CarGurus, Inc. (NASDAQ:CARG) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 05:00 pm ET

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CarGurus, Inc. (NASDAQ:CARG) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Rodney Nelson

Risk Factors in our Quarterly Report on Form 10-Q filed after today's market close as may be updated by our other SEC filings.

Further, during the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release issued after market close today. The press release, investor presentation and our SEC filings can be found in the Investor Relations section of our website at investors.cargurus.com and the SEC's website at sec.gov.

With that, I'll turn it over to Langley.

Executive
Langley Steinert

Thank you, Rodney, and thanks to everyone for joining us today. CarGurus delivered a robust third quarter featuring strong subscription revenue growth, US margin expansion, and several important product developments. We grew our industry-leading US audience, generating nearly three times as many visits as our next closest competitor and we delivered year-over-year US lead growth of 13%, providing strong value to our dealers and aiding growth in our core listings business.

Our brand investments are driving more traffic from direct app and own channels and year-to-date leads from these channels have grown 20% year-over-year. Brand remains an important investment area for us, and we launched our new My Car, My Deal campaign in Q3. In our emerging products business, we added a second lender to our consumer finance marketplace, expanding our dealer and consumer credit spectrum coverage. Our International business delivered rapid growth evidenced by our highest total international net dealer additions and triple-digit audience growth. Finally, in October, we held our first-ever user conference, Navigate, where we hosted hundreds of dealers and unveiled new products and features.

Our core US business is taking share as we earn more of the $14 billion dealer spend annually on digital marketing. These share gains start with our US listings business where we continue to see a long runway for growth. Our commitment to transparency allows us to attract the largest audience in our industry, generating nearly three times the number of visits as our next closest competitor according to Comscore.

In the third quarter, over 38 million average monthly unique visitors logged over 103 million average monthly unique sessions on our US site, representing a two-year compounded annual growth rate of 24% and 21% respectively. Yet we have substantial opportunity to continue increasing our total audience and growing our brand. While we have the largest audience already, we also have a large opportunity to gain unique visitor share since we have roughly 40% share of total de-duplicated visitors to all major US auto listing sites as measured by Comscore.

We are still quite early in our brand investment initiatives. But the last two years of investments are bearing fruit. As I mentioned, year-to-date, leads from direct app and own channels are up 20% year-over-year, helping us create an even more robust traffic mix and enabling greater efficiency in our traffic acquisition efforts.

In fact, our year-to-date cost to acquire a US lead is lower in 2019 than it was through