Ready to go? Good morning, everyone. My name is Chris Pierce with the Needham Research team. Thanks for joining us at this fireside session with CarGurus CEO Jason Trevisan at the 28th Annual Needham Growth Conference. Jason, why don't you just take a minute to touch on CarGurus at a high level, your background at the company, you've worn a couple of different hats, and kind of rolled the path to CEO role right now? Sure. And just before we kick off, quick safe harbor reminder that we may make forward-looking statements, and those come with risks. I've been at the company. I just had my 10-year anniversary this year. Prior to CarGurus, I was an investor in high-growth, middle-market technology businesses. And in 2015, I joined as CFO. I was CFO for about five years, but a pretty broad mandate of CFO, including overseeing international and corporate development, strategic partnerships, and people and talent, and so forth. And then moved into the CEO role five years ago. OK, perfect. With the calendar shown, let's just take a quick look back at 2025, some successes, some challenges, sort of how you think about the year, sort of what you guys were looking to accomplish, how the year sort of ended. Just kind of big picture question, how to think about last year before we think about moving forward? Sure. In 2025 for us, the big focus was on innovation, and so we were so proud of how we innovated faster. We introduced more products than we ever have in any single year period before, and it's all underpinned by our strategy of expanding across the dealer workflow, so the different steps of what a dealer needs to do, we define it as four different dealer pillars, and on the consumer journey as well, And so we introduced our first standalone software product in the inventory category of dealer workflow called PriceVantage, which helps dealers understand how they can price their inventory. We continued to grow adoption of our Dealer Data Insights, which helps dealers well beyond our marketplace understand how they can source products, source cars better, merchandise them better, convert the leads to sales better, and then help them with data and market intelligence as well. And then continue to innovate in the marketing category, which is our bread and butter, with products like our New Car Exposure. And so all of that helped us sustain low to mid-teens growth for a second year in a row, which we're thrilled with. On the consumer side, we also innovated. So if you think about the consumer journey of shopping, we've historically been really good at the point of when a consumer is trying to decide which used car to buy. We moved upstream to help them with a product called Discover. It's an AI-based virtual assistant that helps them understand which type of car they may want to buy. And then downstream with an introduction of a product called Dealership Mode, where we help them with an in-app AI-based set of tools that help them navigate the dealer process as well. So just extremely quick innovation, all underpinned by AI, was the hallmark of last year. Some learnings, too. As many of you probably know, we also wound down CarOffer, which was our acquisition, to get into the wholesale arena. We continue to believe that in order for dealers to market cars well and sell them quickly and at a good margin, they have to source them well. And so we built a lot of great technology and analytics that help them understand wholesale and understand sourcing much better. We're going to continue to push on that. But we moved out of the transaction part of wholesale, which is what CarOffer did. That's a much lower margin, much higher operational logistics business. And we recognize that our bread and butter is technology and data, predictive intelligence driven by AI. And so we've pivoted to focus on that. OK, and so how do you take that sort of momentum into 2026? What are some of the things you're most excited about? Maybe TAM expansion, product you can kind of head and highlight it yet, and just sort of some things investors expect to hear about in 2026 from you guys. Sure. So with our expansion on the dealer side, as we move from just the marketing pillar into an inventory pillar conversion, helping them convert leads into sales, and then data and market intelligence, we are becoming, in addition to a marketplace business, also a software and a data business for dealers. And so we're very excited to continue the expansion of our dealer data insights, which is our Trojan horse into those areas where we have tens of thousands of dealers that are reading these reports and insights and taking action on these recommendations every day. So continued growth on dealer data insights, continued expansion of PriceVantage. This will be our first full year, obviously, of PriceVantage. We're really excited with the start, with the adoption, with the usage. And so this is going to be, we think, a breakout year for PriceVantage and the inventory pillar as a whole. And then on the consumer side, I mentioned Discover, upper funnel, and Dealership Mode, lower funnel. It's lengthening the relationship we have with consumers, and it's making the shopping journey much more AI-driven. And so the experience for a consumer used to be using filters, hunting and pecking through our site. And now it's much more fluid. It's much more AI-driven that guides them through that journey all the way through to the dealer experience. And so that's a step change function for us. Okay, and then I know COVID keeps getting further and further in the rearview, but we had that lack of new car production, which fed down to the used car market. Is there anything sort of investors need to think about from a macro perspective, or are things sort of normalizing, coming back to normal? What's new this year in the used car world? There's some normalization, but I think few things in auto have been normal since COVID. I think the key themes in 2025, and I think this will continue into 2026, number one is affordability. The used car prices are higher now than they were a year ago. There's more inventory now than there was a year ago. There's more time on lot than there was a year ago, and interest rates, even if they come down a couple of clicks, that's not going to solve the issue. The car prices are still high enough, so affordability and sort of quality of car and total cost of ownership is a key theme. The auto manufacturers are still trying to understand tariffs and our trade policy and understand what that's going to do to pricing in new car, and that trickles through to used car. I would say the key themes are affordability and still a bit of trepidation as to what's going to happen. OK. OK, perfect. All right. So if we move to competitive dynamics in the space across kind of the businesses you kind of laid out there, and we start high level, what gets a lot of headlines is consumers and fully digital transactions. You guys have done a lot of data here. You have a lot of first-party data. I'd love to kind of hear how you think about what consumers really want from an all-digital transaction. Do they want an all-digital transaction? How do dealers deliver against that? What do consumers want? How does sort of all that kind of flow together? Sure. It's low to mid-single digits% of car purchases are done fully virtual. And so the balance, there's an in-person interaction. And it's because consumers want to see the car. They want to test drive the car. It is an involved transaction. They don't enjoy all aspects of dealing with another human at the dealership, but there are some parts that they get comfort from in dealing with another human. So 90% plus of transactions involve that. That said, of those people that have an in-person element to it, the 95% or so percent, the majority of them, 80% plus want to do more online. And so that's the sweet spot that we're focusing on, which are consumers that ultimately do want to go into a dealership to see the car but want to do more online. And so we're allowing them and enabling them to do much more of the transaction on our site. Digital Deal is a product that is now in about half of our dealers. That allows consumers with any inventory at that dealer to get fully financed for a loan, get a trade-in value, put down a deposit, buy other F&I products from the dealer, set up an appointment. And so they're able to reduce the time at the dealership by enacting that functionality on our site. And then we're also helping with things like Dealership Mode. So Dealership Mode is an in-app based. It began as a consumer product that we built, but now dealers are really embracing it. That is an in-app experience that the consumer and dealer can use together when the consumer's in the dealership to help the consumer understand more of what's happening, understand more of their options in financing, understand more about what other units that dealer may have on their lot that could be compelling to them, so that they build confidence and build comfort with the dealership experience. And dealers love it because the more the consumer's educated and the more they can look at this together to understand financing options, the higher likelihood that a consumer is going to buy a car from that dealership. And so they're seeing conversion rates improve. So we are continuing to build transaction capabilities on our platform, but recognizing that 95% of people still want to go into the dealer. OK. Got it. So it's sort of win-win for the consumer and the dealer to kind of come together in the sweet spot of the larger part of the market. To come together with capabilities that we're building on our platform for them to use together. OK, and if we think about one more on competitive dynamics, how should investors think about outside actors or new competitors in the space? Does anything change from your strategic perspective, or is it still about solving problems for dealers and that's sort of your bread and butter? Our bread and butter is solving problems for both dealers and consumers. It's a kludgy enough process and a complicated enough process to buy a car that we have a lot of runway of problems to solve. We don't underestimate any competitor ever. We don't take our leadership position for granted ever. In fact, we've accelerated the amount of innovation we've done. We've increased the amount of investment we're making in innovation to maintain and grow that lead. In a two-sided marketplace model, which we have, we also find comfort in and are excited by the fact that that's hard to replicate and that's hard to displace. You have to build trust on both sides of consumers and dealers. If you don't have trust on both sides, if you don't have liquidity and size and scale on both sides, then the marketplace itself is not that valuable. And we feel that we have both and that we're accelerating the innovation to continue to grow both. Okay. So if we move on to revenue generation and growth, kind of that segue there, on the dealer side of the business with your first product, the Legacy Lead Gen product, that's still a source of growth with the new products you've introduced. What's the message you're trying to convey to dealers to grow dealer count, grow revenue per dealer, and what are some proof points that that message is resonating with those dealers? I would say our key theme is that we are not just a lead gen marketplace business anymore at all. In fact, that's just the tip of the iceberg. When articulating the value proposition of that piece of our platform, though, you look at most dealer surveys, if not all dealer surveys, and you will see that on average, we are the highest lead provider. We are the highest lead quality, and we are the best ROI for dealers. So that is a value-based sales position that we hold and we're very proud of. And we will go toe to toe with anyone any time on those dimensions. So that's what drives a lot of our retention and a lot of getting dealers excited about us from an ROI perspective in the first place. Our narrative in the last couple of years, though, has emerged from. That's just the beginning. In order to sell cars, as I said before, you have to source them right, price them right, merchandise them the right way. Once those leads come in, you have to handle the leads properly. You have to understand the consumers that are coming in in order to convert better. And so while we have this core, which is a marketplace, and then we have a number of other marketing products that we've established and built off of that, like RPM and Highlight and New Car Exposure and a number of other marketing products, we also have all this intelligence and increasingly software and data products in inventory, in conversion, and in market intelligence. And all of those products are built to help our customers perform better on our marketplace. So the dealers that are embracing these other reports and insights and predictions are discernibly performing better on our marketplace. And so it's a self-fulfilling ecosystem. And that's led to better retention. We've talked about our retention has improved. That's led to better upsell. We're including some of those features that I just talked about only in higher tier products. So we've upsold much better over the last couple of years. We've cross-sold much better over the last couple of years. And we don't focus on rooftop growth. We could grow rooftops extraordinarily fast if we just lowered our price. So we're confident in maintaining at market level pricing. We optimize to MRR and to spend on dealers. And in order to do that, you have to focus on retention. You have to focus on upsell, cross-sell. And then we're also always focusing on the quality and quantity of our leads. So that is a fundamental driver of our business. And it allows us to, as we think about QARSD, which is our average revenue per subscribing dealer, that has seen really nice growth over the last number of years. That's also recently been coupled with rooftop growth. And when you look at rooftop growth and add that to QARSD growth, those two get you to basically our revenue growth. And that's been, as I said, sort of low to mid-teens for the last six, seven quarters now. You hit on PriceVantage earlier. I'd love to hear why is right now, if you take that momentum, why is now the right time for a TAM expansion? You sort of did it a little earlier, but I'd love to compare and contrast TAM expansion into wholesale and transactions, which you've backed away from, versus TAM expansion into software and data solutions for dealers. The simple headline for our TAM expansion is that in the U.S., dealers spend about $3.5 billion on marketplaces for lead generation, so our core business plays in that $3.5 billion, and that for us is about an $800 million business, so we've got about a quarter of that market. As we expand into data and software products in inventory, conversion, and market and competitive intelligence, that opens up another about $4 billion of spend, so with this expansion into software and data and these other dealer categories, we've basically doubled our TAM. I would say why is now the right time? AI has made our ability to innovate and to build products that are that much more valuable to dealers much faster, and so we are using AI to operate our own business more efficiently. But what has me more excited about our use of AI is how it's embedded in every single product that we build right now on both the dealer and the consumer side. And so it's us sticking to our core competencies of building technology, building software, leveraging data to introduce products in these other categories that doubles our TAM with dealers. How that's different from wholesale, the wholesale transaction business is a very large business, but it has, as I said, much lower margin. It's much more cyclical. It's much more competitive. There's very little dealer loyalty to different wholesale platforms. It's much more labor intensive. And so we decided that we want to tap into the wholesale piece of the value chain through data and software rather than through trying to execute transactions. Okay. And can you talk about PriceVantage and what the data you have and the AI you're using to sort of leverage that data or structure data? How do you kind of, how does that come together to create a product like PriceVantage on a faster timeline and get that product out to dealers, feedback, et cetera? The core premise of PriceVantage and the core premise of really most other products that we'll build outside of marketing products are that the most important input to a decision is how is the retail market going to react. And so when we were running transactions at CarOffer, the majority of our dealers, historically in wholesale dealers, would look at wholesale books. They would say, how much should I pay for this type of car? Well, let me look at how much that type of car sold for in wholesale arena for the past 60 days. What they really want to know, though, is how much can I sell that car for in 60 days when I'm ready to have it on my lot and it's reconditioned and I'm ready to sell it. We have that visibility because we have billions of vehicle detail pages, views a year. We have the largest audience, the most engaged audience. I mean, we're seeing all the retail signals, more retail signals than anybody else by a wide margin. So when you have that intelligence, you can then say, well, if you want to sell a blue Toyota Camry, then of this type and profile, this is how much you can sell it for in 60 days. So you tell us your margin, and we'll tell you how much you can pay for that type of car, and we'll tell you which blue Camry you should go buy. And we'll also tell you, by the way, I know you've historically sold blue Camrys. Demand, retail demand for blue Camrys has been down in the last three months. Demand for red Camrys is up. And so we'll help redirect them. So it's anchoring all the decisions back to the consumer trends, which we see better than anybody else. Okay. So is that our dealers ready for this? Are dealers like, hey, this is different than I've done things, but I realize that the retail side of the business is what drives my gross profit per unit? How do you convince dealers to change sort of how they've been doing it to use your data? I guess what's the sale process like? The aha moment for us was when we saw that the majority of dealers at CarOffer were using retail predictors rather than wholesale book value, and so we knew, we know they want to do that, and when you talk to them, they say, yeah, that's interesting, and the book value is interesting, but hold on, if you can tell me that I'll make $2,500 on this car, well, That's what I really want to anchor to, and so then the process is how do we build the trust with them for them to believe that that would be the outcome, and so we have tens of thousands of dealers who have been using our free pricing tool for years, so we know they trust us with pricing. This is a much more advanced product than our free pricing tool ever was. And so we need to. We're increasing the stakes, if you will, because they're making decisions on this now. But we know they trust us with pricing. And we know that with CarOffer, they were ready to move to this. And so the adoption that we're seeing with PriceVantage, which is an à la carte product, they have to pay for this. They have to justify the ROI. We're helping them do it, certainly, is proof. OK. And are you taking on new competitors as you go into this TAM? And can you bundle with where you have leadership and lead generation? How do you sort of go to market with the product? Is it one-to-one dealers? Is it a wider product release or sort of, and maybe at the coming dealer event? How do you kind of get the word out about PriceVantage? We have really deepened our relationship with customers over the last couple of years. We've talked about how we've grown our account management teams. We've talked about how we are sending them information in the dashboard and via email, via text, via bespoke data analysis, via these dealer data insight reports, so they're engaging. Most dealers are engaging with us either a product, a person, a feature, a report on a daily basis now, and more people at the dealership are engaging. So our roots are really getting much, much deeper in the dealership, and so a conversation with a dealer is commonplace, and so it comes up in conversation. We do have some product-led marketing through our dashboard. Excuse me, and with so many dealers using a free pricing tool, as you would expect, that's a great environment in which to make them aware of this new product. If we move on beyond revenue generation and growth, we talk about margins and OpEx. On your last earnings call, I think you talked about investing more in 2026. How should investors think about the framing of more looking at your product and technology and development costs over the past few years? We've grown margin for several years now. We had a long-term margin target of 30%-35% in marketplace, and we're at the high end of that zone. I mentioned that we built and launched and innovated more products in 2025 than in any year by a pretty wide margin that we have, and we're really excited by the momentum, the adoption, the reception that we're getting from dealers in that and from consumers, too. We've talked mostly about dealer products here, but our Discover and our Dealership Mode consumer products are also changing consumer behavior on our site, too, and that's half the equation for us, so we're really excited by that momentum, and yeah, we talked about investing more, and so our expectation is that in 2026, there will be a slight step down in margin because of the investments that we're making. And we're doing that in order to maintain a higher growth rate than we otherwise would have. And we think that that growth is not only, I mean, it's not near term. It is long-term sustainable growth that is deepening our relationship with dealers and we think is the right growth margin trade-off. AI is facilitating a lot of this. And I think there's a lot of narrative and studying that we're doing on how AI is making our businesses more efficient. It is making our business more efficient, but it's also accelerating the productivity and the proliferation of products that we can offer dealers. And we want to keep that up. OK. We've got about 10 minutes left if anyone from the audience has any questions. How does the size of your marketplace compare to a CarMax or a Carvana? The number of vehicles on offer. So on our marketplace at any given time post some of the COVID troughs, we've got 4 to 4.5 million vehicles, which is probably north of 80% of inventory in the country. It's about 50/50 new and used currently. And that ebbs and flows with new car inventory. I don't know the exact numbers of CarMax and Carvana, but they would be a tiny fraction of that. I won't venture a guess, but a small fraction. Your new product that offers the consumer the ability to finance from his bed is supposed to go on that dealership. How long has that been available to dealers? And what percentage of them have taken it up? And how much can that contribute on a cross-sale basis to your overall product or your dealership? Well, the last part. If a dealer, your average dealer has a certain amount of spend, how much can this add to it? Yeah. OK. So we have had the ability for a consumer to get pre-qualified for a loan that then gets completed in the dealership for probably six years or so, so a long time. What we have improved upon in the last, say, two years is for consumers to get fully qualified for a loan, number one, and for that to get fed directly into a dealer's F&I system, as well as for a consumer to buy any F&I products from a dealer who's on Digital Deal. The ability to get pre-qualified for a loan is available to any consumer. The dealers with whom we are woven directly into their finance system is facilitated through our product called Digital Deal. And Digital Deal is currently used or subscribed to by about half of our dealers. And the economics of it are the dealer keeps the economics of the financing. They keep full economics. In a pre-qualification model, we get a bounty from the lenders to get that. It's like a marketing fee. With the dealer, though, it is we capture some of the value that we're delivering by package levels and by a per-lead pricing because we recognize, and they're not shy about saying, the financing revenue stream is very important to them, and so we don't infringe on that. So you're just collecting a service fee for providing the service to the customers as part of the software packages. Effectively, yes. Effectively, and they know that when a consumer comes through, I mean, one of the great things about Digital Deal, when a dealer signs up for Digital Deal and it enables all of these features for the consumer to do more from their bed, they know that when a consumer comes through that and they get them as a lead, they're much more likely to convert, and so it's much higher quality. They're already there to finance. Yeah. They're much further down the pipe. And one of the things that dealers struggle with is that their sales teams don't respond to all leads. That's on our platform, but that's on every platform. That's every type of lead. And so anything that they can do to, they would love for their sales teams to respond to all leads, but they can't. They don't have the capacity to. A lot of the sales teams were downsized during COVID, and they never built back up. And so any signals that they can give to their sales team to say, this is a high-quality lead. You should really respond to this one, please, if you do anything. And this is as good a sign as any. Anything else? So you've talked about AI a couple of times. I'd love to sort of hear about, we hear about large language models. Is there a bucket where AI can be a threat where someone is sucking up the data that you've kind of got on your site? Or is it more of an opportunity from making it easier for the consumer to sort of get to what they want to get to? You used the term hunting and pecking or not looking through filters now. How does AI become an opportunity and less of a threat for you guys? AI is a huge opportunity for us in a number of ways. It's, again, helping us run a more efficient business, but also just a higher output business. Number two, it's helping improve existing products that we have. So the sort order, just the ranking of cars that we show based on a search, there's a lot of science and algorithm that goes into that. And AI is helping make our sort order, for instance, much smarter, which is helping with conversion rate. So it's helping with existing products. And then it's helping create net new products like Discover. So in all of those respects, and Discover, I'll double-click on it just for a second. Historically, if you didn't know what type of car you wanted and you came to our site, we were not helpful to you. Period. We did not help you do that. We had some content. We had some videos. We had some articles. But it was not as helpful as what existed elsewhere. With AI Discover, we're now able to capture an entire segment of the audience that does not know what type of car they want. And it is a memory-based learning, AI-driven LLM virtual assistant that has the conversation with the consumer to help them understand, based on their needs, recommendations for make models, trims, and then points them directly to the best inventory of that make model trim on our platform. I encourage all of you to use it. It's very cool. That's helping us capture audience that we never could capture before. We would have to wait until they'd gone through that elsewhere and then try and snipe in and catch them when they were lower funnel. PriceVantage is the way that we're able to say how much that car is going to sell for in 60 days is mostly AI-driven. Some of our other products as well, Digital Deal has AI components to it. Dealership Mode is an AI experience that allows the consumer to have a conversation in the app to help them navigate through the dealer experience. Those are all opportunities. Where it could be a threat is what the consumers are doing off our site, even higher funnel. We've said that the amount of traffic we get and audience we get from the LLM search platforms is still very, very small, low single digits today. That said, we are the best performing, if you will, auto site in LLMs. We're the most sourced site by them because we have the most data. It's small. But what it is doing today, we're performing quite well. That traffic does tend to convert better when it comes from an LLM. So it's high-quality traffic. And we are ready for when that grows. We are, like a lot of companies, still developing our strategy and our position on how much data we want to expose to those LLMs. And that's part of an ongoing discussion that we're having with them, with ourselves. And we're building the technology to allow us to tune those dials wherever we'd like them to be. OK. Yeah, very fair. J ust lastly on capital allocation, I think you've taken out roughly 20% of the float the last three years. How should investors think about balance sheet, capital return philosophy? I know you've been active in M&A in the past, but sort of then kind of less active. What do investors think about going forward? What's the messaging on capital allocation? The messaging is we're going to continue to be smart. And we think we've been smart about it. The three sources are, number one, we have to determine margin and cash flow based on what our investment and innovation opportunities are. So I talked about that. Two is M&A. We've never not been evaluating M&A. And so we continue to now. And based on this conversation, as you would guess, where a lot of that focus is, is in these other pillars of dealer workflow. And so in the inventory pillar, there's sourcing, stocking, appraising. There's a number of things that we will either build or acquire our way into in order to continue to build out the inventory pillar. Same with conversion, same with market and data intelligence. And then giving capital back to shareholders, either in the form of a share repurchase or other forms. And so we have used share repurchase really effectively. At the end of Q3, we had $55 million, roughly, remaining on our approved share repurchase program. We're fortunate that we have really high cash flow yield from our business. And so we're going to continue to be smart about it and aggressive when we think our stock is undervalued. OK. One last call. Any questions from the room before we wrap it up? Go ahead. It sounds like you have a lot of new products coming out and a lot of cross-selling opportunities to existing dealer base in the next year or two. So I was wondering if you could just help me understand that a little better. How many rooftops do you have? What is the average purchase of your product? What's the low end? The dealer who's buying the least of your product and the dealer who's buying the most of your product? What's the range? Yeah. In the U.S., and just for those less familiar with us, we operate in the U.S., U.K., and Canada. Our international business is growing even faster than our U.S. business because we started those later. And so they're a few years behind. But they're growing in the 20% and both profitable. And most of what I say that's U.S.-specific applies to international just in a somewhat delayed fashion because our model is we build things in the U.S., and then we adapt them and introduce them in international. In the U.S., there are 42,000-45,000 rooftops. That's split between franchise and independents, about 16,000 franchise. Franchise means it's affiliated with an auto manufacturer. They tend to have bigger budgets, spend more. They tend to be more sophisticated, although the large indies are very sophisticated as well. So 42,000-45,000. We have about 26,000 paying in the U.S. today. We have a freemium model still. So we will bring dealers onto our platform in an effort to give consumers more inventory exposure, more selection. Those dealers on a free version have very limited capabilities, but they do get some benefit. And it helps the consumer. Including our free dealers, we have over 30,000. So that just sort of sets the stage. Our rooftops have been growing modestly. That's not our objective, but it's a common output. The average dealer today pays us about $2,500 a month or about $7,500 a quarter, which is that QARSD metric that I talked about. The drivers of how we grow QARSD are we can sell them on higher-tier products. We can grow our lead quantity and quality. We can cross-sell them other products. And then we still have unit pricing as well. We still tend to be priced below our competitors despite being the market leader, and so one of the reasons for this consistent QARSD growth is that we have so many levers, and we don't pull too hard on any one of them, and we've been executing on all of them. In terms of the, I mean, the smallest dealers will be paying us sub $1,000 a month. The largest dealers are paying us six figures a month, and we think there's extraordinary upside because if you look at the total dealer spend in the U.S., it's about $22 billion. What they spend on marketplaces is only about $3.5 billion, and what they spend on us today in our marketplace is about $800 million, and so despite having the largest audience by far of in-market car shoppers, we're still only garnering about 4% or 5% of dealers' total spend. It's extremely strong ROI, and now as we get more fans in the dealer who are using our products and using our insights, we're just getting them to spend more and more time with us and become more sophisticated. Thank you for your time this morning. Thanks very much. Thanks very much.