CarGurus Inc (NASDAQ:CARG) delivered a mixed financial performance for the fourth quarter of 2025, with revenue narrowly surpassing analyst expectations but profitability metrics falling slightly short. The company's results, released after the market closed on February 19, 2026, have prompted a muted to negative initial reaction from investors, with shares trading lower in the after-hours session.
Earnings Snapshot: A Beat on Sales, A Miss on Profit
The online automotive marketplace reported Q4 revenue of $241.1 million, a 15% increase compared to the same period last year. This figure edged past the consensus analyst estimate of approximately $243.9 million. The company's full-year 2025 revenue from continuing operations reached $907.0 million, marking a second consecutive year of 14% growth.
On the bottom line, the picture was less clear-cut. The company reported GAAP earnings per share (EPS) of $0.51 for the quarter, which was approximately 3.2% below analyst forecasts. However, the press release highlighted a non-GAAP adjusted EPS from continuing operations of $0.63. This non-GAAP metric also came in below the Street's expectation of $0.645, contributing to the cautious market sentiment.
Key financial highlights from the report include:
- Q4 Revenue: $241.1M (Actual) vs. ~$243.9M (Estimate) – Slight Miss
- Q4 GAAP EPS: $0.51 (Actual) vs. ~$0.527 (Estimate) – Miss
- Full-Year 2025 GAAP Net Income: $196.7 million, up 53% year-over-year.
- Full-Year 2025 Adjusted EBITDA: $319.0 million, up 25% year-over-year.
Market Reaction and Strategic Shifts
Following the earnings release, CARG shares declined roughly 2.6% in after-market trading. This reaction suggests investors are weighing the solid top-line growth and strong full-year profitability against the slight earnings miss and the company's forward-looking commentary.
A significant element of the report was the formal closure of the CarOffer digital wholesale business, which has been wound down and is now reported as a discontinued operation. This strategic move allows the company to present a streamlined financial picture focused solely on its core marketplace and digital retail solutions. CEO Jason Trevisan emphasized the company's pivot towards AI-driven products and deepening engagement with both dealers and consumers as the foundation for long-term growth.
Guidance Versus Expectations
Management provided outlooks for both the first quarter and the full year of 2026. The Q1 revenue guidance of $240.5 million to $245.5 million, with a midpoint of $243 million, is slightly above the analyst consensus of approximately $239.4 million. This can be viewed as a positive signal.
For the full year 2026, the company anticipates revenue growth of 10% to 13% year-over-year. Based on the 2025 revenue base of $907 million, this implies a 2026 revenue range of approximately $997.7 million to $1.025 billion. This guidance brackets the current analyst sales estimate of $1.014 billion, indicating management's expectations are generally in line with Wall Street's projections.
Capital Return and Operational Metrics
The company demonstrated a strong commitment to returning capital to shareholders, announcing a new $250 million share repurchase authorization for 2026. This follows the repurchase of approximately $350 million worth of shares in 2025. Operationally, the company grew its total paying dealer base by 7% year-over-year to over 34,400, while the consolidated Quarterly Average Revenue per Subscribing Dealer (QARSD) increased by 8% to $6,616.
Conclusion
CarGurus concluded 2025 with robust double-digit growth in revenue and profits, successfully navigating the wind-down of its CarOffer segment. While the fourth quarter presented a slight earnings disappointment relative to high expectations, the company's forward revenue guidance appears steady. The market's initial negative reaction likely reflects a "sell the news" dynamic following a recent uptick in the stock price, combined with the nuanced results that beat on sales but missed on profit. Investors will now focus on the company's execution against its 2026 targets and its ability to leverage AI and data to deepen its competitive moat in the automotive marketplace.
For a detailed look at historical earnings and future analyst estimates for CarGurus, visit the earnings estimates page.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
