Slide 1: Q2 2019 Business Update
Q2 2019 Business Update ae AC: 1526058 =) NL 338 7 “lel : im a"
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, Powerful Network Effect
Global Trusted Marketplace, Powerful Network Effect More More Unbiased Price Car Shoppers Engagement Transparency Dealer Reputation 37 M1 62M Vehicle Condition US unique 2018 US average monthly connections Inventory Ranking visitors Marketplace Dealers and More More Peer to Peer Inventory Dealers 5.
Slide 4: 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 5: Our Freemium Marketplace Can’t Be Replicated by Classified Models
Our Freemium Marketplace Can’t Be Replicated by Classified Models LARGEST US AUTO INVENTORY OF 5.5M+ LISTINGS1 FROM OVER 40,000 DEALERS1 Car Price Information Dealer Information • Instant Market Value2 • Deal Rating2 Information • Vehicle History • Price History • Qualified Dealer Reviews • Time on
Slide 6: We are the #1 Online US Automotive Marketplace
We are the #1 Online US Automotive Marketplace1 THE LARGEST AUDIENCE OF CAR SHOPPERS IN THE US1 TOTAL MONTHLY VISITS2 TOTAL MONTHLY UNIQUE VISITORS2 2.7x 1.5x our next competitor our next competitor Competitor 1 Competitor 2 Competitor 3 Competitor 1 Competitor 2 Competitor 3 6 1. As measured by pre
Slide 7: Market Opportunity and Value Proposition
Market Opportunity and Value Proposition
Slide 8: Building a Digital Marketing Suite to Serve Dealer Needs
Building a Digital Marketing Suite to Serve Dealer Needs (MILLIONS) US AUTO MARKETING SPEND1 DEALER MARKETING MIX1 LONG GROWTH RUNWAY 57% $11,900 Share of Visits2 $8,000 <5% $21,800 Share of Wallet $13,900 $390 Dealers OEMs Online Offline 2018 CarGurus US Marketplace Revenue 1. Borrell (2018) 2. Sou
Slide 9: We Have a Large International Opportunity
We Have a Large International Opportunity TOTAL PAYING DEALERS (THOUSANDS)1 LARGE DEALER ADDRESSABLE MARKET2 U.S. International 55 98 26% CAGR 33 34 31 30 31 28 29 25 27 23 21 19 17 43 Q2 2016 Q2 2017 Q2 2018 Q2 2019 U.S. Market International All Current Markets Markets 9 1. Beginning in Q1 2019, in
Slide 10: 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 Make BMW BMW IMV Model 3-Series Coupe 328 20+ Ranking Signals Instant Year 2011 2011 100+ Normalization Rules Market Value Trim 3
Slide 11: Our Technology Drives Transparency for Consumers
Our Technology Drives Transparency for Consumers Deal Rating $2,688 BELOW CarGurus IMV of $28,142 IMV $1,755 BELOW + = CarGurus IMV of $46,482 Instant User Dealer $921 BELOW Ratings CarGurus IMV of $33,910 Market Value $1,363 ABOVE CarGurus IMV of $15,232 $3,947 ABOVE CarGurus IMV of $18,351 11
Slide 12: 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 % OF VISITS WITHIN A WEEK OF PURCHASE1 74% are the sole 60% 70% plan to pu
Slide 13: CarGurus Impact on Auto Sales
CarGurus Impact on Auto Sales1 18.5M Total US Vehicle Sales Influenced in User 2018 Viewed a VDP 10.6% bought a car from Dealer A from Dealer A User Made a Connection 15.5% bought a car with Dealer A from Dealer A User Submitted a Lead 16.0% bought a car from Dealer A to Dealer A 13 1. CarGurus stud
Slide 14: Growth Opportunities
Growth Opportunities ae AC: 1526058 =) NL 338 7 “lel : im a"
Slide 15: We Have the Largest US Audience, but We Still Have Room to Grow
We Have the Largest US Audience, but We Still Have Room to Grow THE LARGEST, MOST ENGAGED US AUDIENCE1 INVESTING TO INCREASE BRAND AWARENESS Unaided Awareness2 12% 2.2X 10% Increase Visits Share Unique Visitor Share 8% 6% 11% 4% 2% 57% 42% 0% Q2 2017 Q4 2018 Self-Reported Usage3 17% 15 1. As measure
Slide 16: Our Dealer Offerings Unlock Digital Marketing Wallet Share
Our Dealer Offerings Unlock Digital Marketing Wallet Share $ 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 Delive
Slide 17: Introducing New Products to Unlock Large TAM
Introducing New Products to Unlock Large TAM US NEW AND USED CAR RETAIL SALES: $1.4T1 INSURANCE P2P FINANCE TRADE-IN WARRANTY $6B $3B Total US Value2 US Used Car Loan Commissions3 LISTINGS CONSUMER LIFECYCLE DEALER MANAGEMENT MARKETPLACE Increase Consumer $13.9B $5.3B $3.3B Retention US Dealer US De
Slide 18: Growing US AARSD Through Three Levers
Growing US AARSD1 Through Three Levers Grow Increase Unit Connection Adoption Pricing and and Lead of New Product Volume Products Packaging 18 1. Average annual revenue per subscribing dealer.
Slide 19: We Have Rapidly Grown Connection Volume and Increased US AARSD
We Have Rapidly Grown Connection Volume and Increased US AARSD ANNUAL US CONNECTIONS (MILLIONS) US AARSD $18,000 21% CAGR $16,188 $16,000 39% 62 CAGR $14,000 $13,130 51 $12,000 $11,048 42 $10,000 $8,000 23 $6,000 $4,000 $2,000 $- 2015 2016 2017 2018 Q2 2017 Q2 2018 Q2 2019 19
Slide 20: Scaling Our International Business
Scaling Our International Business INTERNATIONAL AVERAGE Core Market Successfully Launched MONTHLY UNIQUE USERS (MILLIONS)1,2 9.8 96% CAGR Q2 2016 Q2 2017 Q2 2018 Q2 2019 INTERNATIONAL PAYING DEALERS2 5,836 167% CAGR Launched Launched Launched Launched Launched in 2014 in 2015 in 2017 in 2018 in 201
Slide 21: Financial Overview
Financial Overview ae AC: 1526058 =) NL 338 7 “lel : im a"
Slide 22: CarGurus Financial Highlights
CarGurus Financial Highlights Strong track High Proven Attractive Scalable record of quality operating free cash model for revenue revenue: leverage and flow replication in growth recurring, high profitability generation international in large total retention, and markets addressable diversified mar
Slide 23: Significant Revenue Scale and Momentum
Significant Revenue Scale and Momentum ($ MILLIONS) 31% YoY U.S. International Growth $579.5 $145 $135 43% $126 CAGR $454 $119 $17 $110 $99 $91 $317 $83 $9 $76 $67 $61 $198 $53 $46 $39 FY2016 FY2017 FY2018 FY 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Guidance 2019 guidance Mid-point 1 2016 2017
Slide 24: High Quality Revenue: Recurring and Diversified
High Quality Revenue: Recurring and Diversified HIGH RETENTION CUSTOMER MIX U.S. MONTHLY MARKETPLACE SUBSCRIPTION REVENUE DIVERSIFIED MARKETPLACE SUBSCRIPTION REVENUE BY COHORT1 ($ MILLIONS) Top 10 $50,000,000 $45 2019 Customers $45,000,000 $40 5% 2018 $40,000,000 $35 2018 Total 2017 $35,000,000 $30
Slide 25: Our Recurring Revenue Stream is Insulated From Auto Market Cyclicality
Our Recurring Revenue Stream is Insulated From Auto Market Cyclicality USED CAR SALES ARE MORE DURABLE THROUGH A LISTINGS PROVIDE SUPERIOR DEALER ROI MARKET CYCLE1 Used Car Units (Millions) Y/Y Growth Listings 50 20% 40 10% Search 0% 30 -10% 20 -20% Display Ads 10 -30% 0 -40% $ Offline 2015 2000 200
Slide 26: Profitable US Business Driving Investments in International
Profitable US Business Driving Investments in International US GAAP OPERATING INCOME ($ MILLIONS) CONSOLIDATED GAAP OPERATING INCOME $23 $14 $12 $58 $42 $27 $15 FY 2016 FY 2017 FY 2018 Q2 2018 Q2 2019 % Margin 14% 14% 13% 11% 10% $4.0 $9 $3.5 INT’L GAAP OPERATING INCOME ($ MILLIONS) $(19) $(26) $(8)
Slide 27: Long-Term Target Model Progression Since IPO
Long-Term Target Model Progression Since IPO Long-Term Percent of Revenue 2016 2017 20181 Q2 2019 1 Target Gross Margin 95% 94% 95% 94% 93% – 95% Sales & Marketing % 78% 75% 69% 70% 43% – 47% Product, Technology, Development % 6% 7% 11% 12% 9% – 11% G&A % 6% 7% 9% 9% 5% – 6% Depreciation & Amortizat
Slide 28: Appendix: Reconciliation of Net Income to Adjusted EBITDA
Appendix: Reconciliation of Net Income to Adjusted EBITDA ($ MILLIONS) 2016 2017 2018 Q2 2019 Net Income $6.5 $13.2 $65.2 $6.0 Depreciation and Amortization 2.1 3.8 5.0 1.9 Stock-based Compensation Expense 0.3 5.0 20.8 8.9 Other Income, Net (0.4) (0.6) (2.3) (.8) Provision for/(Benefit from) Income