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CARG · SERVICES-COMPUTER PROCESSING & DATA PREPARATION · 8-K · Item 1.01 · Aug 6, 2026

Revenue missed consensus despite an adjusted EPS beat; margins still compressed

CarGurus, Inc. (CARG) — AllSight decodes this SEC 8-K in plain English, versus what the market expected.

The quarter was better on profit than on demand. Revenue reached $251.0 million, below the published consensus of roughly $254.9 million, while non-GAAP diluted EPS was $0.66 versus a published consensus near $0.62. That makes this a profit beat but a top-line miss, not a clean upside surprise. (Financial Highlights; Non-GAAP net income reconciliation)

MetricQ2 2026Comparison / expectation
Revenue$251.0 million+13% YoY; published consensus ~ $254.9 million
GAAP net income from continuing operations$49.2 million$49.0 million prior year
Non-GAAP adjusted EBITDA$84.7 million+7% YoY; 34% margin vs. 36% prior year
GAAP diluted EPS from continuing operations$0.54$0.49 prior year
Non-GAAP diluted EPS$0.66$0.57 prior year; published consensus ~ $0.62
Cash flow from operations$94.6 million$73.1 million prior year
Non-GAAP free cash flow$87.7 million$65.3 million prior year
Paying dealers34,629+5% YoY
Consolidated QARSD$6,771+7% YoY
Cash and equivalents$122.1 million$190.5 million at December 31, 2025

Underlying growth remains solid, but profitability is not keeping pace. Revenue grew 13%, international paying dealers rose 11%, and consolidated revenue per subscribing dealer increased 7%, supporting the case that pricing and international expansion are contributing. But operating expenses grew 15%, adjusted EBITDA grew only 7%, and adjusted EBITDA margin fell 199 basis points to 34% (Financial Highlights; Key Performance Indicators). The six-month picture is weaker still: GAAP net income from continuing operations fell 11% and margin declined to 16%, partly reflecting $20.2 million of impairment charges (Income Statement; Financial Highlights).

Management did not raise the outlook, so the beat does not reset expectations higher. Third-quarter guidance calls for $253.5 million to $258.5 million of revenue, $82.0 million to $90.0 million of adjusted EBITDA, and $0.63 to $0.69 of non-GAAP EPS. Full-year guidance still implies 10% to 13% revenue growth and a 0.5% to 1.5% year-over-year decline in adjusted EBITDA margin (Third Quarter and Full-Year 2026 Guidance). In other words, the EPS outperformance was accompanied by an unchanged growth outlook and continued planned margin pressure.

Capital allocation is aggressive relative to the shrinking cash balance. CarGurus repurchased $29.2 million of stock during the quarter and $202.1 million during the first six months, while cash declined to $122.1 million from $190.5 million at year-end (Press Release; Cash Flow statement; Balance Sheet). The buybacks reduced Class A and Class B shares outstanding by roughly 5.5 million combined since year-end, helping per-share results, but they also explain much of the cash decline and limit flexibility if the company needs to fund heavier AI investment or an acquisition.

The credit amendment improves runway but adds a more defensive constraint. The revolving facility was cut from $400 million to $200 million, its maturity was extended from September 26, 2027 to August 6, 2031, and the agreement added a 6.25:1.00 gross leverage test for certain new debt while increasing the cash-capped incremental facility to the greater of $380 million or 100% of trailing-four-quarter EBITDA (Item 1.01; Exhibit 10.1). The longer maturity is helpful, but cutting committed capacity in half and adding leverage-based borrowing restrictions reads as balance-sheet housekeeping rather than a new growth catalyst. Net: a genuine adjusted-EPS beat and strong cash generation offset a revenue miss, unchanged guidance, margin erosion, and more cautious financing terms.

Read the original 8-K on SEC EDGAR ↗
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