Slide 1: 1Q19 Business Update
1Q19 Business Update May 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: Global Trusted Marketplace
Global Trusted Marketplace UNBIASED TRANSPARENCY Price Dealer Reputation Vehicle Condition Dealers Inventory Ranking Buyers MARKETPLACE Peer to Peer Dealers & Peer to Peer 3
Slide 4: Optimized for Consumer Relevance vs Paid Inclusion
Optimized for Consumer Relevance vs Paid Inclusion How did Google overtake Yahoo? • Relevance over economics • Algorithms provided best answer to consumer CarGurus ranks listings based on unbiased algorithms • Organic listings ranked by Deal Ratings • Instant Market Value considers make, model, trim
Slide 5: We are the #1 Online US Automotive Marketplace
We are the #1 Online US Automotive Marketplace1 THE LARGEST AND MOST ENGAGED AUDIENCE OF CAR SHOPPERS IN THE US2 TOTAL MONTHLY VISITS TOTAL MONTHLY UNIQUE VISITORS Competitor 1 Competitor 2 Competitor 3 Competitor 1 Competitor 2 Competitor 3 TOTAL MONTHLY MOBILE UNIQUE VISITORS TOTAL VISITS PER VISI
Slide 6: Market Opportunity & Value Proposition
Market Opportunity & Value Proposition
Slide 7: U.S. Automotive Marketing Continues to Shift Online
U.S. Automotive Marketing Continues to Shift Online TOTAL U.S. AUTOMOTIVE INDUSTRY MARKETING SPEND ($ BILLIONS)1 Offline CHANGING CONSUMER AUTO Online $41 SHOPPING BEHAVIOR 2% $37 CAGR Average Dealership Visits $14 Prior to Purchase2 $16 63% spent by 5 dealers dealerships $27 $21 6% CAGR in 2005 1.6
Slide 8: Ancillary and International Markets Expand Addressable Opportunity
Ancillary and International Markets Expand Addressable Opportunity AUTOMOTIVE RELATED METRICS IN U.S.1 NUMBER OF DEALERSHIPS1 (THOUSANDS) Annual Auto-related 55 98 Advertising Spend (Financing, Warranty, Multi-billions Insurance) Annual Dealer 43 Software Spend ~$4.5 billion Used Cars Sold in P2P Ma
Slide 9: Our Business Model
Our Business Model CONSUMERS CONNECTIONS DEALERS MARKETPLACE + BRANDING TOOLS DEALER SEM PLUS DISPLAY Marketplace Subscriptions Average Annual Revenue per Subscribing Dealer (AARSD) $15,4401 9 1. As of March 31, 2019, based on U.S. dealers only
Slide 10: Our Marketplace Can’t Be Replicated by Classified Models
Our Marketplace Can’t Be Replicated by Classified Models LARGEST AUTO INVENTORY FROM OVER 40,000 DEALERS Car Price Dealer Information Information Information • Vehicle History • Instant Market Value1 • Qualified Dealer Reviews • Time on Site1 • Deal Rating1 • Dealer Ratings • Price History MOST INTU
Slide 11: Our Technology Drives Transparency for Consumers
Our Technology Drives Transparency for Consumers UNSTRUCTURED CAR DATA FROM Proprietary Algorithm HUNDREDS OF SOURCES ACROSS Instant Market Value THOUSANDS OF DEALERS IMV 7M+ + = Used Car Data Points Analytics, Manual Penalties, Bait & Switch Make BMW BMW Detection, Non-standard Pricing, Photos Mode
Slide 12: Rapid Acquisition of Subscribing Dealers
Rapid Acquisition of Subscribing Dealers1 NUMBER OF PAYING DEALERS GLOBALLY (THOUSANDS) U.S. International 30% 33 CAGR 31 31 30 28 29 25 27 23 21 19 17 15 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 1. Beginning in Q1 2019, international de
Slide 13: Our Business Model and Scale Create Network Effects
Our Business Model and Scale Create Network Effects 1 2 Transparent Large, in-market marketplace audience compels attracts the largest more dealers to pay audience for listings CONSUMER PAYING TRAFFIC DEALERS 4 3 More connections ANALYTICS CONNECTIONS strengthen our More paying algorithms and dealer
Slide 14: CarGurus’ Growth Opportunities
CarGurus’ Growth Opportunities
Slide 15: Key Growth Opportunities
Key Growth Opportunities Grow our paying Grow the size Expand and U.S. dealer base and engagement scale 1 of our consumer 3 international 2 and increase revenue per audience Buyers markets Sellers dealer 15
Slide 16: Grow Our Audience by Addressing More Consumer Needs
Grow Our Audience by Addressing More Consumer Needs GROW AUDIENCE SHARE INCREASE ENGAGEMENT INVEST IN BRAND ALONG WITH ALGORITHMIC TRAFFIC ACQUISITION CONSUMER AUTO OWNERSHIP LIFECYCLE RESEARCH / MAINTAIN / PURCHASE COMPARE SELL Total Minutes Spent on Major U.S. Online Automotive 59% Detailed P2P Ma
Slide 17: Grow Our Paying U.S. Dealer Base
Grow Our Paying U.S. Dealer Base FREEMIUM BUSINESS MODEL PAYING VS. NON-PAYING DEALERS IN U.S.1 (THOUSANDS) Basic (Free) Value Driver Paid Listings Listings Phone Email Anonymized 15 Connections Text/Chat Email 28 URL 23 Map/Directions Merchandising Pricing Tool 5 X Tools Market Analysis Dealership
Slide 18: Increase Average Annual Revenue per Subscribing Dealer (AARSD)
Increase Average Annual Revenue per Subscribing Dealer (AARSD) CONNECTIONS BETWEEN • Algorithmic Optimization CONSUMERS AND DEALERS U.S. AARSD Grow IN THE U.S.1 $15,440 • Text/Chat 22% Connection 24% • Brand 51M 62M Volume • 62M Connections in 2018 in U.S.1 $12,470 FY2017 FY2018 MULTI-PRODUCT PENETR
Slide 19: Replicate Our Model in International Markets
Replicate Our Model in International Markets Core Market Successfully Launched INTERNATIONAL AVERAGE MONTHLY UNIQUE USERS (MILLIONS)1 230% Growth 11.5 3.5 Q1 2018 Q1 2019 INTERNATIONAL PAYING DEALERS2 87% Growth 5,174 2,765 Launched Launched Launched Launched Launched in 2014 in 2015 in 2017 in 2018
Slide 20: CarGurus’ Financial Overview
CarGurus’ Financial Overview
Slide 21: Key Financial Highlights
Key Financial Highlights Strong track record of revenue growth High quality revenue: recurring, high retention, and diversified Proven operating leverage and profitability Attractive free cash flow generation Scalable model for replication in international markets 21
Slide 22: Significant Revenue Scale and Momentum
Significant Revenue Scale and Momentum ($ MILLIONS) U.S. International 39% YoY Growth $454 $135 $17 51% $126 CAGR $119 $110 $317 $99 $9 $91 $83 $76 $67 $198 $437 $61 $53 $46 $307 $39 FY2016 FY2017 FY2018 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q11 2016 2017 2018 2019 22 1. Beginning in Q1 2019, includes
Slide 23: High Quality Revenue: Recurring, High Retention and Diversified
High Quality Revenue: Recurring, High Retention and Diversified RECURRING HIGH RETENTION CUSTOMER MIX TOTAL REVENUE U.S. MONTHLY MARKETPLACE DIVERSIFIED RECURRING REVENUE ($ MILLIONS) SUBSCRIPTION REVENUE BY COHORT1 ($ MILLIONS) Recurring (Marketplace Subscription) $454 $45 Non-Recurring 2019 $48 $4
Slide 24: GAAP Profitable U.S. Business Continues to Drive Investments in International
GAAP Profitable U.S. Business Continues to Drive Investments in International U.S. GAAP OPERATING INCOME CONSOLIDATED GAAP OPERATING INCOME ($ MILLIONS) ($ MILLIONS) $17 $23 $58 $14 $42 $27 FY 2016 FY 2017 FY 2018 Q1 2018 Q1 2019 $9 $7 % Margin 14% 14% 13% 15% 14% $6 INTERNATIONAL GAAP OPERATING INC
Slide 25: Continued Momentum Since IPO
Continued Momentum Since IPO MONTHLY UNIQUE USERS1 (MILLIONS) TOTAL PAYING DEALERS2 Strong Execution Against Our Growth Strategies +45% +15% Grow the Size and Engagement of Consumer Audience1 YoY YoY • Total monthly user sessions and unique users up 45% and 37%, respectively, 50 33,235 YoY in Q1 201
Slide 26: Long-Term Target Model Progression Since IPO
Long-Term Target Model Progression Since IPO Long-Term Percent of Revenue 2016 2017 20181 Q1 20191 Target Gross Margin 95% 94% 95% 94% 93% – 95% 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% Depreciation & Amortizati