EX-99.1 2 carg-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

img239243378_0.jpg

 

CarGurus Announces Third Quarter 2025 Results

Q3’25 Marketplace revenue grew 14% YoY to $232 million, above the midpoint of our guidance range

GAAP Marketplace (U.S. Marketplace Segment and Other) operating income of $64.1 million; Non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA of $82.4 million, up 18% YoY, above the midpoint of our guidance range

Further advanced our innovative AI-powered solutions with PriceVantage, Dealership Mode, and CG Discover

Repurchased $111 million worth of shares in Q3’25; have repurchased 23% of shares outstanding since initiation of buyback program in December 2022

BOSTON, November 6, 2025 - CarGurus, Inc. (Nasdaq: CARG), the No. 1 visited automotive shopping site in the U.S.1, today announced financial results for the third quarter ended September 30, 2025.

“We delivered another quarter of strong Marketplace revenue growth as dealers have increasingly adopted our data-driven tools,” said Jason Trevisan, Chief Executive Officer at CarGurus. “Our product innovation is driving measurable ROI across more areas of the dealership, like inventory, pricing, marketing, and data intelligence. That adoption, coupled with strong execution, has fueled solid growth in both our U.S. and international businesses. We believe these trends position us well to extend our leadership, deepen customer relationships, access new market segments, and drive long-term growth.”

1

 

Third Quarter Financial Highlights

Below are our third quarter financial highlights for the three and nine months ended September 30, 2025. The amounts in the tables below may not sum due to rounding.

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2025

 

 

September 30, 2025

 

 

 

Results
(in millions)

 

 

Variance from Prior Year

 

 

Results
(in millions)

 

 

Variance from Prior Year

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Marketplace Revenue

 

$

231.7

 

 

 

14

%

 

$

665.9

 

 

 

14

%

Wholesale Revenue

 

 

2.2

 

 

 

(81

)%

 

 

16.3

 

 

 

(61

)%

Product Revenue

 

 

4.8

 

 

 

(69

)%

 

 

15.7

 

 

 

(59

)%

Total Revenue

 

$

238.7

 

 

 

3

%

 

$

697.9

 

 

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit (1)

 

$

213.5

 

 

 

17

%

 

$

617.6

 

 

 

14

%

% Margin

 

 

89

%

 

1,055 bps

 

 

 

88

%

 

741 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses (2)

 

$

158.9

 

 

 

2

%

 

$

492.3

 

 

 

(15

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Marketplace (U.S. Marketplace Segment and Other) Operating Income (3)

 

$

64.1

 

 

 

22

%

 

$

177.5

 

 

 

33

%

% Margin

 

 

28

%

 

182 bps

 

 

 

27

%

 

382 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA (4)

 

$

82.4

 

 

 

18

%

 

$

232.1

 

 

 

25

%

% Margin (4)

 

 

36

%

 

122 bps

 

 

 

35

%

 

310 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income (3)

 

$

44.7

 

 

 

99

%

 

$

106.1

 

 

NM(6)

 

% Margin

 

 

19

%

 

900 bps

 

 

 

15

%

 

NM(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted EBITDA (4)

 

$

78.7

 

 

 

21

%

 

$

222.3

 

 

 

30

%

% Margin (4)

 

 

33

%

 

491 bps

 

 

 

32

%

 

619 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents at period end (5)

 

$

178.8

 

 

 

(41

)%

 

$

178.8

 

 

 

(41

)%
(1)
There was no impairment of other assets for the three months ended September 30, 2025. During the three months ended September 30, 2024, we recorded $9.8 million of impairments in cost of revenue. During the nine months ended September 30, 2025 and 2024, we recorded $2.9 million and $9.9 million, respectively, of impairments in cost of revenue.
(2)
During the three months ended September 30, 2025, there was no impairment recorded. During the three months ended September 30, 2024, we recorded $7.0 million of impairments in operating expenses. During the nine months ended September 30, 2025 and 2024, we recorded $29.6 million and $134.5 million, respectively, of impairments in operating expenses.
(3)
During the three months ended September 30, 2025, there was no impairment recorded. During the three months ended September 30, 2024, we recorded $16.8 million of impairments. During the nine months ended September 30, 2025 and 2024, we recorded $32.6 million and $144.4 million, respectively, of impairments.
(4)
For more information regarding our use of non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA, non-GAAP Adjusted EBITDA, and other non-GAAP financial measures, please see the reconciliations of GAAP financial measures to non-GAAP financial measures and the section titled “Non-GAAP Financial Measures and Other Business Metrics” below.
(5)
Variance represents the change from December 31, 2024.
(6)
Not meaningful.

2

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2025

 

 

September 30, 2025

 

 

 

Results

 

 

Variance from Prior Year

 

 

Results

 

 

Variance from Prior Year

 

Key Performance Indicators (1)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Paying Dealers (2)

 

 

25,743

 

 

 

5

%

 

 

25,743

 

 

 

5

%

International Paying Dealers (2)

 

 

7,930

 

 

 

11

%

 

 

7,930

 

 

 

11

%

Total Paying Dealers (2)

 

 

33,673

 

 

 

6

%

 

 

33,673

 

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. QARSD

 

$

7,742

 

 

 

8

%

 

$

7,742

 

 

 

8

%

International QARSD

 

$

2,375

 

 

 

15

%

 

$

2,375

 

 

 

15

%

Consolidated QARSD

 

$

6,492

 

 

 

8

%

 

$

6,492

 

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Reporting (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Marketplace Segment Revenue

 

$

210.4

 

 

 

12

%

 

$

608.3

 

 

 

13

%

U.S. Marketplace Segment Operating Income

 

$

61.0

 

 

 

21

%

 

$

169.6

 

 

 

34

%

Digital Wholesale Segment Revenue

 

$

7.0

 

 

 

(74

)%

 

$

32.0

 

 

 

(60

)%

Digital Wholesale Segment Operating Loss (3)

 

$

(9.4

)

 

 

63

%

 

$

(52.3

)

 

 

70

%
(1)
For more information regarding our use of Key Performance Indicators, please see the section titled “Non-GAAP Financial Measures and Other Business Metrics” below.
(2)
Metrics presented as of September 30, 2025.
(3)
For the three months ended September 30, 2025, there was no impairment recorded. For the three months ended September 30, 2024, Digital Wholesale Segment Operating Loss is inclusive of $16.8 million of impairments. For the nine months ended September 30, 2025 and 2024, Digital Wholesale Segment Operating Loss is inclusive of $32.6 million and $144.4 million, respectively, of impairments.

3

 

Fourth Quarter and Full-Year 2025 Guidance

The table below provides CarGurus’ guidance, which is based on recent market trends, industry conditions, and management’s expectations and assumptions as of today.

 

Fourth Quarter 2025 Guidance Metrics

Values

Marketplace Revenue (1)

$236.0 million to $241.0 million

Non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA

$83.0 million to $91.0 million

Non-GAAP Earnings per Share

$0.61 to $0.67
(1)
Marketplace revenue consists of U.S. Marketplace Segment and Other revenue.

 

Full-Year 2025 Guidance Metrics

Values

Marketplace Revenue (1)

$902.0 million to $907.0 million

Non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA

$313.0 million to $321.0 million

Non-GAAP Earnings per Share

$2.19 to $2.25
(1)
Marketplace revenue consists of U.S. Marketplace Segment and Other revenue.

The fourth quarter and full-year 2025 non-GAAP earnings per share calculations assume 97.0 million and 101.0 million, respectively, diluted weighted-average common shares outstanding.

The assumptions that are built into guidance for the fourth quarter and full-year 2025 regarding our pace of paid dealer acquisition, churn, and expansion activity for the relevant period are based on recent market trends and industry conditions. Guidance for the fourth quarter and full-year 2025 excludes macro-level industry issues that result in dealers and consumers materially changing their recent market trends or that cause us to enact measures to assist dealers. Guidance also excludes any potential impact of future foreign currency exchange gains or losses. CarGurus may incur charges, realize gains or losses, or experience other events or circumstances in 2025 that could cause any of these assumptions to change and/or actual results to vary from this guidance.

CarGurus has not reconciled its guidance of non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA to GAAP Marketplace (U.S. Marketplace Segment and Other) operating income or non-GAAP earnings per share to GAAP earnings per share because we are unable to accurately predict without unreasonable effort the exact amount or timing of certain reconciling items between such GAAP and non-GAAP financial measures, including, as applicable, depreciation expenses, amortization of intangible assets, non-intangible amortization, stock-based compensation, transaction-related expenses, and income tax effects. The variability of these reconciling items could have a significant impact on our future GAAP reported results.

4

 

Conference Call and Webcast Information

CarGurus will host a conference call and live webcast to discuss its third quarter 2025 financial results and business outlook at 5:00 p.m. Eastern Time today, November 6, 2025. To access the conference call, dial (877) 451-6152 for callers in the U.S. or Canada, or (201) 389-0879 for international callers. The webcast will be available live on the Investors section of CarGurus’ website at investors.cargurus.com.

An audio replay of the call will also be available to investors beginning at approximately 8:00 p.m. Eastern Time today, November 6, 2025, until 11:59 p.m. Eastern Time on November 20, 2025, by dialing (844) 512-2921 for callers in the U.S. or Canada, or (412) 317-6671 for international callers, and entering passcode 13755566. In addition, an archived webcast will be available on the Investors section of CarGurus’ website at investors.cargurus.com.

About CarGurus

CarGurus (Nasdaq: CARG) is the leading multinational automotive platform helping consumers and dealers confidently buy and sell vehicles. Founded in 2006 with a mission to bring more trust and transparency to car shopping, CarGurus is the No. 1 visited automotive shopping site in the U.S.1 with the largest selection of inventory and network of dealers.2 CarGurus’ unmatched selection, trusted automotive insights, and data-driven products and solutions support each shopper’s journey — from online research and shopping to in-dealership decisions — to empower them at every step. And, by translating data from billions of monthly site interactions, CarGurus provides dealers a personalized, predictive intelligence platform with software solutions that helps them run their businesses more efficiently and profitably at all stages of inventory acquisition and pricing, marketing, and conversion to sale.

CarGurus operates online marketplaces in the U.S., U.K., and Canada. The company’s network of brands includes PistonHeads, the largest online motoring community in the U.K.3, and Autolist, a U.S.- based online marketplace.

To learn more about CarGurus, visit www.cargurus.com.

1 Similarweb: Traffic and Engagement Report [Cars.com, Autotrader.com, TrueCar.com, CARFAX.com Listings
(defined as CARFAX.com Total Visits minus Vehicle History Reports)], Q3 2025, U.S.

2Compared to Autotrader.com (YipitData July/August 2025), Cars.com, TrueCar.com (YipitData as of September 30, 2025), and CARFAX (Joreca as of September 30, 2025).

3 Similarweb: Traffic Insights, Q3 2025, U.K.

CarGurus® and Autolist® are each a registered trademark of CarGurus, Inc., CarOffer® is a registered trademark of CarOffer, LLC, and PistonHeads® is a registered trademark of CarGurus Ireland Limited in the U.K. and the European Union. All other product names, trademarks, and registered trademarks are property of their respective owners.

© 2025 CarGurus, Inc., All Rights Reserved.

Cautionary Language Concerning Forward-Looking Statements

This press release includes forward-looking statements. Other than statements of historical facts, all statements contained in this press release, including statements regarding our future financial and operating results; our fourth quarter and full-year 2025 financial and business performance, including guidance; the expectations about our intended wind-down of CarOffer, LLC ("CarOffer"), including the Dealer-to-Dealer and Instant Max Cash Offer products (the “CarOffer Transactions Business"), such as expected costs and timing; our plans to focus on technology and analytics that will enable smarter sourcing and pricing decisions; our business and growth strategy and our plans to execute on our growth strategy; our ability to grow our business profitably and efficiently; our capital allocation and investment strategy; the attractiveness and value proposition of our current offerings and other product opportunities; our ability to maintain existing and acquire new customers; addressable opportunities; our expectation that we will continue to invest in growth initiatives; our ability to quickly make transformations necessary for our business to achieve long-term goals; and our ability to overcome challenges facing the automotive industry ecosystem, including inventory supply problems, global supply chain challenges, including disruptions to pre-existing supply chains and vendor relations, changes to trade policies or tariff regulations, financial market volatility and disruption, increased interest rates, inflationary concerns, and other macroeconomic issues, including

5

 

uncertain or volatile economic conditions in the U.S. and abroad, are forward-looking statements. The words “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “guide,” “guidance,” “intend,” “may,” “might,” “plan,” “potential,” “predicts,” “projects,” “seeks,” “should,” “strive,” “target,” “will,” “would,” and similar expressions and their negatives are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. You should not rely upon forward-looking statements as predictions of future events.

These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such statements, including risks related to our growth and our ability to grow our revenue; our relationships with dealers; competition in the markets in which we operate; market growth; our ability to implement our plan to wind down CarOffer, including the CarOffer Transactions Business; failure to achieve expected organizational efficiencies from the wind-down; the estimated timing and costs associated with the wind-down; the impact the wind-down will have on our operations; disruptions in relationships with dealers, customers, vendors, contractors, and employees given our decision to wind down CarOffer, including the CarOffer Transactions Business; unanticipated developments that may prevent, delay, or increase the costs associated with the wind-down activities; the potential impact on our business due to the announcement of the wind-down; our ability to innovate; our ability to realize benefits from our acquisitions and successfully implement the integration strategies in connection therewith; increased inflation and interest rates, global supply chain challenges, changes in international trade policies, including tariffs, volatile economic conditions, and other macroeconomic issues; the impact of changes in tax law and related guidance and regulations that may be implemented, including on tax rates, our business, and our financial results; changes in our key personnel; natural disasters, epidemics, or pandemics; and our ability to operate in compliance with applicable laws as well as other risks and uncertainties as may be detailed from time to time in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and other reports we file with the U.S. Securities and Exchange Commission. Moreover, we operate in very competitive and rapidly changing environments. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, we cannot guarantee that future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

Investor Contact:

Kirndeep Singh

Vice President, Head of Investor Relations

investors@cargurus.com

Media Contact:

Maggie Meluzio

Director, Public Relations and External Communications

pr@cargurus.com

 

6

 

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

As of
September 30,
2025

 

 

As of
December 31,
2024

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

178,834

 

 

$

304,193

 

Accounts receivable, net of allowance for doubtful accounts of $1,186
   and $788, respectively

 

 

39,612

 

 

 

44,248

 

Inventory

 

 

—

 

 

 

338

 

Prepaid expenses, prepaid income taxes, and other current assets

 

 

36,078

 

 

 

27,868

 

Deferred contract costs

 

 

14,843

 

 

 

12,523

 

Restricted cash

 

 

21

 

 

 

2,036

 

Total current assets

 

 

269,388

 

 

 

391,206

 

Property and equipment, net

 

 

132,934

 

 

 

130,010

 

Intangible assets, net

 

 

3,493

 

 

 

11,767

 

Goodwill

 

 

28,409

 

 

 

46,167

 

Operating lease right-of-use assets

 

 

116,665

 

 

 

121,484

 

Deferred tax assets

 

 

92,706

 

 

 

106,672

 

Deferred contract costs, net of current portion

 

 

12,842

 

 

 

13,196

 

Other non-current assets

 

 

4,035

 

 

 

4,034

 

Total assets

 

$

660,472

 

 

$

824,536

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

30,350

 

 

$

26,410

 

Accrued expenses, accrued income taxes, and other current liabilities

 

 

30,546

 

 

 

35,975

 

Deferred revenue

 

 

23,643

 

 

 

21,661

 

Operating lease liabilities

 

 

9,317

 

 

 

9,005

 

Total current liabilities

 

 

93,856

 

 

 

93,051

 

Operating lease liabilities

 

 

183,944

 

 

 

183,739

 

Deferred tax liabilities

 

 

26

 

 

 

26

 

Other non–current liabilities

 

 

7,197

 

 

 

6,031

 

Total liabilities

 

 

285,023

 

 

 

282,847

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock, $0.001 par value per share; 10,000,000 shares authorized;
   no shares issued and outstanding

 

 

—

 

 

 

—

 

Class A common stock, $0.001 par value per share; 500,000,000 shares
   authorized; 81,908,990 and 89,002,571 shares issued and outstanding
   at September 30, 2025 and December 31, 2024, respectively

 

 

82

 

 

 

89

 

Class B common stock, $0.001 par value per share; 100,000,000 shares
   authorized; 14,216,250 and 14,986,745 shares issued and outstanding
   at September 30, 2025 and December 31, 2024, respectively

 

 

14

 

 

 

15

 

Additional paid-in capital

 

 

6,776

 

 

 

169,013

 

Retained earnings

 

 

367,187

 

 

 

375,119

 

Accumulated other comprehensive income (loss)

 

 

1,390

 

 

 

(2,547

)

Total stockholders’ equity

 

 

375,449

 

 

 

541,689

 

Total liabilities and stockholders’ equity

 

$

660,472

 

 

$

824,536

 

 

7

 

Unaudited Condensed Consolidated Income Statements

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Marketplace

 

$

231,653

 

 

$

204,019

 

 

$

665,886

 

 

$

586,405

 

Wholesale

 

 

2,249

 

 

 

12,107

 

 

 

16,271

 

 

 

41,351

 

Product

 

 

4,794

 

 

 

15,232

 

 

 

15,730

 

 

 

38,090

 

Total revenue

 

 

238,696

 

 

 

231,358

 

 

 

697,887

 

 

 

665,846

 

Cost of revenue (1)

 

 

 

 

 

 

 

 

 

 

 

 

Marketplace

 

 

16,946

 

 

 

13,521

 

 

 

46,755

 

 

 

41,051

 

Wholesale (2)

 

 

3,366

 

 

 

20,415

 

 

 

17,883

 

 

 

47,272

 

Product

 

 

4,852

 

 

 

14,871

 

 

 

15,628

 

 

 

37,567

 

Total cost of revenue

 

 

25,164

 

 

 

48,807

 

 

 

80,266

 

 

 

125,890

 

Gross profit

 

 

213,532

 

 

 

182,551

 

 

 

617,621

 

 

 

539,956

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

89,368

 

 

 

81,216

 

 

 

260,421

 

 

 

245,801

 

Product, technology, and development

 

 

36,316

 

 

 

36,359

 

 

 

106,936

 

 

 

108,484

 

General and administrative

 

 

28,463

 

 

 

28,187

 

 

 

82,305

 

 

 

83,682

 

Impairments

 

 

—

 

 

 

7,026

 

 

 

29,633

 

 

 

134,501

 

Depreciation and amortization

 

 

4,711

 

 

 

2,329

 

 

 

13,053

 

 

 

7,354

 

Total operating expenses

 

 

158,858

 

 

 

155,117

 

 

 

492,348

 

 

 

579,822

 

Income (loss) from operations

 

 

54,674

 

 

 

27,434

 

 

 

125,273

 

 

 

(39,866

)

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,292

 

 

 

2,717

 

 

 

7,524

 

 

 

9,063

 

Other (expense) income, net

 

 

(399

)

 

 

(94

)

 

 

(271

)

 

 

122

 

Total other income, net

 

 

1,893

 

 

 

2,623

 

 

 

7,253

 

 

 

9,185

 

Income (loss) before income taxes

 

 

56,567

 

 

 

30,057

 

 

 

132,526

 

 

 

(30,681

)

Provision for (benefit from) income taxes

 

 

11,850

 

 

 

7,546

 

 

 

26,421

 

 

 

(5,772

)

Net income (loss)

 

$

44,717

 

 

$

22,511

 

 

$

106,105

 

 

$

(24,909

)

Net income (loss) per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.46

 

 

$

0.22

 

 

$

1.06

 

 

$

(0.24

)

Diluted

 

$

0.45

 

 

$

0.21

 

 

$

1.04

 

 

$

(0.24

)

Weighted-average number of shares of common stock used in
   computing net income (loss) per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

98,170,081

 

 

 

103,321,988

 

 

 

100,033,516

 

 

 

104,769,518

 

Diluted

 

 

99,722,575

 

 

 

105,059,283

 

 

 

101,640,190

 

 

 

104,769,518

 
(1)
For the three months ended September 30, 2025 and 2024 and for the nine months ended September 30, 2025 and 2024, cost of revenue includes $2,645, $2,849, $7,539, and $10,968, respectively.
(2)
For the three months ended September 30, 2025, there was no impairment recorded in cost of revenue. For the three months ended September 30, 2024, and for the nine months ended September 30, 2025 and 2024, we recorded $9,750, $2,919, and $9,930, respectively, in impairments.

8

 

Unaudited Segment Revenue

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Segment Revenue

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Marketplace

 

$

210,441

 

 

$

187,253

 

 

$

608,321

 

 

$

540,293

 

Digital Wholesale

 

 

7,043

 

 

 

27,339

 

 

 

32,001

 

 

 

79,441

 

Other

 

 

21,212

 

 

 

16,766

 

 

 

57,565

 

 

 

46,112

 

Total

 

$

238,696

 

 

$

231,358

 

 

$

697,887

 

 

$

665,846

 

 

Unaudited Segment Income (Loss) from Operations

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Segment Income (Loss) from Operations

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Marketplace

 

$

61,009

 

 

$

50,410

 

 

$

169,552

 

 

$

126,670

 

Digital Wholesale

 

 

(9,441

)

 

 

(25,317

)

 

 

(52,261

)

 

 

(173,815

)

Other

 

 

3,106

 

 

 

2,341

 

 

 

7,982

 

 

 

7,279

 

Total

 

$

54,674

 

 

$

27,434

 

 

$

125,273

 

 

$

(39,866

)

 

9

 

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

44,717

 

 

$

22,511

 

 

$

106,105

 

 

$

(24,909

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,356

 

 

 

5,178

 

 

 

20,592

 

 

 

18,322

 

Currency gain on foreign denominated transactions

 

 

11

 

 

 

(741

)

 

 

(446

)

 

 

(234

)

Other non-cash income, net

 

 

(101

)

 

 

—

 

 

 

(101

)

 

 

(816

)

Deferred taxes

 

 

27,296

 

 

 

(3,180

)

 

 

13,966

 

 

 

(47,344

)

Provision for doubtful accounts

 

 

924

 

 

 

736

 

 

 

2,047

 

 

 

1,534

 

Stock-based compensation expense

 

 

12,627

 

 

 

15,455

 

 

 

38,552

 

 

 

46,614

 

Amortization of deferred financing costs

 

 

129

 

 

 

129

 

 

 

387

 

 

 

387

 

Amortization of deferred contract costs

 

 

4,172

 

 

 

3,608

 

 

 

11,986

 

 

 

10,241

 

Impairments

 

 

—

 

 

 

16,776

 

 

 

32,552

 

 

 

144,431

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

1,181

 

 

 

(5,636

)

 

 

3,404

 

 

 

(5,393

)

Inventory

 

 

711

 

 

 

863

 

 

 

338

 

 

 

149

 

Prepaid expenses, prepaid income taxes, and other assets

 

 

(17,346

)

 

 

(332

)

 

 

(8,452

)

 

 

7,093

 

Deferred contract costs

 

 

(4,278

)

 

 

(3,859

)

 

 

(13,707

)

 

 

(11,307

)

Accounts payable

 

 

(2,465

)

 

 

1,469

 

 

 

4,227

 

 

 

10,770

 

Accrued expenses, accrued income taxes, and other liabilities

 

 

(2,854

)

 

 

(1,706

)

 

 

(6,058

)

 

 

(2,568

)

Deferred revenue

 

 

247

 

 

 

79

 

 

 

1,933

 

 

 

555

 

Lease obligations

 

 

(1,162

)

 

 

4,846

 

 

 

4,838

 

 

 

32,232

 

Net cash provided by operating activities

 

 

71,165

 

 

 

56,196

 

 

 

212,163

 

 

 

179,757

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,362

)

 

 

(10,288

)

 

 

(5,185

)

 

 

(64,937

)

Capitalization of website development costs

 

 

(5,794

)

 

 

(4,607

)

 

 

(17,447

)

 

 

(15,314

)

Purchases of short-term investments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(494

)

Sale of short-term investments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21,218

 

Advance payments to customers, net of collections

 

 

—

 

 

 

—

 

 

 

—

 

 

 

259

 

Net cash used in investing activities

 

 

(7,156

)

 

 

(14,895

)

 

 

(22,632

)

 

 

(59,268

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

25

 

 

 

49

 

 

 

429

 

 

 

75

 

Payment of withholding taxes on net share settlements of restricted stock units

 

 

(7,374

)

 

 

(5,986

)

 

 

(22,704

)

 

 

(17,391

)

Repurchases of common stock

 

 

(110,279

)

 

 

(3,701

)

 

 

(294,887

)

 

 

(146,180

)

Payment of excise tax for repurchase of common stock

 

 

—

 

 

 

—

 

 

 

(682

)

 

 

—

 

Payment of finance lease obligations

 

 

(20

)

 

 

(19

)

 

 

(60

)

 

 

(56

)

Change in gross advance payments received from third-party transaction processor

 

 

(803

)

 

 

(624

)

 

 

(1,084

)

 

 

(704

)

Net cash used in financing activities

 

 

(118,451

)

 

 

(10,281

)

 

 

(318,988

)

 

 

(164,256

)

Impact of foreign currency on cash, cash equivalents, and restricted cash

 

 

(52

)

 

 

1,356

 

 

 

2,083

 

 

 

582

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

 

(54,494

)

 

 

32,376

 

 

 

(127,374

)

 

 

(43,185

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

233,349

 

 

 

218,365

 

 

 

306,229

 

 

 

293,926

 

Cash, cash equivalents, and restricted cash at end of period

 

$

178,855

 

 

$

250,741

 

 

$

178,855

 

 

$

250,741

 

 

10

 

Unaudited Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income and GAAP Net Income (Loss) Per Share Attributable to Common Stockholders to Non-GAAP Net Income Per Share Attributable to Common Stockholders:

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024(1)

 

 

2025

 

 

2024(1)

 

GAAP net income (loss)

 

$

44,717

 

 

$

22,511

 

 

$

106,105

 

 

$

(24,909

)

Amortization of intangible assets

 

 

813

 

 

 

509

 

 

 

1,830

 

 

 

3,148

 

Stock-based compensation expense

 

 

12,627

 

 

 

15,455

 

 

 

38,552

 

 

 

46,834

 

Transaction-related expenses

 

 

206

 

 

 

39

 

 

 

1,486

 

 

 

1,115

 

Restructuring expenses

 

 

3,803

 

 

 

—

 

 

 

3,803

 

 

 

—

 

Impairments

 

 

—

 

 

 

16,776

 

 

 

32,552

 

 

 

144,431

 

Income tax effects and adjustments

 

 

(5,718

)

 

 

(9,058

)

 

 

(22,656

)

 

 

(47,284

)

Non-GAAP net income

 

$

56,448

 

 

$

46,232

 

 

$

161,672

 

 

$

123,335

 

GAAP net income (loss) per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.46

 

 

$

0.22

 

 

$

1.06

 

 

$

(0.24

)

Diluted

 

$

0.45

 

 

$

0.21

 

 

$

1.04

 

 

$

(0.24

)

Non-GAAP net income per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.58

 

 

$

0.45

 

 

$

1.62

 

 

$

1.18

 

Diluted

 

$

0.57

 

 

$

0.44

 

 

$

1.59

 

 

$

1.18

 

Shares used in GAAP and Non-GAAP per share calculations

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

98,170

 

 

 

103,322

 

 

 

100,034

 

 

 

104,770

 

Diluted

 

 

99,723

 

 

 

105,059

 

 

 

101,640

 

 

 

104,770

 
(1)
During the three months ended March 31, 2025, we identified an immaterial error to our non-GAAP net income calculation related to the income tax effects and adjustments and have updated the table to correct the calculation for the three months ended September 30, 2024 and for the nine months ended September 30, 2024. For the three months ended September 30, 2024, this resulted in a decrease in the basic and diluted non-GAAP net income per share attributable to common stockholders from $0.46 per share to $0.45 per share and from $0.45 per share to $0.44, respectively. For the nine months ended September 30, 2024, this resulted in a decrease in the basic non-GAAP net income per share attributable to common stockholders from $1.19 per share to $1.18 per share.

11

 

Unaudited Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA and GAAP Net Income (Loss) Margin to Non-GAAP Adjusted EBITDA Margin

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

GAAP net income (loss)

 

$

44,717

 

 

$

22,511

 

 

$

106,105

 

 

$

(24,909

)

Depreciation and amortization

 

 

7,356

 

 

 

5,178

 

 

 

20,592

 

 

 

18,322

 

Stock-based compensation expense

 

 

12,627

 

 

 

15,455

 

 

 

38,552

 

 

 

46,834

 

Transaction-related expenses

 

 

206

 

 

 

39

 

 

 

1,486

 

 

 

1,115

 

Restructuring expenses

 

 

3,803

 

 

 

—

 

 

 

3,803

 

 

 

—

 

Impairments

 

 

—

 

 

 

16,776

 

 

 

32,552

 

 

 

144,431

 

Other income, net

 

 

(1,893

)

 

 

(2,623

)

 

 

(7,253

)

 

 

(9,185

)

Provision for (benefit from) income taxes

 

 

11,850

 

 

 

7,546

 

 

 

26,421

 

 

 

(5,772

)

Non-GAAP adjusted EBITDA

 

$

78,666

 

 

$

64,882

 

 

$

222,258

 

 

$

170,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss) margin

 

 

19

%

 

 

10

%

 

 

15

%

 

 

(4

)%

Non-GAAP adjusted EBITDA margin

 

 

33

%

 

 

28

%

 

 

32

%

 

 

26

%

 

Unaudited Reconciliation of GAAP Marketplace (U.S. Marketplace Segment and Other) Operating Income to Non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA and GAAP Marketplace (U.S. Marketplace Segment and Other) Operating Income Margin to Non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA Margin

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

GAAP Marketplace (U.S. Marketplace Segment and Other) Operating Income

 

$

64,115

 

 

$

52,751

 

 

$

177,534

 

 

$

133,949

 

Depreciation and amortization

 

 

6,308

 

 

 

2,892

 

 

 

17,707

 

 

 

8,319

 

Stock-based compensation expense

 

 

12,026

 

 

 

14,476

 

 

 

36,866

 

 

 

43,899

 

Transaction-related expenses

 

 

(2

)

 

 

7

 

 

 

5

 

 

 

79

 

Non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA

 

$

82,447

 

 

$

70,126

 

 

$

232,112

 

 

$

186,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Marketplace (U.S. Marketplace Segment and Other) Operating Income margin

 

 

28

%

 

 

26

%

 

 

27

%

 

 

23

%

Non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA margin

 

 

36

%

 

 

34

%

 

 

35

%

 

 

32

%

 

 

 

 

12

 

Unaudited Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit and GAAP Gross Profit Margin to Non-GAAP Gross Profit Margin

(in thousands, except percentages)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Revenue

 

$

238,696

 

 

$

231,358

 

 

$

697,887

 

 

$

665,846

 

Cost of revenue

 

 

25,164

 

 

 

48,807

 

 

 

80,266

 

 

 

125,890

 

GAAP gross profit

 

 

213,532

 

 

 

182,551

 

 

 

617,621

 

 

 

539,956

 

Amortization of intangible assets included in Cost of revenue

 

 

—

 

 

 

—

 

 

 

—

 

 

 

875

 

Stock-based compensation expense included in Cost of revenue

 

 

75

 

 

 

96

 

 

 

213

 

 

 

387

 

Transaction-related expenses included in Cost of revenue

 

 

1

 

 

 

—

 

 

 

272

 

 

 

92

 

Restructuring expenses included in Cost of revenue

 

 

392

 

 

 

—

 

 

 

392

 

 

 

—

 

Impairments included in Cost of revenue

 

 

—

 

 

 

9,750

 

 

 

2,919

 

 

 

9,930

 

Non-GAAP gross profit

 

$

214,000

 

 

$

192,397

 

 

$

621,417

 

 

$

551,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit margin

 

 

89

%

 

 

79

%

 

 

88

%

 

 

81

%

Non-GAAP gross profit margin

 

 

90

%

 

 

83

%

 

 

89

%

 

 

83

%

 

13

 

Unaudited Reconciliation of GAAP Expense to Non-GAAP Expense

(in thousands)

 

 

 

Three Months Ended September 30, 2025

 

 

 

GAAP expense

 

 

Amortization of
intangible assets

 

 

Stock-based
compensation
expense

 

 

Transaction-related expenses

 

 

Restructuring expenses

 

 

Impairments

 

 

Non-GAAP
expense

 

Cost of revenue

 

$

25,164

 

 

$

—

 

 

$

(75

)

 

$

(1

)

 

$

(392

)

 

$

—

 

 

$

24,696

 

Sales and marketing

 

 

89,368

 

 

 

—

 

 

 

(2,781

)

 

 

—

 

 

 

(1,424

)

 

 

—

 

 

 

85,163

 

Product, technology, and development

 

 

36,316

 

 

 

—

 

 

 

(5,393

)

 

 

(12

)

 

 

(1,189

)

 

 

—

 

 

 

29,722

 

General and administrative

 

 

28,463

 

 

 

—

 

 

 

(4,378

)

 

 

(193

)

 

 

(798

)

 

 

—

 

 

 

23,094

 

Impairments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Depreciation & amortization

 

 

4,711

 

 

 

(813

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,898

 

Operating expenses(1)

 

$

158,858

 

 

$

(813

)

 

$

(12,552

)

 

$

(205

)

 

$

(3,411

)

 

$

—

 

 

$

141,877

 

Total cost of revenue and operating expenses

 

$

184,022

 

 

$

(813

)

 

$

(12,627

)

 

$

(206

)

 

$

(3,803

)

 

$

—

 

 

$

166,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2024

 

 

 

GAAP expense

 

 

Amortization of
intangible assets

 

 

Stock-based
compensation
expense

 

 

Transaction-related expenses

 

 

Restructuring expenses

 

 

Impairments

 

 

Non-GAAP
expense

 

Cost of revenue

 

$

48,807

 

 

$

—

 

 

$

(96

)

 

$

—

 

 

$

—

 

 

$

(9,750

)

 

$

38,961

 

Sales and marketing

 

 

81,216

 

 

 

—

 

 

 

(3,017

)

 

 

(6

)

 

 

—

 

 

 

—

 

 

 

78,193

 

Product, technology, and development

 

 

36,359

 

 

 

—

 

 

 

(6,164

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

30,195

 

General and administrative

 

 

28,187

 

 

 

—

 

 

 

(6,178

)

 

 

(33

)

 

 

—

 

 

 

—

 

 

 

21,976

 

Impairments

 

 

7,026

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,026

)

 

 

—

 

Depreciation & amortization

 

 

2,329

 

 

 

(509

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,820

 

Operating expenses(1)

 

$

155,117

 

 

$

(509

)

 

$

(15,359

)

 

$

(39

)

 

$

—

 

 

$

(7,026

)

 

$

132,184

 

Total cost of revenue and operating expenses

 

$

203,924

 

 

$

(509

)

 

$

(15,455

)

 

$

(39

)

 

$

—

 

 

$

(16,776

)

 

$

171,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2025

 

 

 

GAAP expense

 

 

Amortization of
intangible assets

 

 

Stock-based
compensation
expense

 

 

Transaction-related expenses

 

 

Restructuring expenses

 

 

Impairments

 

 

Non-GAAP
expense

 

Cost of revenue

 

$

80,266

 

 

$

—

 

 

$

(213

)

 

$

(272

)

 

$

(392

)

 

$

(2,919

)

 

$

76,470

 

Sales and marketing

 

 

260,421

 

 

 

—

 

 

 

(8,593

)

 

 

(497

)

 

 

(1,424

)

 

 

—

 

 

 

249,907

 

Product, technology, and development

 

 

106,936

 

 

 

—

 

 

 

(16,500

)

 

 

(215

)

 

 

(1,189

)

 

 

—

 

 

 

89,032

 

General and administrative

 

 

82,305

 

 

 

—

 

 

 

(13,246

)

 

 

(502

)

 

 

(798

)

 

 

—

 

 

 

67,759

 

Impairments

 

 

29,633

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(29,633

)

 

 

—

 

Depreciation & amortization

 

 

13,053

 

 

 

(1,830

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,223

 

Operating expenses(1)

 

$

492,348

 

 

$

(1,830

)

 

$

(38,339

)

 

$

(1,214

)

 

$

(3,411

)

 

$

(29,633

)

 

$

417,921

 

Total cost of revenue and operating expenses

 

$

572,614

 

 

$

(1,830

)

 

$

(38,552

)

 

$

(1,486

)

 

$

(3,803

)

 

$

(32,552

)

 

$

494,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2024

 

 

 

GAAP expense

 

 

Amortization of
intangible assets

 

 

Stock-based
compensation
expense

 

 

Transaction-related expenses

 

 

Restructuring expenses

 

 

Impairments

 

 

Non-GAAP
expense

 

Cost of revenue

 

$

125,890

 

 

$

(875

)

 

$

(387

)

 

$

(92

)

 

$

—

 

 

$

(9,930

)

 

$

114,606

 

Sales and marketing

 

 

245,801

 

 

 

—

 

 

 

(9,141

)

 

 

(570

)

 

 

—

 

 

 

—

 

 

 

236,090

 

Product, technology, and development

 

 

108,484

 

 

 

—

 

 

 

(18,165

)

 

 

(63

)

 

 

—

 

 

 

—

 

 

 

90,256

 

General and administrative

 

 

83,682

 

 

 

—

 

 

 

(19,141

)

 

 

(390

)

 

 

—

 

 

 

—

 

 

 

64,151

 

Impairments

 

 

134,501

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(134,501

)

 

 

—

 

Depreciation & amortization

 

 

7,354

 

 

 

(2,273

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,081

 

Operating expenses(1)

 

$

579,822

 

 

$

(2,273

)

 

$

(46,447

)

 

$

(1,023

)

 

$

—

 

 

$

(134,501

)

 

$

395,578

 

Total cost of revenue and operating expenses

 

$

705,712

 

 

$

(3,148

)

 

$

(46,834

)

 

$

(1,115

)

 

$

—

 

 

$

(144,431

)

 

$

510,184

 
(1)
Operating expenses include sales and marketing, product, technology, and development, general and administrative, impairments, and depreciation & amortization.

14

 

Unaudited Reconciliation of GAAP Net Cash and Cash Equivalents Provided by Operating Activities to Non-GAAP Free Cash Flow

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

GAAP net cash and cash equivalents provided by operating activities

 

$

71,165

 

 

$

56,196

 

 

$

212,163

 

 

$

179,757

 

Purchases of property and equipment

 

 

(1,362

)

 

 

(10,288

)

 

 

(5,185

)

 

 

(64,937

)

Capitalization of website development costs

 

 

(5,794

)

 

 

(4,607

)

 

 

(17,447

)

 

 

(15,314

)

Non-GAAP free cash flow

 

$

64,009

 

 

$

41,301

 

 

$

189,531

 

 

$

99,506

 

 

15

 

Non-GAAP Financial Measures and Other Business Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), we provide investors with certain non-GAAP financial measures and other business metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other business metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures and other business metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

The presentation of non-GAAP financial information and other business metrics is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. While our non-GAAP financial measures and other business metrics are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included above, and not to rely on any single financial measure to evaluate our business.

While a reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis because we are unable to accurately predict without unreasonable effort the exact amount or timing of certain reconciling items between such GAAP and non-GAAP financial measures, including, as applicable, depreciation expenses, amortization of intangible assets, non-intangible amortization, stock-based compensation, transaction-related expenses, restructuring expenses, impairments, and income tax effects, we have provided a reconciliation of non-GAAP financial measures and other business metrics to the nearest comparable GAAP measures in the accompanying financial statement tables included in this press release.

We monitor operating measures of certain non-GAAP items including non-GAAP gross profit, non-GAAP gross margin, non-GAAP expense, non-GAAP net income, and non-GAAP net income per share attributable to common stockholders. These non-GAAP financial measures exclude the effect of amortization of intangible assets, stock-based compensation expense, transaction related-expenses, restructuring expenses, and impairments. Non-GAAP net income, non-GAAP net income attributable to common stockholders, and non-GAAP net income per share attributable to common stockholders also exclude certain income tax effects and adjustments. Our calculations of non-GAAP net income per share attributable to common stockholders utilize applicable GAAP share counts as included in the accompanying financial statement tables included in this press release. In addition, we evaluate our non-GAAP gross profit in relation to our revenue. We refer to this as non-GAAP gross profit margin and define it as non-GAAP gross profit divided by total revenue. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

We define non-GAAP Adjusted EBITDA as net income (loss) adjusted to exclude: depreciation and amortization, stock‑based compensation expense, transaction-related expenses, restructuring expenses, impairments, other income, net, and provision for (benefit from) income taxes. In addition, we evaluate our non-GAAP Adjusted EBITDA in relation to our revenue. We refer to this as non-GAAP Adjusted EBITDA margin and define it as non-GAAP Adjusted EBITDA divided by total revenue.

We have presented non-GAAP Adjusted EBITDA and non-GAAP Adjusted EBITDA margin because they are key measures used by our management and Board of Directors to understand and evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. We believe non-GAAP Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. Accordingly, we believe that non-GAAP Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision making.

16

 

We define non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA as GAAP Marketplace (U.S. Marketplace Segment and Other) operating income adjusted to exclude: depreciation and amortization, stock‑based compensation expense, and transaction-related expenses. In addition, we evaluate our non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA in relation to our revenue. We refer to this as non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA margin and define it as non-GAAP Marketplace (U.S. Marketplace Segment and Other) Adjusted EBITDA divided by total revenue.

We define Free Cash Flow as cash flow from operations adjusted to include: purchases of property and equipment and capitalization of website development costs. We have presented Free Cash Flow because it is a measure of our financial performance that represents the cash that we are able to generate after expenditures required to maintain or expand our asset base.

We define a paying dealer as a dealer account with an active, paid marketplace subscription at the end of a defined period. The number of paying dealers we have is important to us and we believe it provides valuable information to investors because it is indicative of the value proposition of our marketplace products, as well as our sales and marketing success and opportunity, including our ability to retain paying dealers and develop new dealer relationships.

We define Quarterly Average Revenue per Subscribing Dealer ("QARSD"), which is measured at the end of a fiscal quarter, as the marketplace revenue primarily from subscriptions to our Listings packages, Real-time Performance Marketing, our digital advertising suite, and other digital add-on products during that trailing quarter divided by the average number of paying dealers in that marketplace during the quarter. We calculate the average number of paying dealers for a period by adding the number of paying dealers at the end of such period and the end of the prior period and dividing by two. This information is important to us, and we believe it provides useful information to investors, because we believe that our ability to grow QARSD is an indicator of the value proposition of our products and the return on investment that our paying dealers realize from our products. In addition, increases in QARSD, which we believe reflect the value of exposure to our engaged audience in relation to subscription cost, are driven in part by our ability to grow the volume of connections to our users and the quality of those connections, which result in increased opportunity to upsell package levels and cross-sell additional products to our paying dealers.

17