CarGurus at JPMorgan Conference: Emphasizing Dealer Engagement and Innovation

On Tuesday, 13 May 2025, CarGurus (NASDAQ:CARG) participated in the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. CEO Jason Trefson highlighted the company’s strategic shift towards comprehensive dealer solutions and product innovation, while addressing market uncertainties. He emphasized CarGurus’ commitment to enhancing dealer engagement and leveraging AI for improved efficiency, though challenges remain in auto manufacturer advertising predictability.

Key Takeaways

• CarGurus is evolving from a lead generation tool to a comprehensive dealer solutions provider, focusing on predictive intelligence and insights.
• The company has seen the highest net dealer additions in years, attributed to improved retention and acquisition.
• AI integration is a key driver of innovation and efficiency, impacting product development and margin expansion.
• CarGurus’ pricing strategy is value-driven, with modest price increases to build long-term dealer partnerships.
• Future growth is expected through retention, expansion, and new dealer additions, with a focus on delivering value.

Financial Results

• Revenue per subscribing dealer has grown significantly, driven by market-rate onboarding, upselling, and cross-selling.
• Revenue growth is fueled by net monthly recurring revenue (MRR) bookings, influenced by retention, expansion, and new dealer additions.
• Long-term contracts, comprising 40% of new agreements, are boosting retention rates.
• AI investments are enhancing productivity, with potential for future margin expansion.

Operational Updates

• Increased dealer engagement is linked to new insights and intelligence in car sourcing, pricing, merchandising, and retailing.
• Product innovation is accelerating, focusing on consumer content creation, virtual assistants, and dealer tools for pricing and lead enrichment.
• AI is being utilized to improve existing products and create new ones, such as predictive price intelligence and merchandising recommendations.
• The company has shifted towards six-month or annual contracts, providing stability and reflecting stronger mutual commitments.

Future Outlook

• CarGurus projects double-digit revenue growth, supported by its predictable subscription-based marketplace and diverse customer base.
• Growth will be driven by retention, expansion, and new dealer additions, with a focus on providing value and earning customer loyalty.
• Capital allocation priorities include investment in product development and innovation, M&A opportunities in dealer software and data products, and share buybacks.

Q&A Highlights

• CarGurus’ value proposition is stronger for used cars due to greater information asymmetry, offering price history and vehicle condition insights.
• The CarOffer strategy focuses on achieving profitability through data-driven predictive intelligence and transaction model refinement.
• Market uncertainty is prompting dealers to consolidate spending with market leaders like CarGurus, seeking clarity through products like Dealer Data Insights.

For a deeper understanding of CarGurus’ strategic direction, readers are encouraged to refer to the full transcript below.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Rajat Gupta, Equity Research Team Member, JPMorgan: Alright. Great. Thanks everyone for joining. Thanks to everyone on the webcast that were listening. My name is Rajat Gupta, member of the automotive equity research team at JPMorgan.

Very pleased to have with us CEO of CarGurus, Jason Trefson here. Jason has a couple quick remarks here before we can go deeper into Q and A. Thanks, Jason.

Jason Trefson, CEO, CarGurus: Sure. Thanks very much. Good to see you all today. So, yeah, Rajat asked for me to give a brief description of the business and then maybe talk about some of the most prevalent recent trends. So very quickly, CarGurus is the largest destination online for consumers and dealers to buy and sell automotive autos with the most convenient selection, trust, price.

So what that means is our primary business is we operate a US based online marketplace that has the largest consumer audience, the most engaged consumer audience, the most sessions, etcetera, the most mind share of consumers who are deep in the funnel of looking to buy a car. On the other side of the marketplace, we have the largest inventory of automobiles. We have the largest number of dealers. And then together, we provide the most transparency and information around those cars and those dealers. And what that does is create an unbiased, transparent automotive marketplace that is extremely helpful to consumers, as evidenced by their engagement and NPS scores, and a very valuable marketing channel to dealers that gives them the largest audience of in market shoppers.

That was our initial business. And since then, we have expanded to provide much more functionality to consumers to other parts of the shopping journey and also much more functionality to dealers that more recently is helping them with predictive intelligence and insights into things other than just marketing their cars, but also to things around which cars to source and how to source them, how to think about pricing those cars, how to merchandise them, of course, how to market them, and then also how to retail them, so how to take those leads that we’re delivering them and turn them into sold cars. More recent our primary business model is a subscription from dealers. And so we look at the number of paying customers we have and the average revenue per customer as metrics. And then this last quarter, I would say some of the key themes we also operate marketplaces in The UK and Canada as well.

Some of the key themes from this last quarter are we’re really excited about the engagement that we’re seeing from dealers. So historically, they used to take our leads, and they would go into the CRM, and they would work those leads. Now we’re giving them intelligence and insights around all of those other areas of their workflow, and we’re seeing them use those daily and weekly and become much stickier with our product, which is turning into higher retention. Second thing is expansion along the dealer workflow and the consumer journey. We’ve increased the velocity of our new product introductions, so we’re seeing more new features and products come into that.

And in this uncertain market I’m sure we’ll talk about tariffs but in this uncertain market, dealers, we think, are doing two things. They’re flocking to quality, and so they’re increasingly turning to us as the market leader. And they’re also seeking more information and thought partnership and insights. And so our insights products are particularly well timed in that regard.

Rajat Gupta, Equity Research Team Member, JPMorgan: Understood. No, that’s a helpful overview. Jason, you’ve historically maintained that CarGurus ranks amongst the top marketplace platforms in terms of ROIC. Can you maybe expand upon how the definition of dealer ROIC might have changed as your business has evolved from a traditional lead generating tool to more all encompassing dealer solutions provider?

Jason Trefson, CEO, CarGurus: Sure. So at the core of ROI and that is the fundamental value proposition that we’ve had with our listings product for a long time it is looking at what they spend on us relative to the gross profit that they generate from units that they sell that they otherwise would not have sold had they not been on our platform. We call that attribution, and that is sometimes difficult to track. But when a dealer sells a car, they will likely they will often make a couple thousand dollars of profit on the metal. They will oftentimes make profit on financing.

And if they have service, they’ll make profit on service as well. And so dealers can make anywhere from a couple thousand dollars to several thousand dollars on each unit. What they will typically spend on us, if you were to work the math down to a cost per sold car, is in the few hundred dollars. And so the ROI just on that is pretty outstanding and oftentimes much more efficient than other marketing channels that are digital marketing channels that are measurable, and oftentimes much more efficient than offline marketing channels that are not only less efficient but are certainly not measurable, like billboards, as an example. And so that’s at the core.

Now that we have started expand and offer them actionable intelligence on which cars to buy at wholesale, how much to pay at wholesale, how to think about pricing their cars for retail today, how to think about merchant how to optimize merchandising those cars, how to convert their leads better using our intelligence that we’re providing on the customers we’re sending them to convert those leads better. Those are all areas that they’re spending money on software on. And that is typically included in our listings packages. And so in addition to the great core ROI, they’re also able to either, A, not spend as much in software in other areas, or B, for instance, have fewer people at the dealership. If they can convert leads twice as well, they don’t need as many salespeople.

So that’s where the ROI goes from good to amazing. It is, though, hard to quantify. And so that is an education and process that we are going through and will take some time.

Rajat Gupta, Equity Research Team Member, JPMorgan: Understood. And your offering I mean, the last two, three years, you’ve seen really good momentum in the business across all lines. Some of your products, they’ve been successful pretty early on. But it seems like there has been more opportunity to take price and you haven’t. Is this purposeful?

Maybe just talk about pricing strategy in general. Why not lean into the momentum and take more price? Is there more ambitious market share or market penetration targets that you have in mind?

Jason Trefson, CEO, CarGurus: Sure. We’ve always had an ethos, which is to deliver value and then ask for compensation for that value after the fact once we’ve proven ourselves. And our plans are to continue that. And at the core of that, it’s because we’re trying to build long lasting relationships with our customers. Historically, dealers have worked with a lot of partners, providers, vendors.

And historically, they’ve thought of marketplaces as vendors. We’re trying to change that and have them think of us as partners, not just lead providers, not just marketing channel provider, a marketing channel vendor, but as actually a thought partner. And so as we’ve built out this product suite and they’re using our products more and more, we’re also engaging with them more and more. And so our account management we’ve invested more in our account management teams. We have a team that goes into dealerships to help make sure that they have the systems configured well and that they’re aware of and using all the features and products in our platform so that they can improve the conversion rate.

And that’s all part of our services that we provide them. So we’re trying to earn that partnership position, that thought partnership position over time. We have raised prices modestly over time. We still believe we’re priced at the most core fundamental level below our competitors, despite all of the premium attributes that we provide in our leadership position. But we don’t want to get greedy.

And so we want to continue to earn their business. Our metric is quarterly average revenue per subscribing dealer or CARSID. That has grown quite nicely. There are several levers to growing that. One is we bring on dealers.

When dealers first come on to us or come back to us, we’re bringing them on at market rates, which is taking price relative to the install base. We’re upselling customers to higher tier packages. That’s the second driver. We’re cross selling other products. We do raise unit prices.

And then we also continue to grow our lead volume to them and our lead quality to them. And so by growing how much dealers spend with us across a handful of channels rather than exercising too heavily anything on price, we think we’re earning their business for a more sustainable period of time.

Rajat Gupta, Equity Research Team Member, JPMorgan: Got it. You mentioned in the last earnings call that a higher proportion of your company resources are being dedicated towards innovation. Are there a few areas you can highlight for us where you’re deeply focused? I presume AI might be one of them. Curious where you see Gargurus leveraging just the true power of LLMs and AI addition to just other areas

Jason Trefson, CEO, CarGurus: you’re focused So I would say I’ll take those two separate. The higher investment in innovation, I think you can almost exclusively think of it as product and engineering. And within product and engineering, on the consumer side, I would say we’re very excited about helping consumers Two areas. We’re helping consumers higher up funnel. Historically, consumers that don’t know what car they want to buy have not found a lot of value in our site.

Now we’re helping them through greater content creation, through virtual assistants, helping them determine which make model they may want if they don’t yet know. A lot of that’s AI. On the dealer side, we’ve historically been very good at marketing. Two areas where we’re especially focused, one is in pricing intelligence. And we’re uniquely positioned there because there are pricing tools in the market that will tell a dealer, you should price your car at x because we can see other cars in the market that are priced at a, b, and c.

Because of our data footprint, we’re able to say all of that. And if you price your car at this, this is what you can expect for lead volume from our marketplace, and this is how much more quickly we think you will turn your car. That is far more valuable and actionable information than just a theoretical here’s how you may want to think about changing price. So those are a couple areas in consumer and oh, sorry. The other in dealer is in lead enrichment and lead handling.

So we send an extraordinary amount of leads to dealers. The variability in dealers’ capabilities in converting those leads into sales is dramatic. I mentioned the team that goes into a dealer group and works with them on lead conversion. It’s not uncommon for that group to double dealer’s lead conversion over a three day period. That’s game changing for the dealer group.

And so we’re looking at that’s a that’s a a human service layer to it. We’re looking at technology and products that will empower dealers to improve those conversion rates significantly by giving them much more information on the lead, much more information on leads like that lead, helping them respond and interact better with the lead, so helping improve their own service operations from a product perspective. So that’s where we’re focused on a lot of innovation, and we think all of those things are making us a much stickier platform on both consumer and dealer. From an AI perspective, AI is affecting now, I would say, virtually everything we do, if not everything we do. One framework that we use to think about it is we think about how it can improve existing products, how it can create new products, and how it can improve our efficiency.

Improving existing or enhancing existing products would be in things like predictive price intelligence, in sort order and search results, in personalizing search results to past behavior. Virtual Assistant is an AI driven tool that uses our own LLM gateway that we’ve built. Creating entirely new products, the ways in which we’re recommending to dealers how they can merchandise their car smarter is almost exclusively an AI product. How we’re synthesizing dealer reviews is leveraging AI. How we’re recommending acquisition inventory suggestions to them is driven by AI and machine learning, less generative AI.

And then internally for productivity and efficiency, we’re using it heavily on our engineering team for code assistance and now primarily code creation. We’re using it in product for very rapid prototype creation. We’re using it in sales and account management to arm the salespeople with talk tracks that are the most relevant and bespoke for that customer. We are using it heavily in legal and contract and review. We’re using it in customer support.

So we’re using it across our business. And I think it’s one of the reasons that we are seeing some of the margin expansion, at least from a people perspective.

Rajat Gupta, Equity Research Team Member, JPMorgan: So you are starting to see some tangible P and L impacts of AI already. Is it reasonable?

Jason Trefson, CEO, CarGurus: That is reasonable. But we don’t think about AI as a means to be a cost efficiency play today. We view it as a productivity enhancer that will be a efficiency producer in the future.

Rajat Gupta, Equity Research Team Member, JPMorgan: Yeah, makes sense. I wanted to touch on the net dealer ads in the first quarter. Pretty it’s the highest quarter of ads in a pretty uncertain backdrop, one could say. Are there two or three things you would point to that’s driven this in the most recent quarter? Are you seeing new dealers primarily being converted from the freemium version?

Or would you be able to share any color as to how many of these dealers might have previously been CallGurus customers?

Jason Trefson, CEO, CarGurus: So we don’t share any of that data in terms of conversion from free or previous customers. A good portion of our customers who are coming on today have been on our platform before. And for better or worse, especially smaller dealers will come on and then go off for a period of time if they’re having economic difficulties or whatever the case may be, and they’ll come back. And so that’s not ideal for them or us. And so we’ve tried to do a number of things, primarily product driven, to just make it a much stickier relationship.

But we also have begun executing a much higher percentage of our contracts that are six month or annual contracts versus month to month, which is what the industry norm has been historically. In terms of highest net adds, as you mentioned, in many years, So that’s a function of two things. It could be a function and is a function of two things. We’re retaining better and we’re adding better. So those are net adds.

And we’re executing well on both. I think from an internal execution perspective, a lot of the or a lot of the things I’ve just recently talked about from a product perspective have recently been introduced. And so our value proposition and breadth and value add potential that we’re giving to dealers with our product suite is greater than it ever has been. So that’s just more compelling. I think we’ve gotten better at value proposition from a dealer perspective.

I think we’ve gotten better at dealer marketing, at product marketing. I talked about AI driving better account management and sales efficacy. So there’s a whole bucket of execution things that I think are just working really well for us right now. Then from the market perspective, there’s nothing if not uncertainty in the market. And when there’s uncertainty, I think we think dealers do a couple things.

And they tell us they do a couple things. One is they look at everywhere where they’re spending money. And they’re spending money with a lot of partners. And in times of uncertainty, I think they try to consolidate that. And they typically will try to consolidate with some combination of the market leader, the best ROI, the partner who helps them in other ways.

And so there’s this flight to quality that we think we’re seeing. The second thing is in this uncertainty, they’re just looking for ways to get more clarity, ways to get more insight. And so Dealer Data Insights, which we launched two plus years ago, is a perfect fit for that because it’s helping them see around corners, see what their competitors are doing, have predictive intelligence for the first time ever. And I think that’s especially compelling in an uncertain time.

Rajat Gupta, Equity Research Team Member, JPMorgan: Understood. Yeah. I remember, think last year at the conference, I think you mentioned you were seeing this flight to quality just in the ecosystem in general. And you believe that’s been accelerated with the recent uncertainty. Is that a fair statement?

Jason Trefson, CEO, CarGurus: We think it has, yes. And that manifests itself in when you look at revenue growth rates, we’re gaining quite a bit of wallet share within the marketplace segment. And now that we’re adding in other products that help them with pricing, merchandising, sourcing, retailing, we’re also appealing to more people at the dealership. And so historically, the person who was in charge of pricing may not be the same person that’s responsible for internet marketing. And now the person who’s responsible for pricing is also saying, well, we’re not going to there’s no way we’re canceling CarGurus.

Like, I use them every day. Or I heard CarGurus products now can do this. Can we please look into them? So I think our value prop’s gotten better. Our ROI’s gotten stronger.

The engagement’s higher. But the the number of users and customers we have in a dealership is growing as well.

Rajat Gupta, Equity Research Team Member, JPMorgan: Understood. You recently started sharing data points on the mix of new contracts signed. There are long term commitments and attracted 40% in the first quarter. Could you give us a sense of what entails a long term commitment? Are there different rates, cancellation policies, perhaps preferential access to features offered to these customers?

Any more color you can give there.

Jason Trefson, CEO, CarGurus: Sure. I mean, definition is six months or more is a long term contract. And so it’s typically, for the most part, six months or twelve months. The industry has historically been month to month. So we sometimes provide a modest discount for them engaging in that, like most SAS companies do.

But it pays for itself in higher retention. I’m, though, more excited by the psychological symbol and benefit that it provides, which is, to me, it is showing and from talking to dealers, it’s showing that they think of us as a longer term partner. They’re willing to contractually sign up for that. And part of the reason they’re doing it is because we now have demonstrated enough to them that over time we grow leads, we improve the quality of leads, we grow the products and features that we offer them. And so there is a discernible benefit to them to locking in to a longer period.

And so we think it’s good for all parties to have just more stability like that. And then we also think it shows a much stronger mutual commitment.

Rajat Gupta, Equity Research Team Member, JPMorgan: Understood. That makes sense. Just wanted to check into the audience if there are any questions here. None right now. Know, wanted to just quickly touch on guidance.

I know you’ve probably been asked this a lot already. You know, you despite some of the uncertainty in the macro, you know, some of your other public peers decided suspend guidance, not even for the second quarter, not for the full year, especially on the top line. You’ve given us an exit rate revenue outlook of double digits. Could you maybe lay out some of the underlying assumptions embedded in that? What’s driving this level of conviction?

Maybe some of the points that you touched on earlier when some of your peers are deciding not to give any guidance. And does the complexion of growth exiting the year and into next year change materially relative to today between volume, price, etcetera?

Jason Trefson, CEO, CarGurus: On the first part I may ask you to repeat the second part. On the first part, we have shared that the least predictable or the less predictable part of our business is auto manufacturer advertising. And so that’s where tariffs are most likely to surprise. We have not seen much of that yet we shared. A couple examples for sure, but nothing that we think speaks to a trend at this point.

But that’s where we would see a surprise. In our core marketplace business, it’s a subscription business, obviously. And so a subscription business is hard to accelerate. It’s hard to decelerate. But it just takes time for those things to happen.

And we don’t have customer concentration. And we see dozens or hundreds of customers make a series of decisions every day. And so not to say that those can’t change, of course, but we get these reinforcing signals every day that we’re looking at. And our business has proven many times the marketplace business, not just ours but car prices can rise and fall, consumer demand can rise and fall, inventory can rise and fall, interest rates can rise and fall. And different segments of dealers react differently to that in a variety of ways.

But as it relates to their need to market cars, they always need to market cars to some extent. And so in the grand scheme of dealer marketing, offline is probably the least measurable and therefore maybe the most susceptible to change. Online is safer. Within online, third party marketplaces like ours are a quite attractive and steady ROI relative to YouTube videos or relative to Facebook because quality can become an issue. And so we’re in a safe category within digital.

Within that safe category, we’re the leader with the strongest ROI. And then all of that’s in used cars. And used cars are much safer than new cars. So of course, we have risk in our business. Everybody does.

But we are in a fairly safe harbor and a business model that provides for a lot of predictability. So your last question was the exit rate between mix and The

Rajat Gupta, Equity Research Team Member, JPMorgan: double digit guidance and how you get there, I mean, the last few quarters, price has been a very significant contributor to your revenue growth. I’m curious, does it now have a more even mix between the two? Is it going to be different than what you’ve seen recently? Just what makes up those that growth number is what I’m trying to get at.

Jason Trefson, CEO, CarGurus: Yeah. Unit price has not been a big contributor to our growth. Revenue per customer

Rajat Gupta, Equity Research Team Member, JPMorgan: Yeah, that’s what I

Jason Trefson, CEO, CarGurus: mean. Okay. So yeah, we optimize our business. We measure ourselves as a leadership team on revenue growth. And revenue growth is driven by net monthly recurring revenue bookings.

And that’s driven by retention, expansion, and new. How we achieve that is we’re almost indifferent to how that’s achieved. I mean, it helps to have a larger footprint of dealers off of which who can become enamored with our products. And we can then expand them. And it gives us a higher starting point of rooftops, but not if we achieve that through pricing it very low, or not if we achieve that by not serving them well.

And so we think about we look at metrics like net MRR, bookings, dealer NPS, adoption of new products, engagement of free products. I mean, to us, those are the things that are the harbingers of customer satisfaction and future growth and not we could go add 1,000 more dealers by slashing our prices by 30%. So long winded way of saying, no, we don’t speak to or guide on the mix of car SID versus rooftops because that’s not how we try to grow the business. Understood.

Rajat Gupta, Equity Research Team Member, JPMorgan: Just quickly wanted to check-in. Anyone in the audience? Question? Yep. There we go.

Talk a

Jason Trefson, CEO, CarGurus: little bit,

Unidentified speaker: Jason, about the dynamic right now between new and used. You talked about used where you might have even more talk about the dynamic between new and used. Just kind of you talked about used, you might have a little bit more of a, I don’t know, strategic advantage or something along those lines. Just talk about the dynamic between your value to one market versus the other and what you’re seeing now in each of those markets. Thank you.

Jason Trefson, CEO, CarGurus: Sure. Our marketplace has the most inventory, and so we have most inventory in the country. And so from an inventory perspective, it’s roughly at the moment, roughly fifty-fifty, half new car, half used car, Because we want to give consumers as much selection as possible, and we want to help dealers market all of their cars however they see fit. That said, our value proposition, I would argue, is much better for used cars where the consumer has more of an information disadvantage. And we’re able to tell them the history of the car, the price history of the car, if we think it’s well priced or overpriced, etcetera.

And so more of our growth is driven by how successful we are at connecting used car shoppers with used car dealers or just dealers who are selling used car, which is every dealer pretty much. The dynamics between the two, I mean, the used car market is less volatile than new car market. If you look at ’eight, you saw new car volume fall off, I want to say, about 20%, twenty five %. Used car volume fell off only about 8% to 10%. When you look at COVID, that was obviously a very unique circumstance.

But the chip shortage caused new car inventory to absolutely plummet. Used car inventory fell, but not by nearly as much. Pricing follows suit. Prices for new cars can fluctuate much more than for used cars. What we think we’ve started to see with tariffs is or hypothetically, the logic would follow if certain new cars are facing more of a price increase from tariffs, then that demand will either shift to other new cars that are facing less of that or to used car.

We didn’t see a lot of that yet because I think it’s just so early and a lot of the new car tariffs haven’t been passed on. What we did see though was across new and used, consumer purchases got pulled forward for a three or four week period. And now that has sort of gone away. We’re back to normal inventory, normal SAAR expected total sales. Prices have risen a little bit.

And now you’re seeing consumer sentiment really tank. And so that’s causing a lot of consumers to say that they’re going to postpone a big purchase, new or used. But we’re not seeing that yet. And so have seen with that pull forward, we saw our traffic really sore. It’s come back down.

Still up year over year, but it’s come back down from the highs in March and April. We are, though, seeing consumers put affordability and reliability much more central to their search. And so we’re seeing much higher growth in searches for cars, say, under $30,000 and over $30,000 And we’re seeing things around safety and reliability as more important to people’s searches.

Rajat Gupta, Equity Research Team Member, JPMorgan: Great. Any other questions? I wanted to just quickly ask on CarOffer here. It’s been a tough couple of years turning around that platform. It seems like you’ve been a little wary pivoting Carr Offer to another digital D2D platform, which makes sense, I think, given the intensifying competitive landscape there.

But given your position in the marketplace, why has it been more challenging to scale that platform, given you’ve had the customer base, you have all these dealers on your platform? What’s been the major roadblock? Any thoughts around what holds you back from exploring this again?

Jason Trefson, CEO, CarGurus: From exploring?

Rajat Gupta, Equity Research Team Member, JPMorgan: Like just, again, taking another push to grow CarOffer as it was supposed to

Jason Trefson, CEO, CarGurus: We are doing that. I mean, we’re trying to grow CarOffer and get it profitable. The path to profit for CarOffer has to be through some growth. So rest assured, we’re trying very hard to do that. I mean, I think the you talked about all of our customers and getting them on it.

I mean, the hypothesis of being able to parlay or cross sell car offer to our existing CarGurus customers has been a little more challenging than we thought because it’s typically a different user at the dealership. So that’s been a specific challenge to the synergistic growth proposition. As it relates to CarOffer specifically, it’s an instant trade platform, which is different than traditional wholesale auction. It worked exceedingly well during a time period when wholesale prices kept rising. And it works well today for a segment of dealers who know exactly what they want, want to do that in a high volume, and are very clear about what they want and don’t want to spend time in auctions.

What we’re finding is a challenge with the instant trade concept and platform is that when a dealer isn’t sure what they want or what they want changes rapidly, the ability for that model to adapt to rapid changes is tough. And so we know that there’s value in the insights from CarOffer. We’re telling dealers which cars they should buy, how much they should pay for them. We’re telling them the profit estimate that they’ll achieve. And these are good predictions.

We’re telling them how long it will take them to turn the cars. Those types of insights, similar to a lot of our dealer data insights, are predictive and incredibly valuable. The transaction machine that we have at CarOffer that’s based on the Instant Trade matrix is not as flexible as we’d like and has some operational differences that, again, in an uncertain environment when dealers change their mind quickly, is slower than ’d like. So that’s where our focus is, to get the product market to leverage the data and insights, which we’re doing, to get the product market fit of the transaction side of it more sustainable in fluid environments, and then try to scale the business. The strategic assessment we talked about is to say, what does that transaction model need to look like?

And how much of that do we need in order to garner the value from the data and the insights?

Rajat Gupta, Equity Research Team Member, JPMorgan: Understood. That’s a good clarification. Because you have a minute left, quickly wanted to touch on capital allocation. Surprisingly, not a lot of discussion on the last earnings call despite the sizable buyback that you executed on. Obviously, encouraging to see the conviction.

How are you thinking about capital allocation going forward? You still have a lot of balance sheet optionality. Wondering if there are any growth areas outside of some of the topics you’ve discussed today where you were looking to expand organically or inorganically.

Jason Trefson, CEO, CarGurus: The first discussion point we have on capital allocation is what do we think are how much do we want to invest in currently in building products and in fostering innovation, which translates into margin and cash flow. So that’s the first discussion. After it becomes cash flow and cash on the balance sheet, we then think about M and A, number one. We have an active pipeline in M and A. We’re primarily looking at dealer products right now, dealer software and data products.

And then number two, buying back shares or returning capital to shareholders when we think it’s an attractive investment. And so we’ve done quite a lot of that over the last few years, And we were excited to execute as much as we did in Q1.

Rajat Gupta, Equity Research Team Member, JPMorgan: Understood. Great. I think that’s a good way to end. So thanks, Jason. Thanks, Kargurus team.

And thanks, everyone, for joining.

Jason Trefson, CEO, CarGurus: Thank you.

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