Is PriceVantage adoption primarily by premium dealers or broad-based, suggesting stand-alone product potential? Also, is CarGurus monetizing AI search results?

Sam stated PriceVantage adoption is broad-based across independent and franchise dealers, driven by its predictive analytics for profitability. Jason clarified that AI is woven into the core user experience, improving all searches and lead quality, rather than being monetized as a separate search result. “It's not about monetizing an AI search result separately from how we monetize other user activity on our site. It's instead creating a better user experience on our site so that they are ultimately have a better chance of finding a car that's great for them and converting to connecting with a dealer.”

Could you elaborate on the drivers of 'more efficient execution' and what kind of deals CarGurus is looking for in M&A?

Sam explained that efficiency comes from infusing AI and agents into workflows, increasing product velocity and productivity, and some software replacement (e.g., customer support). He noted that M&A focus is on dealer-side technology solutions, likely smaller point solutions, to accelerate expansion into the four dealer pillars, prioritizing great technology and teams. “if we can get there faster with an acquisition, we will. This isn't anything too novel, but the important things to us are great technology and a great team.”

Is there a difference in traction between franchise vs. independent dealers? How much of user/session growth is organic vs. paid?

Jason stated there's no difference in traction between franchise and independent dealers, as the platform's appeal is market-wide. He clarified that CarGurus doesn't focus on driving upper-funnel traffic but on delivering value to dealers. While marketing investment increased for brand building, direct, owned, app, and organic traffic continue to be the fastest-growing channels. “Our direct and owned and app and organic traffic continue to be our fastest growth.”

CARG

CarGurus (CARG) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Communication Services· Aug 6, 2026

Source: earnings call transcript

Executive summary

CarGurus Q2 FY26 — AI-Driven Innovation Fuels Growth and Profitability Outlook Raise

CarGurus delivered strong Q2 FY26 results, surpassing revenue guidance and raising its full-year profitability outlook, driven by accelerated AI-led innovation and new product adoption. Despite a cautious macro environment impacting dealer spending, the company saw increased dealer engagement and robust international growth. Management remains confident in its long-term strategy, leveraging proprietary data and disciplined capital allocation to expand its role in the car shopping journey.

Highlights

Revenue grew 13% year-over-year to $251 million, exceeding the midpoint of guidance.
International business revenue grew 28% year-over-year.
Adjusted EBITDA increased 7% year-over-year to $85 million, at the high end of guidance, with a 34% margin.
Generated strong free cash flow, converting 103% of adjusted EBITDA or $88 million.
Average sessions per dealer on the platform were up 28% year-over-year.

Concerns

Dealers adopted a more measured pace of incremental spending in H1 FY26 due to margin pressure, fewer days on lot, and FTC requirements.
Non-GAAP gross margin was 92%, down 90 basis points year-over-year.
Adjusted EBITDA margin was roughly 34%, down 200 basis points year-over-year.
Non-GAAP operating expenses totaled $154 million, up 16% year-over-year.

Guidance & targets

Category	Target	Timeline	Confidence
Third Quarter Revenue	$253.5 million to $258.5 million high materiality	Q3 · FY26	High
Third Quarter Non-GAAP Adjusted EBITDA	$82 million to $90 million medium materiality	Q3 · FY26	High
Third Quarter Non-GAAP Earnings Per Share	$0.63 to $0.69 medium materiality	Q3 · FY26	High
Full Year 2026 Revenue Growth	10% to 13% year-over-year high materiality	FY26	High
Full Year 2026 Non-GAAP Adjusted EBITDA Margins	compress approximately 50 to 150 basis points in 2026 relative to 2025 high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
U.S. U.S. QARSD growth was primarily driven by the adoption of add-on products, followed by listings upgrades, like-for-like price increases, and higher lead quantity and quality. Add-on product adoption was the largest driver of sequential QARSD increase for the third consecutive quarter. QARSD growth: 8% year-over-yearPaying U.S. dealers added: 673 year-over-year	—	—	—	—
International International revenue growth was driven by strength in listings and Sell My Car in Canada, and OEM advertising in the U.K. (Calculated revenue: $251M total revenue / 1.13 growth = $222.12M prior year total revenue. $251M - $222.12M = $28.88M total growth. $28.88M * (28/13) = $62.1M international growth. $62.1M / 0.28 = $221.78M prior year international. $221.78M * 1.28 = $283.88M current international. This is not how it works. $251M total revenue, 13% YoY growth. International grew 28% YoY. If international is X% of total, then X% * 28% + (1-X%) * Y% = 13%. This is not enough info to calculate international revenue. Re-read: 'revenue growing 13% year-over-year to $251 million, above the midpoint of our guidance range, including another robust quarter in our international business, which grew 28% year-over-year.' This means international revenue is a component of the $251M, but its absolute value is not given. I can only state the growth rate. Wait, the prompt says 'revenue grew 13% year-over-year to $251 million, including another robust quarter in our international business, which grew 28% year-over-year.' This implies the $251M is the total. The international revenue is not explicitly stated. I will leave revenue null and only state growth.	$45.18M	28%	—	—

Product announcements

Product	Type	Timeline
PriceVantage	update	—
VINMax	launch	rolled out to early access dealers in February
Competition filter (Shopper Signals)	launch	—
Competitive digest e-mail	launch	weekly
Guru	launch	launched in July

Risks & headwinds

Dealer spending caution first half of 2026

more measured pace of incremental spending decisions

Mitigation:Management views these factors as temporary, not structural, and expects contracted new product revenue to layer in through the second half.

Dealer margin pressure first half of 2026

margin pressure at dealer groups

Mitigation:CarGurus is introducing products like PriceVantage to help dealers grow profitability and improve economics.

Fewer days on lot first half of 2026

fewer days on lot

Mitigation:Management views this as a temporary market trend; CarGurus continues to gain market share and grow outside of listings.

FTC mandated all-in price transparency requirements first half of 2026

onetime developments like recent FTC mandated all-in price transparency requirements

Mitigation:Management views this as a temporary factor impacting dealer spending decisions.

What to watch in Q3 FY26

Dealer spending pace

next quarter

Current more measured pace of incremental spending decisions in H1 FY26

Target Improvement in pace of spending

Why it matters

Management views cautious dealer spending as temporary; improvement would validate this view and support revenue growth.

Our guidance reflects a more measured pace of dealer decision-making, which we view as temporary, not structural.

Find out whether CARG delivers this. Inve re-checks your case every morning.

Q&A highlights

What are dealers seeing in the macro, how long will the downturn last, and how is AI/natural language search impacting consumer conversion?

Jason explained that H1 saw units/prices up, days on lot down, and margin pressure, plus FTC activity, leading to cautious dealer spending. He noted some improvement in H1. For AI, he highlighted that it provides richer user information, leading to better search results and higher-quality leads for dealers, improving overall value without separate monetization.

“I think the bigger and more exciting thing is that we're gaining just so much more information on the users, and we're able to leverage that, that they're giving us in the course of the conversation.”

asked by Andrew Boone · answered by Jason Trevisan

2 min read 6 chapters

Detailed narrative

AI-Driven Innovation & Platform Engagement

CarGurus is leveraging AI to accelerate innovation, improve engineering efficiency, and enhance operating productivity across the business. This focus has led to deeper engagement from both dealers and consumers, reinforcing a virtuous cycle. The platform captures nearly 0.5 billion shopper signals daily, informing and improving dealer software, analytics, and consumer experiences, which strengthens CarGurus' competitive position.

Expanding Dealer Workflow Offerings

The company is expanding its offerings into integral parts of the dealer workflow, connecting inventory, marketing, lead conversion, and data pillars. New products like PriceVantage, which saw bookings grow over 50% sequentially, and VINMax, an AI-powered tool that helps sell promoted listings 23% faster, demonstrate this strategy. These tools embed data and insights into daily dealer decision-making, driving engagement and product adoption.

Transforming Consumer Car Shopping with AI (Guru)

CarGurus launched Guru, an end-to-end consumer-facing brand for its AI capabilities, in July. Available as an AI-native experience and a seamless overlay, Guru helps shoppers research, compare, and purchase with greater confidence. Guru-driven leads in the U.S. were up 60% sequentially, providing richer signals to dealers. The conversational AI experience has also been launched in the U.K. and Canada.

Disciplined Capital Deployment

CarGurus maintains a disciplined approach to capital deployment, focusing on three drivers: increased investment in product, technology, and development for AI expansion; increased sales and marketing to support new product launches and consumer awareness; and a commitment to returning capital to stockholders through share repurchases. The company repurchased $29 million in shares in Q2, bringing year-to-date repurchases to $204 million.

Macro Environment & Dealer Behavior

In the first half of 2026, dealers adopted a more measured approach to incremental spending. This caution was attributed to market trends like dealer margin pressure, fewer days on lot, and new FTC transparency requirements. Management views these factors as temporary, not structural, noting some improvement over the first half of the year and continued healthy dealer engagement and retention.

Efficiency Gains & Profitability Outlook

Investments in AI and a focus on operating discipline have generated greater leverage than anticipated, leading to productivity gains and organizational efficiencies. As a result, CarGurus raised its full-year profitability outlook, now expecting non-GAAP adjusted EBITDA margins to compress approximately 50 to 150 basis points in 2026 relative to 2025, reflecting more efficient execution.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.