
Slide 40: We are Productizing the Consumer Side of Our Marketplace
We are Productizing the Consumer Side of Our Marketplace Existing Product Future Opportunity INSURANCE P2P FINANCE TRADE-IN WARRANTY LISTINGS MARKETPLACE DEALER MANAGEMENT CONSUMER LIFECYCLE Enhanced Featured Search Service and Vehicle Display and Shopping Social Engine Featured Priority Maintenance
Slide 41: Bringing Transparency to Financing
Bringing Transparency to Financing SOURCE OF US AUTO LOAN ORIGINATIONS Indirect Direct 15+ Million $200 Fee $3 Billion > > US Used Car per Used Car 3 1% other Loan Funded Loan Loan 79% 2 3 1 Originations Commissions Indirect 41 1. Automotive News (2018) 2. Transunion (2018) 3. Internal EstimateBring
Slide 42: Launching Consumer Financing
Launching Consumer Financing Integrated Loan Pre-Qualification Consumer Gains Clarity on Financing Dealer Retains Ability to Offer Other Options F&I Economics Not Impacted Next Step Towards Robust Digital Retailing 42Launching Consumer Financing Integrated Loan Pre-Qualification Consumer Gains Clari
Slide 43: Modernizing the Peer-to-Peer Transaction
Modernizing the Peer-to-Peer Transaction 11M Cars Sold Peer-to-Peer 1 Annually in US Giving Sellers Access to Large Audience of Buyers Focusing Efforts on Digitized Experience Secure, Safe, Transparent Transactions 43 1. NIADA (2018)Modernizing the Peer-to-Peer Transaction 11M Cars Sold Peer-to-Peer
Slide 44: Peer-to-Peer Represents a Large Opportunity
Peer-to-Peer Represents a Large Opportunity $700M+ US 11M US $99 $500/Unit $6B+ US > > > > Private Party Private Party Transaction Maximum Peer-to-Peer 2 Marketing Transactions Fee Product Revenue 1 3 Spend Attach Fee TAM 3 Opportunity 44 1. Borrell (2018) 2. NIADA (2018) 3. Internal estimatePeer-to
Slide 45: Our Path to a Digital Peer-to-Peer Transaction
Our Path to a Digital Peer-to-Peer Transaction CURRENTLY DIGITAL UNDERGOING AUTOMATION Buyer and Bill of Sale Ownership Access to Secure > > > > Seller Identity Verification Finance, Payment Verification Insurance, Processing Warranties, Vehicle Service, etc. 45Our Path to a Digital Peer-to-Peer Tra
Slide 46: We Attract Car Shoppers By Solving Their Toughest Problems
We Attract Car Shoppers By Solving Their Toughest Problems $ Most US Price Most US Best-Deal- Mobile- Inventory Transparency Focused Dealers First Search Results 46We Attract Car Shoppers By Solving Their Toughest Problems $ Most US Price Most US Best-Deal- Mobile- Inventory Transparency Focused Dea
Slide 47: Our Deal Ratings are More Objectively Distributed
Our Deal Ratings are More Objectively Distributed DEAL RATING DISTRIBUTION DEAL RATING OVERLAP Great Deal Good Deal Fair Deal High Price Overpriced Not Rated Great Deal Good Deal Fair Deal High Price Overpriced Not Rated* 100% 3% 3% 80% 100% 7% 59% 60% 90% 80% 40% 80% 20% 0% 70% Great Good Competito
Slide 48: We are the #1 Online US Automotive Marketplace
1 We are the #1 Online US Automotive Marketplace 1 THE LARGEST AND MOST ENGAGED AUDIENCE OF CAR SHOPPERS IN THE US 2 2 TOTAL MONTHLY VISITS TOTAL MONTHLY UNIQUE VISITORS 2.8x 1.6x our next competitor our next competitor Competitor 1 Competitor 2 Competitor 3 Competitor 1 Competitor 2 Competitor 3 1.
Slide 49: Diverse Traffic Mix Limits Reliance on Any One Channel
Diverse Traffic Mix Limits Reliance on Any One Channel 1 US MONTHLY SESSIONS (MILLIONS) 110 We attract our audience from more than 15 sources 0 2016 2017 2018 2019 49 1. CarGurus Internal DataDiverse Traffic Mix Limits Reliance on Any One Channel 1 US MONTHLY SESSIONS (MILLIONS) 110 We attract our a
Slide 50: Diverse Traffic Funnel Expands Our Reach
Diverse Traffic Funnel Expands Our Reach Algorithmic Direct Organic Traffic Acquisition Traffic Traffic Branded Paid Search Android/iOS App Branded Organic Search Unbranded Paid Search Direct Navigation Unbranded Display/Retargeting E-mail Organic Search Social Media Ads TV Campaigns 50Diverse Traff
Slide 51: Our Search Strategies Focus on the Long Tail
Our Search Strategies Focus on the Long Tail Ford Ford F-150 70% of search activity occurs in the long tail 2018 Ford F-150 2018 Ford F-150 Blue 2018 Ford F-150 Blue – Chicago, IL 1,000 1M 200M 500M+ KEYWORDS 51 Source: Experian, seomoz.orgOur Search Strategies Focus on the Long Tail Ford Ford F-150
Slide 52: Focusing on Long-Tail Terms Yields a Down-Funnel Audience
Focusing on Long-Tail Terms Yields a Down-Funnel Audience X X X X 2015 Springfield Honda Black Touring Accord 10 more terms X = 33,000 combinations 52Focusing on Long-Tail Terms Yields a Down-Funnel Audience X X X X 2015 Springfield Honda Black Touring Accord 10 more terms X = 33,000 combinations 52
Slide 53: Consumer-Centric Model Pays Dividends in Keyword Bidding
Consumer-Centric Model Pays Dividends in Keyword Bidding Max Cost Per QS*Max CPC = Quality Score Ad Slot on Page Actual CPC Click Bid Adj. Bid 9 $0.30 $2.70 1 $0.28 Bidder #2 6 $0.40 $2.40 2 $0.34 Bidder #3 4 $0.50 $2.00 3 $0.46 Bidder #4 2 $0.90 $1.80 4 0.81 Bidder #5 2 $0.80 $1.60 Not Displayed No
Slide 54: Dynamic Marketing Drives Down-Funnel Engagement
Dynamic Marketing Drives Down-Funnel Engagement 1 x 1 Search Personalized Retargeting TV Online Connections Video Display Prospecting 54Dynamic Marketing Drives Down-Funnel Engagement 1 x 1 Search Personalized Retargeting TV Online Connections Video Display Prospecting 54
Slide 55: Data-Driven Attribution & Bidding Maximizes Efficiency
Data-Driven Attribution & Bidding Maximizes Efficiency Last Click First Click Linear Position-Based Cost Per Lead Time Decay Data-Driven BUDGETS & BIDS CONTINUALLY OPTIMIZED 55Data-Driven Attribution & Bidding Maximizes Efficiency Last Click First Click Linear Position-Based Cost Per Lead Time Decay
Slide 56: Connection Conversion is Driven by ATA, Direct, and Branded Traffic
Connection Conversion is Driven by ATA, Direct, and Branded Traffic US CONNECTIONS ‘16-’19 CAGR Paid, Direct, and Branded Connections Google Organic Connections 100% 30% 90% CAGR 80% 70% 60% 50% 53% CAGR 40% 30% 20% 10% 0% 2016 2017 2018 YTD 2019 56Connection Conversion is Driven by ATA, Direct, and
Slide 57: We Focus on Driving Quality Connections and Leads for Dealers
We Focus on Driving Quality Connections and Leads for Dealers 1 INDEXED US MONTHLY VISITORS , CONNECTIONS, LEADS (MILLIONS) 250 200 150 100 50 2016 2017 2018 2019 Unique Visitors Connections Leads 57 1. Google AnalyticsWe Focus on Driving Quality Connections and Leads for Dealers 1 INDEXED US MONTHL
Slide 58: Our Car Shopping Audience is Engaged and Ready to Purchase
Our Car Shopping Audience is Engaged and Ready to Purchase CarGurus shoppers are decision makers And, they’re visiting CarGurus and auto intenders who have right before making a purchase the means to buy a new or used vehicle 1 % OF PURCHASES WITHIN A WEEK % % % 74 70 60 1.4x CarGurus 37% are the so
Slide 59: CarGurus is Top of Mind for Consumers
CarGurus is Top of Mind for Consumers 100 Google search interest in CarGurus 90 far exceeds our competitors 80 70 60 50 40 30 20 10 0 2016 2017 2018 2019 CarGurus Autotrader Cars.com Truecar 59 Source: Google (US Only)CarGurus is Top of Mind for Consumers 100 Google search interest in CarGurus 90 fa
Slide 60: We Have the Largest Audience, but We Still Have Room to Grow
We Have the Largest Audience, but We Still Have Room to Grow 1 THE LARGEST, MOST ENGAGED US AUDIENCE INVESTING TO INCREASE BRAND AWARENESS 2 Unaided Awareness 12% 2.2X 10% Increase Visits Share Unique Visitor Share 8% 6% 4% 2% 0% Q2 2017 Q4 2018 58% 43% 3 Self-Reported Usage 17% 60 1. As measured by
Slide 61: Brand Building Evolves Over Time
Brand Building Evolves Over Time Preference Awareness Familiarity and Loyalty 61Brand Building Evolves Over Time Preference Awareness Familiarity and Loyalty 61
Slide 62: Playing Catch Up on Brand
Playing Catch Up on Brand 1 BRAND AWARENESS AND ESTIMATED TV SPEND (MILLIONS, 2013 – PRESENT) 100% $300 90% $250 80% 70% $200 60% 50% $150 40% $100 30% 20% $50 10% 0% $0 CarGurus AutoTrader Cars.com TrueCar Unaided Awareness Aided Awareness Estimated TV Investment ($ Million) 62 1. Sources: Awarenes
Slide 63: Investing Thoughtfully in TV
Investing Thoughtfully in TV 63Investing Thoughtfully in TV 63
Slide 64: User Experience is a Critical Driver of Brand
User Experience is a Critical Driver of Brand 64User Experience is a Critical Driver of Brand 64
Slide 65: Conclusion
Conclusion Largest, Sophisticated Most Traffic Meaningful Engaged Acquisition Brand Upside Audience at Scale 65Conclusion Largest, Sophisticated Most Traffic Meaningful Engaged Acquisition Brand Upside Audience at Scale 65
Slide 66: CarGurus Helps Solve the Customer Acquisition Challenge
CarGurus Helps Solve the Customer Acquisition Challenge WHY DEALERS CHOOSE US Unmatched Superior ATA- US Return on Driven Audience Investment Platform Scale at Scale 66CarGurus Helps Solve the Customer Acquisition Challenge WHY DEALERS CHOOSE US Unmatched Superior ATA- US Return on Driven Audience I
Slide 67: Basic vs. Enhanced vs. Featured Listing
Basic vs. Enhanced vs. Featured Listing Illustrative Connections Example BASIC LISTING ENHANCED LISTING FEATURED LISTNG Email 100 (anonymized) 70 85 Phone 60 75 û Managed Text / Chat 15 25 û URL Clicks 70 90 û Maps / Direction Clicks 70 90 û Walk-In Traffic û✓✓ Brand Exposure û✓✓ 1-2 12+ 18+ ESTIMAT
Slide 68: Our Large Audience and Strong Value Prop Has Attracted Over 33,000 Global Paying Dealers
Our Large Audience and Strong Value Prop Has Attracted Over 33,000 Global Paying Dealers 1 TOTAL PAYING DEALERS (THOUSANDS) U.S. International 100% US Dealer Penetration Rate International Dealer Penetration Rate 35 90% 30 80% 70% 25 60% 20 50% 15 40% 30% 10 20% 5 10% 0 0% Q1 2016 Q1 2017 Q1 2018 Q1
Slide 69: We Effectively Serve All Dealer Types
We Effectively Serve All Dealer Types PAYING DEALER MIX BY DEALER TYPE MRR BY DEALER TYPE 100% 100% 75% 75% 50% 50% 25% 25% 0% 0% Q1 2017 Q1 2018 Q1 2019 Q1 2017 Q1 2018 Q1 2019 Franchise Independent Franchise Independent 69We Effectively Serve All Dealer Types PAYING DEALER MIX BY DEALER TYPE MRR B
Slide 70: CarGurus' Approach to Attribution
CarGurus’ Approach to Attribution More CarGurus Influence Walk-In ROI Transparency On Sales Impact SRP and VDP Influence ROI Calculator Direct Closed Sales on Sales Eyes on Our Data Third-Party Case Studies Number of Store Visits Influenced 70CarGurus’ Approach to Attribution More CarGurus Influence
Slide 71: The ROI Calculator
The ROI Calculator Closing Rates Informed by Closed Sales Data ROI-Based Marketing Increasingly Precise 71The ROI Calculator Closing Rates Informed by Closed Sales Data ROI-Based Marketing Increasingly Precise 71
Slide 72: Dealers Generate Significant ROI from the CarGurus Platform
Dealers Generate Significant ROI from the CarGurus Platform UNDERSTANDING DEALER’S ROI Close Gross Profit Connections X X Rate (per car sold) ROI = Cost of CarGurus Program 100 X 10% X $2,000 Illustrative = 10.0X ROI Example $2,000/mo. 72Dealers Generate Significant ROI from the CarGurus Platform UN
Slide 73: CarGurus Impact on Auto Sales
1 CarGurus Impact on Auto Sales 18.5M Total US Vehicle Sales Influenced in 2018 User Viewed a VDP 10.6% bought a car from Dealer A from Dealer A User Made a Connection 15.5% bought a car from Dealer A with Dealer A User 16.0% bought a car Submitted a Lead from Dealer A to Dealer A 73 1. CarGurus stu
Slide 74: Efficient and Consistent Inside Sales Model with Opportunistic Field Presence
Efficient and Consistent Inside Sales Model with Opportunistic Field Presence DEALS PER SALES REPRESENTATIVE MIX OF SALES HEADCOUNT 100% 45 40 35 75% 30 25 50% 20 15 10 25% 5 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2017 2017 2017 2018 2018 2018 2018 2019 Q1 2017 Q1 2018 Q1 2019 Deals per Inside Rep Ins
Slide 75: Effective Customer Relationship Management Drives Retention and Growth
Effective Customer Relationship Management Drives Retention and Growth Dealer Account Contract Dealer Onboarding Management Signed (MONTHS 1-3) (MONTHS 4+) • Handoff from Sales to • Optimize dealer • Designated single point begin formal engagement with of contact for remainder onboarding process pro
Slide 76: Effective Customer Relationship Management and High-ROI Platform Drives Dealer Retention
Effective Customer Relationship Management and High-ROI Platform Drives Dealer Retention INDEXED US LISTINGS MRR CHURN RATE 120 110 100 28% Churn Rate Reduction Since Q4 2016 90 80 70 60 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 76Effecti
Slide 77: Expansion Opportunities Increasing with New Products and Packaging
Expansion Opportunities Increasing with New Products and Packaging CONTRIBUTORS TO EXPANSION MRR • MRR increase on annual Renewal renewal cycle 100% 90% 80% 70% • Additional stores in paying dealer groups 60% Cross-Sell • New products 50% 40% 30% • Higher-level listings package 20% Upsell • Increase
Slide 78: New Products Taking Hold and Driving Revenue Growth
New Products Taking Hold and Driving Revenue Growth 1 2 US MULTI-PRODUCT ATTACH INCREASING US AVERAGE ORDER SIZE BY PRODUCT 28% 26% Delivery 19% Audience Retargeting 500+ US Dealers Subscribing to Search 10% 3 or more Products Dealer Display $0 $500 $1,000 $1,500 $2,000 Q4 2016 Q4 2017 Q4 2018 Q1 20
Slide 79: Dealer Customer Illustration
Dealer Customer Illustration MRR Connections $5.0x $4.0x $3.1x $2.8x 3.2x 2.8x 2.5x 2.3x 2.0x 1.0x $1.4x 0.3x $1.0x Off-cycle Month 0 Month 1-3 Month 13 Month 19 Month 25 Month 32 Month 40 Lifecycle Initial Year 1 Product Year 3 Product Listings Event Acquisition Renewal Cross-Sell Renewal Cross-Sel
Slide 80: International Market Launch Process: Platform Built for Rapid Expansion
International Market Launch Process: Platform Built for Rapid Expansion 3-6 MONTHS COUNTRY-SPECIFIC Website Setup Country Customization Live Site Monetization 1 2 3 4 • Conduct legal review✔ Localize language, ✔ Algorithmic traffic • Build sales process to geography, currency acquisition convert fre
Slide 81: Scaling Our International Business
Scaling Our International Business Core Market Successfully Launched International Enterprise Value Competitor (USD) 1 Auto Trader UK $7.5 Billion 1 Schibsted $6.8 Billion 1 Scout24 $6.2 Billion 2 TRADER Corporation $1.1 Billion Launched Launched Launched Launched Launched in 2018 in 2014 in 2015 in
Slide 82: Scaling Our International Business
Scaling Our International Business INTERNATIONAL AVERAGE Core Market Successfully Launched 1 MONTHLY UNIQUE USERS (MILLIONS) 11.5 143% CAGR Q1 2016 Q1 2017 Q1 2018 Q1 2019 2 INTERNATIONAL PAYING DEALERS 5,174 235% CAGR Launched Launched Launched Launched Launched in 2018 in 2014 in 2015 in 2017 in 2
Slide 83: Advanced Market Progress: Canada
Advanced Market Progress: Canada CANADA AVERAGE MONTHLY UNIQUE USERS CANADA PAYING DEALERS 1 (MILLIONS) 72% 69% 1,379 CAGR CAGR 1.7 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2017 Q1 2018 Q1 2019 83 1. Google AnalyticsAdvanced Market Progress: Canada CANADA AVERAGE MONTHLY UNIQUE USERS CANADA PAYING DEALERS
Slide 84: Advanced Market Progress: Canada
Advanced Market Progress: Canada PROGRESS TOWARDS PROFITABILITY UNIT ECONOMICS STRENGTHENING Indexed Revenue Per Connection Indexed Cost Per Connection Unit Profit Margin Indexed Traffic Acquisition Spend 10.0% 0.0% 180 -10.0% 160 -20.0% 140 -30.0% 120 -40.0% 100 -50.0% 80 -60.0% 60 -70.0% 40 -80.0%
Slide 85: Advanced Market Progress: United Kingdom
Advanced Market Progress: United Kingdom 2 UK AVERAGE MONTHLY UNIQUE USERS UK PAYING DEALERS 1 (MILLIONS) 107% 172% 3,795 8.2 CAGR CAGR Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2017 Q1 2018 Q1 2019 85 1. Google Analytics; as of Q1 2019, includes average monthly unique visitors from PistonHeads. 2. As of Q
Slide 86: Advanced Market Progress: United Kingdom
Advanced Market Progress: United Kingdom 1 1 PROGRESS TOWARDS PROFITABILITY UNIT ECONOMICS STRENGTHENING Indexed Revenue Per Connection Indexed Cost Per Connection Unit Profit Margin Indexed Traffic Acquisition Spend 0.0% 200 -10.0% 180 160 -20.0% 140 120 -30.0% 100 80 -40.0% 60 40 -50.0% 20 -60.0%
Slide 87: CarGurus and PistonHeads Create a Compelling Platform
CarGurus and PistonHeads Create a Compelling Platform • Passionate community of • Market leading tech platform • Rapidly growing platform 1 5M+ unique visitors • Disruptive freemium model • Viable alternative for dealers • Iconic brand among car enthusiasts• Search Engine Marketing • Compelling plat
Slide 88: Emerging Market Progress: Germany, Italy, and Spain
Emerging Market Progress: Germany, Italy, and Spain 1 2 AVERAGE MONTHLY UNIQUE VISITORS (MILLIONS) UNIT ECONOMICS STRENGTHENING Indexed Cost Per Connection 120 214% Y/Y 110 1.6 100 90 80 70 60 50 Q1 2018 Q1 2019 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 88 1. Google Analytics, includes CarGurus’ combi
Slide 89: CarGurus Financial Highlights
CarGurus Financial Highlights Strong track Proven Attractive High Scalable record of operating free cash model for quality leverage and revenue replication in flow revenue: profitability international growth recurring, high generation markets in large total retention, and addressable diversified mar
Slide 90: Significant Revenue Scale and Momentum
Significant Revenue Scale and Momentum ($ MILLIONS) 37% U.S. International YoY Growth $573.5 $135 $126 43% CAGR $119 $454 $110 $17 $99 $91 $83 $317 $76 $9 $67 $61 $53 $198 $46 $39 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY2016 FY2017 FY2018 FY 2019 Guidance 1 2016 2017 2018 2019 Mid-point 2019 guidan
Slide 91: High Quality Revenue: Recurring and Diversified
High Quality Revenue: Recurring and Diversified HIGH RETENTION CUSTOMER MIX U.S. MONTHLY MARKETPLACE SUBSCRIPTION REVENUE DIVERSIFIED MARKETPLACE SUBSCRIPTION REVENUE 1 BY COHORT COMPOUND ($ MILLIONS) ANNUAL CAGR GROWTH Top 10 $45,000,000 $45 2019 Customers $40,000,000 2 $40 5% 37% 2018 $35,000,000
Slide 92: Near-Term Focus on Growing US AARSD Through Three Levers
1 Near-Term Focus on Growing US AARSD Through Three Levers Grow Increase Unit Connection Adoption Pricing and and Lead of New Product Volume Products Packaging 92 1. Average annual revenue per subscribing dealer.1 Near-Term Focus on Growing US AARSD Through Three Levers Grow Increase Unit Connection
Slide 93: We Have Rapidly Grown Connection Volume and Improved Lead Conversion
We Have Rapidly Grown Connection Volume and Improved Lead Conversion ANNUAL US CONNECTIONS (MILLIONS) LEADS AS A PERCENTAGE OF CONNECTIONS 100% 90% 62 39% CAGR 80% 51 70% 64% 59% 60% 56% 42 50% 40% 23 30% 20% 10% 0% 2015 2016 2017 2018 Q1 2017 Q1 2018 Q1 2019 93We Have Rapidly Grown Connection Volum
Slide 94: New Products Taking Hold and Driving Revenue Growth
New Products Taking Hold and Driving Revenue Growth 1 2 US MULTI-PRODUCT ATTACH INCREASING US AVERAGE ORDER SIZE BY PRODUCT 28% 26% Delivery 19% Audience Retargeting 500+ US Dealers Subscribing to Search 10% 3 or more Products Dealer Display $0 $500 $1,000 $1,500 $2,000 Q4 2016 Q4 2017 Q4 2018 Q1 20
Slide 95: Multi-Product Customers Creating MRR Lift
Multi-Product Customers Creating MRR Lift Dealers (MONTHLY RECURRING REVENUE) 1.3x Uplift 1.9x Uplift LISTINGS-ONLY US DEALERS TWO-PRODUCT US DEALERS 3+ PRODUCT US DEALERS 95Multi-Product Customers Creating MRR Lift Dealers (MONTHLY RECURRING REVENUE) 1.3x Uplift 1.9x Uplift LISTINGS-ONLY US DEALERS
Slide 96: Multiple Levers are Contributing to US AARSD Growth
1 Multiple Levers are Contributing to US AARSD Growth Volume Product Unit Pricing and Packaging Sessions Growth 120% 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 96 1. Average annual revenue per subscribing dealer.1 Multiple Levers are Contrib
Slide 97: Expansion Opportunities Increasing with New Products and Packaging
Expansion Opportunities Increasing with New Products and Packaging CONTRIBUTORS TO EXPANSION MRR • MRR increase on annual Renewal renewal cycle 100% 90% 80% 70% • Additional stores in paying dealer groups 60% Cross-Sell • New products 50% 40% 30% • Higher-level listings package 20% Upsell • Increase
Slide 98: Our Dealer Value Proposition is Reducing Churn
Our Dealer Value Proposition is Reducing Churn INDEXED US LISTINGS MRR CHURN 120 110 100 28% Churn Rate Reduction Since Q4 2016 90 80 70 60 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 98Our Dealer Value Proposition is Reducing Churn INDEXED
Slide 99: Despite High Account Penetration, Our Core Business Has Long Growth Runway
Despite High Account Penetration, Our Core Business Has Long Growth Runway INCREASING DEALER WALLET SHARE ROOM TO GROW AUDIENCE (MILLIONS) 1 Unaided Awareness $14,000 12% 2.2X 10% Increase $12,000 8% 6% $10,000 4% 2% $8,000 0% Q2 2017 Q4 2018 $6,000 2 2 Visits Share Unique Visitor Share $4,000 $2,00
Slide 100: Advertising Business Scaling with Our Audience
Advertising Business Scaling with Our Audience US Advertising and Other Int'l Advertising and Other $16,000 $14,000 31% $12,000 CAGR $10,000 $8,000 $6,000 $4,000 $2,000 $- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 100Advertising Business
Slide 101: We Have a Large International Opportunity
We Have a Large International Opportunity 1 2 TOTAL PAYING DEALERS (THOUSANDS) LARGE DEALER ADDRESSABLE MARKET U.S. International 55 98 30% 33 CAGR 31 31 30 29 28 27 25 23 21 19 17 43 15 Q1 2016 Q1 2017 Q1 2018 Q1 2019 U.S. Market International All Current Markets Markets 101 1. Beginning in Q1 2019
Slide 102: Potential Product Universe Unlocks Large TAM
Potential Product Universe Unlocks Large TAM 1 US NEW AND USED CAR RETAIL SALES: $1.4T INSURANCE P2P FINANCE TRADE-IN WARRANTY $6B $3B 2 Total US Value US Used Car Loan 3 Commissions LISTINGS DEALER MANAGEMENT CONSUMER LIFECYCLE MARKETPLACE Increase Consumer $13.9B $5.3B $3.3B US Dealer US Dealer US
Slide 103: Strong Financial Position to Support Long-Term Growth
Strong Financial Position to Support Long-Term Growth As of 3/31/2019 Select Balance Sheet Accounts ($, Thousands) Assets TTM as of 3/31/2019 Select Cash Flow Statement Accounts Cash and Cash Equivalents 29,939 ($, Thousands) Investment 108,500 Cash from Operating Activities Accounts Receivable 15,1
Slide 104: US Audience Unit Economics Support Future Margin Expansion
US Audience Unit Economics Support Future Margin Expansion Unit Profit Margin Indexed US Listings Revenue Per Connection Indexed US Cost Per Connection 140 100% 90% 80% 70% 60% 100 50% 40% 30% 20% 10% 60 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2017 2018 2018 2018 2018 2019 104US Audience Unit Economics Support
Slide 105: Long-Term Target Model Progression Since IPO
Long-Term Target Model Progression Since IPO Long-Term 1 1 2016 2017 2018 Q1 2019 Percent of Revenue Target 95% 94% 95% 94% 93% – 95% Gross Margin Sales & Marketing % 78% 74% 69% 67% 43% – 47% Product, Technology, Development % 6% 7% 11% 12% 9% – 11% G&A % 6% 7% 9% 9% 5% – 6% 1% 1% 1% 1% 1% – 2% Dep
Slide 106: Our Recurring Revenue Stream is Insulated From Auto Market Cyclicality
Our Recurring Revenue Stream is Insulated From Auto Market Cyclicality LISTINGS PROVIDE SUPERIOR DEALER ROI USED CAR SALES ARE MORE DURABLE THROUGH A 1 MARKET CYCLE Listings Used Car Units (Millions) Y/Y Growth 50 20% 10% Search 40 0% 30 -10% 20 Display Ads -20% 10 -30% $ 0 -40% Offline New Car Unit
Slide 107: Reaffirming 2Q19 and FY 2019 Guidance
1 Reaffirming 2Q19 and FY 2019 Guidance 2 3 2Q19 FY 2019 Revenue $138M - $141M $569M - $578M Non-GAAP Operating Income $8M - $10M $50M - $56M Non-GAAP Earnings Per Share $0.06 - $0.08 $0.39 - $0.43 1. Guidance provided by CarGurus in the Company’s earnings press release dated May 9, 2019, furnished
Slide 108: Appendix: Reconciliation of Net Income to Adjusted EBITDA
Appendix: Reconciliation of Net Income to Adjusted EBITDA 2016 2017 2018 Q1 2019 ($ MILLIONS) $6.5 $13.2 $65.2 $12.6 Net Income Depreciation and Amortization 2.1 3.8 5.0 1.6 Stock-based Compensation Expense 0.3 5.0 20.8 7.7 Other Expense, Net (0.4) (0.6) (2.3) (1.6) (Benefit from)/Provision for Inco