CarGurus Inc.’s net income continued its double-digit percentage nose-dive in the second quarter, dropping 23 percent to $13.8 million, the company said Wednesday, nearly a week after it was initially slated to report quarterly results.
The vehicle listings company said overall revenue tumbled by 53 percent to $239.7 million and digital wholesale revenue plunged 80 percent year-over year to $68.8 million, though CEO Jason Trevisan said efforts to stabilize that segment have turned a corner.
CarOffer, CarGurus’ wholesale digital trading platform, is a big part of its digital wholesale segment. The segment booked a $6.3 million second-quarter operating loss, more than double the loss from a year ago.
One bright spot: revenue from the company’s U.S. marketplace business — its other reporting segment — grew 3.7 percent to $158.4 million from the same period last year. Trevisan attributed the gains to higher sales and price increases targeting both new and existing dealers.
Operating income for that segment was $24.6 million, down 13 percent from the same 2022 period.
CarGurus shares closed down nearly 1.3 percent to $19.24 on Wednesday but rose slightly in after-hours trading.
The stock has mostly rebounded after plunging more than 15 percent when the company briefly delayed its scheduled second-quarter earnings without explanation on Thursday before rescheduling it. Trevisan apologized for the delay before starting his remarks on a second-quarter earnings call on Wednesday.
CarGurus, of Cambridge, Mass., started reporting digital wholesale as a separate segment in the fourth quarter, which includes dealer-to-dealer and Instant Max Cash Offer services and products sold via CarOffer. CarGurus acquired a 51 percent stake of CarOffer in 2021.
The digital wholesale business started to suffer in the second half of 2022 with the decline of the wholesale market. Steps taken to improve it have included plans to “intentionally reduce volumes sequentially” and improve some “operational aspects” of the business “to better handle price and volatility” in recent months, the company said this year.
The company reported 31,097 paying dealers as of June 30, about flat from the year before. The 2023 figure covers 24,220 dealers in the U.S. and 6,877 internationally.
Average revenue per subscribing dealer in the U.S. was $6,110 at the end of June, up 6 percent from a year earlier.
Transactions tumbled 68 percent in the second quarter to 20,793.
Q2 revenue: $239.7 million, down 53 percent from a year earlier
Q2 consolidated net income: $13.8 million, down 23 percent from a year earlier
Q2 adjusted EBITDA: $45.2 million, down 26 percent from a year earlier
Guidance: For the third quarter, the company expects revenue of $201 million to $221 million, product revenue of $15 million to $25 million and non-GAAP consolidated adjusted earnings before interest, taxes, depreciation and amortization of $36 million to $44 million.