CarGurus posts 13% revenue growth as AI products gain traction
CarGurus (Nasdaq: CARG) delivered second-quarter 2026 revenue of $251.0 million, a 13% year-on-year increase that came in above the midpoint of the company's own guidance range. Non-GAAP adjusted EBITDA reached $84.7 million, landing toward the upper bound of guidance, while free cash flow for the quarter was $87.7 million. The results mark a continued recovery in trading momentum after the company wound down its CarOffer wholesale vehicle unit at the end of 2025.
Chief executive Jason Trevisan highlighted two distinct AI investment threads driving the quarter. On the dealer side, CarGurus has been embedding predictive intelligence into dealer workflows, supporting pricing, inventory acquisition and marketing decisions. On the consumer side, the company introduced Guru, a new AI-powered layer intended to act as an expert guide across the full car-buying journey. Trevisan said the dual approach had deepened engagement across both audiences, adding that CarGurus believes it "strengthens our competitive position and creates durable long-term value."
Dealer metrics and international growth
Paying dealer numbers rose to 34,629 in total at quarter-end, up 5% year-on-year. US paying dealers grew 3% to 26,151, while international paying dealers increased 11% to 8,478, reflecting stronger momentum outside the home market. Consolidated quarterly average revenue per subscribing dealer (QARSD) rose 7% to $6,771, suggesting the company is successfully upselling higher-value packages and cross-selling ancillary products.
International revenue reached $24.7 million in Q2, a 28% year-on-year jump, against US revenue of $226.3 million, up 12%. The international outperformance is consistent with the company's stated intention to expand in markets where it already operates, including the UK, where its PistonHeads motoring community is an established brand.
Gross margin remained stable at 92%, though EBITDA margin compressed by roughly 200 basis points to 34%, reflecting higher operating expenditure in sales and marketing and product development. GAAP net income from continuing operations was broadly flat at $49.2 million. The company repurchased $29.2 million of shares in the quarter, bringing total buybacks since December 2022 to more than 30% of shares outstanding.
Competitive landscape and forward guidance
The online automotive marketplace sector is consolidating around a small group of scaled platforms. In the US, CarGurus competes directly with Autotrader, Cars.com, TrueCar and CARFAX on listing volume and dealer reach. The launch of Guru as a consumer AI assistant is a direct response to broader industry pressure: search-led discovery of vehicles is shifting toward AI-mediated recommendation, and platforms that fail to embed conversational or agentic product layers risk losing top-of-funnel traffic to general-purpose AI tools.
For the third quarter of 2026, CarGurus guided revenue of $253.5 million to $258.5 million and non-GAAP adjusted EBITDA of $82.0 million to $90.0 million, implying continued mid-teen growth. Full-year guidance projects year-on-year revenue growth of 10% to 13%, with adjusted EBITDA margin expected to compress modestly by 0.5 to 1.5 percentage points. The company flagged macroeconomic risks including tariff policy uncertainty and consumer sensitivity to interest rates as factors that could alter the pace of dealer acquisition and churn.
Cash and equivalents stood at $122.1 million at quarter-end, down from $190.5 million at December 2025, primarily reflecting the scale of the share repurchase programme in the first half of the year. Investors will watch closely for evidence of Guru's impact on consumer engagement metrics and any named enterprise dealer wins tied to the predictive intelligence suite in the quarters ahead.