CarGurus, Inc.

1. Organization and Business Description

CarGurus, Inc. (the “Company” or “CarGurus”) is a multinational automotive platform helping consumers and dealers confidently buy and sell vehicles. Founded in 2006 with a mission to bring more trust and transparency to car shopping, CarGurus is an automotive shopping site in the U.S. CarGurus’ selection, trusted automotive insights, and data-driven products and solutions support each shopper’s journey — from online research and shopping to in-dealership decisions — to empower them at every step. CarGurus provides dealers a personalized, predictive intelligence platform with software solutions that helps them run their businesses more efficiently and profitably at all stages of inventory acquisition and pricing, marketing, and conversion to sale.

On August 6, 2025, the Board of Directors of the Company (the “Board”) determined, after considering all reasonably available options and a broader strategic reassessment, that it is in the best interests of its stockholders to wind down CarOffer, LLC (“CarOffer”), including the Dealer-to-Dealer and Instant Max Cash Offer products (the “CarOffer Transactions Business”). Following the broader strategic reassessment, the Company concluded that the CarOffer Transactions Business has proven less effective in today’s more volatile and unpredictable pricing environment, where dealers require more flexibility and broader automation to streamline fulfillment than the model could provide. Following the wind-down, the Company will continue to deliver AI-powered inventory intelligence through its insights platform and enable consumer vehicle sourcing at scale through Sell My Car (formerly Sell My Car - Top Dealer Offers) and will focus on technology and analytics that will enable smarter sourcing and pricing decisions rather than facilitating the transactions themselves.

The wind-down of CarOffer was completed and the business was considered abandoned for accounting purposes as of December 31, 2025. The Company presented the financial results of CarOffer as discontinued operations in the consolidated financial statements for all periods presented, except for the consolidated statements of comprehensive income, the consolidated statements of redeemable noncontrolling interest and stockholders’ equity, and the consolidated statements of cash flows. These statements have not been separately reclassified and discontinued operations are included within each for all periods presented. For further information, refer to Note 3 of these consolidated financial statements.

The Company operates principally in the U.S., where it also operates the Autolist online marketplace as an independent brand. The Company also operates online marketplaces under the CarGurus brand in Canada and the U.K. In the U.K. it also operates the PistonHeads online marketplace as an independent brand.

The Company has subsidiaries in the U.S., Canada, Ireland, and the U.K. Effective as of the fourth quarter of 2025 the Company revised its segment reporting fromtwo reportable segments toone reportable segment, in connection with the wind-down of CarOffer and as a result of the Chief Operating Decision Maker (“CODM”) managing the business, making operating decisions, and evaluating operating performance on a consolidated basis. For further segment reporting and geographic information, refer to Note 14 of these consolidated financial statements.

The Company is subject to a number of risks and uncertainties common to companies in its and similar industries and stages of development including but not limited to rapid technological changes, competition from substitute products and services from larger companies, management of international activities, protection of proprietary rights, patent litigation, and dependence on key individuals.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The assets, liabilities, and results of operations of CarOffer, excluding certain assets that have been repurposed for corporate use, have been presented as discontinued operations for all periods presented in the consolidated balance sheets and income statements.

No assets or liabilities were classified as discontinued operations as of December 31, 2025. The consolidated balance sheet as of December 31, 2024, was derived from the audited financial statements of CarGurus, Inc. as of that date, adjusted for the reclassification of discontinued operations.

The consolidated income statements for the years ended December 31, 2024 and 2023, were derived from the audited financial statements of CarGurus, Inc. as of those dates, adjusted for the reclassification of discontinued operations.

The consolidated statements of comprehensive income, consolidated statements of redeemable noncontrolling interest and stockholders’ equity, and consolidated statements of cash flowsas of December 31, 2025, 2024, and 2023, related to discontinued operations have not been separately reclassified and are included within each for all periods presented.

Unless indicated otherwise, the information in the notes to these consolidated financial statements relates to the Company’s continuing operations and does not include the results of discontinued operations.

For further information on discontinued operations, refer to Note 3 of these consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Subsequent Event Considerations

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the consolidated financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure, other than those described in Note 17 of these consolidated financial statements.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Changes in estimates are recognized in the period in which they become known.

Critical estimates relied upon in preparing the consolidated financial statements include the determination of variable consideration in the Company’s revenue recognition and the capitalization and useful lives of product, technology, and development costs for website development, internal-use software, and hosting arrangements. Accordingly, the Company considers these to be its critical accounting estimates, and believes that of the Company’s significant accounting policies, these involve the greatest degree of judgment and complexity.

Concentration of Credit Risk

The Company has no significant off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, trade accounts receivable, and other receivables.

The Company maintains its cash and cash equivalents, principally with accredited financial institutions of high credit standing. Although the Company deposits its cash and cash equivalents with multiple financial institutions, its deposits with each such financial institution exceed governmental insured limits.

The Company routinely assesses the creditworthiness of its customers and does not require collateral. The Company generally has not experienced any material losses related to receivables from individual customers or groups of customers.

The Company had no material losses related to receivables as the losses were dispersed across a large number of customers. Due to this factor, no additional credit risk beyond amounts provided for collection losses was believed by management to be probable in the Company’s accounts receivable and other receivables.

As of December 31, 2025 and December 31, 2024, apayment processor for several hundred dealer accounts represented 10.8% and 10.6%, respectively, of net accounts receivable and other receivables. The related accounts receivable balance included unbilled and billed receivables that are not past due. The concentration was driven by the timing of payments pursuant to the agreement with the payment processor, as well as a decrease in the total accounts receivable, net balance as of December 31, 2025 and 2024. The remainder of the accounts receivable was dispersed among more than 1,000 customers. Therefore, the Company does not believe there is significant credit risk with respect to accounts receivable.

For the years ended December 31, 2025, 2024, and 2023, no customer accounted for more than 10% of total revenue.

Significant Accounting Policies

The consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in the notes of these consolidated financial statements.

Cash, Cash Equivalents, and Investments

As of December 31, 2025 and 2024, cash and cash equivalents primarily consisted of cash on deposit with banks and money market funds.

Cash equivalents are carried at cost, which approximates their fair market value.

As of December 31, 2025 and 2024, the Company did not have any investments.

The Company’s investment policy, which was approved by the Audit Committee of the Board, permits investments in fixed income securities, including U.S. government and agency securities, non‑U.S. government securities, money market instruments, commercial paper, certificates of deposit, corporate bonds, and asset‑backed securities.

The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. Investments not classified as cash equivalents with maturities less than one year from the balance sheet date are classified as short‑term investments, while investments with maturities in excess of one year from the balance sheet date are classified as long‑term investments. Management determines the appropriate classification of investments at the time of purchase, and re‑evaluates such determination at each balance sheet date.

Investments in equity securities with readily determinable fair values are recognized at fair value based on quoted market prices within investments in the consolidated balance sheets. Investments in held‑to‑maturity debt securities are recognized at amortized cost within investments in the consolidated balance sheets. The Company adjusts the cost of investments in held-to-maturity debt securities for amortization of premiums and accretion of discounts to maturity, if any. Investments in trading and available-for-sale debt securities are recognized at fair value within investments in the consolidated balance sheets. Purchases of equity securities and debt securities are recognized within investing activities in the consolidated statements of cash flows.

Dividend income from equity securities is recognized within interest income in the consolidated income statements. Reinvested proceeds from dividend income are recognized within purchases of investments in investing activities in the consolidated statements of cash flows.

The revaluation of equity securities and debt securities results in an unrealized gain or loss. Unrealized gains or losses on equity securities and trading debt securities are recognized within other (expense) income, net in the consolidated income statements and adjusted for in operating activities in the consolidated statements of cash flows. Unrealized gains or losses on available-for-sale debt securities are recognized within other comprehensive income in the consolidated statements of comprehensive income. Interest on held-to-maturity debt securities is recognized within interest income in the consolidated income statements.

Proceeds from sale of equity securities and debt securities are recognized within investing activities in the consolidated statements of cash flows. Realized gains and losses on sale of equity securities and debt securities are recognized within other (expense) income, net in the consolidated income statements, adjusted for in operating activities in the consolidated statements of cash flows, and recognized within proceeds from sale of equity securities and debt securities in investing activities in the consolidated statements of cash flows.

Debt securities are reviewed for other‑than‑temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. Other‑than‑temporary impairments of debt securities are recognized within other (expense) income, net in the consolidated income statements if the Company has experienced a credit loss or if it is more likely than not that the Company will be required to sell the investment before recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and duration of the impairment, and changes in value subsequent to the end of the period.

Restricted Cash

As of December 31, 2025, the Company did not have any restricted cash. As of December 31, 2024, restricted cash was related to pass-through payments from dealers. Restricted cash is classified as a current asset on the consolidated balance sheets if it is expected to be used or released within one year. Restricted cash is classified as a non-current asset on the consolidated balance sheetsif it is expected to be used or released beyond one year.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable is recorded based on the amount due from the customer. Accounts receivable do not bear interest.

The Company is exposed to credit losses primarily through its trade accounts receivable. The Company offsets gross trade accounts receivable with an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable and is based upon historical loss trends, the number of days that billings are past due, an evaluation of the potential risk of loss associated with specific accounts, current economic trends and conditions, and reasonable and supportable forecasts of economic conditions. If circumstances relating to specific customers change, or unanticipated changes occur in the general business environment, particularly as it affects auto dealers, the Company’s estimates of the recoverability of receivables could be further adjusted.

Provisions for allowances for doubtful accounts are recognized within general and administrative expense in the consolidated income statements. Amounts are charged against the allowance after all means of collection have been exhausted, the potential for recovery is considered remote, and when it is determined that expected credit losses may occur. The Company does not have any off‑balance sheet credit exposure related to its customers.

As of December 31, 2025, 2024, and 2023, changes in the Company’s allowance for doubtful accounts were as follows:

Unbilled accounts receivable generally relate to services rendered in the current period but not invoiced until the subsequent period.

As of December 31, 2025 and 2024,$16.8 million and$13.2 million, respectively, was included in accounts receivable, net representing unbilled accounts receivable relating primarily to both dealers and advertising customers invoiced in the period subsequent to services rendered and revenue recognition adjustments for Company offered discounts given to dealers in accordance with ASC Topic 606, Revenue from Contracts with Customers(“ASC 606”).

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization using the straight‑line method over the estimated useful lives of the assets. Leasehold improvements and right-of-use assets are amortized over the lease term, or the estimated useful life of the related asset, if shorter. The estimated useful lives of the Company’s property and equipment were as follows:

Expenditures for repairs and maintenance are charged to expense as incurred, whereas major betterments are capitalized as additions to property and equipment.

Impairment of Long‑Lived Assets

The Company evaluates the recoverability of long‑lived assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. During the review, the Company re-evaluates the significant assumptions used in determining the original cost and estimated lives of long-lived assets. Although the assumptions may vary from asset to asset, they generally include operating results, changes in the use of the asset, cash flows, and other indicators of value. Management evaluates whether the remaining useful life continues to be appropriate, estimates the future undiscounted cash flows, and assesses whether there has been an impairment of long-lived assets. To test for impairment, recoverability of these assets is first measured by comparing the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. If the asset is determined to not be recoverable, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.

Capitalized Website Development and Capitalized Internal-Use Software Costs

The Company capitalizes certain costs associated with the development of its websites and internal‑use software after the preliminary project stage is complete and until the website development or software is ready for its intended use. Research and development costs incurred during the preliminary project stage or costs incurred for data conversion activities, training, maintenance, and general and administrative, or overhead costs are expensed as incurred. Capitalization begins when the preliminary project stage is complete, management authorizes and commits to the funding of the project with the required authority, it is probable the project will be completed, the website development or software will be used to perform the functions intended, and certain functional and quality standards have been met. Qualified costs incurred during the operating stage of its website development or software relating to upgrades and enhancements are capitalized to the extent it is probable that they will result in added functionality, while costs that cannot be separated between maintenance of, and minor upgrades and enhancements to, websites and internal‑use software are expensed as incurred. The Company determines the amount of website development and internal-use software costs to be capitalized based on the amount of time spent by its developers on projects in the operating stage of development. There is judgment involved in estimating the time allocated to a particular project in the operating stage. A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods. Capitalized website development and capitalized internal-use software costs are recognized within property and equipment, net in the consolidated balance sheets.

Capitalized website development and capitalized internal-use software costs are amortized on a straight‑line basis over their estimated useful life ofthree years beginning with the time when the product is ready for its intended use. Amortization expenses related to capitalized website development costs are recognized within cost of revenue in the consolidated income statements. Amortization expenses related to capitalized internal-use software costs arerecognized within the operating expense caption for depreciation and amortization in the consolidated income statements. The Company evaluates the useful lives of these assets when each asset is ready for its intended use, and at least annually thereafter to ensure three years remains appropriate. The Company also tests for impairment at least annually and whenever events or changes in circumstances occur that could impact the recoverability of these assets. Impairment is evaluated as discussed in the “Impairment of Long-Lived Assets” section above.

During the year ended December 31, 2025, capitalized website development costs were$26.5 million. During the year ended December 31, 2024, capitalized website development costs were$21.4 million, offset by impairments, disposals, and write offs of$23.9 million primarily due to the end of the CG Buy Online pilot, for a net decrease of$2.5 million.

During the years ended December 31, 2025 and 2024, capitalized internal-use software costs were$5.8 million and$7.2 million, respectively.

For the years ended December 31, 2025, 2024, and 2023, amortization expense associated with capitalized website development costs was$9.0 million,$8.3 million, and$6.8 million, respectively. For the years ended December 31, 2025, 2024, and 2023, amortization expense associated with capitalized internal-use software costs was$4.8 million,$3.3 million, and$2.7 million, respectively.

Capitalized Hosting Arrangements

The Company’s hosting arrangements consist of cloud-based hosting platforms. The Company determines the amount of hosting arrangement implementation costs to be capitalized based on the amount of time spent by its developers on projects in the operating stage of development. There is judgment involved in estimating the time allocated to a particular project in the operating stage. A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods.

Capitalized implementation costs for hosting arrangements are recognized within prepaid expenses, prepaid income taxes, and other current assets and within other non-current assets, as applicable, in the consolidated balance sheets.

Capitalized implementation costs for hosting arrangements are amortized on a straight‑line basis over an estimated useful life of the term of the hosting arrangement, taking into consideration several other factors such as, but not limited to, options to extend the hosting arrangement or options to terminate the hosting arrangement, beginning with the time when the software is ready for intended use. Amortization expenses related to hosting arrangement costs are recognized within the same line item in the consolidated income statements as the expense for fees for the associated hosting arrangement. The Company evaluates the useful lives of these assets when each asset is ready for its intended use, and at least annually thereafter to ensure the selected useful life remains appropriate. The Company also tests for impairment at least annually and whenever events or changes in circumstances occur that could impact the recoverability of these assets. Impairment is evaluated as discussed in the “Impairment of Long-Lived Assets” section above.

During the years ended December 31, 2025, 2024, and 2023, the Company launched separate initiatives designed to enhance its hosting arrangements related to its enterprise applications. During the year ended December 31, 2025, capitalized implementation costs were$2.2 million and recognized within prepaid expenses, prepaid income taxes, and other current assets and within other non-current assets in the consolidated balance sheets. During the year ended December 31, 2024, capitalized implementation costs were$0.4 million and recognized within prepaid expenses, prepaid income taxes, and other current assets and within other non-current assets in the consolidated balance sheets, offset by impairments of $1.0 million due to the end of the CG Buy Online pilot, for a net decrease of $0.6 million.

For the years ended December 31, 2025, 2024, and 2023, amortization expense associated with hosting arrangements was$1.8 million,$2.3 million, and$2.0 million, respectively, and recognized within operating expense and cost of revenue in the consolidated income statements.

Business Combinations

Valuation of Acquired Assets and Liabilities

The Company measures all consideration transferred in a business combination at its acquisition-date fair value. Consideration transferred is determined by the acquisition-date fair value of assets transferred and liabilities assumed, including contingent consideration obligations, as applicable. The Company measures goodwill as the excess of the consideration transferred over the net of the acquisition-date amounts of assets acquired less liabilities assumed.

The Company makes significant assumptions and estimates in determining the fair value of the acquired assets and liabilities as of the acquisition date, especially the valuation of intangible assets and certain tax positions. The Company records estimates as of the acquisition date and reassess the estimates at each reporting period up toone year after the acquisition date. Changes in estimates made prior to finalization of purchase accounting arerecognized within goodwill.

Intangible Assets

Intangible assets are recognized at their estimated fair value at the date of acquisition. Fair value is determined based on inputs and assumptions such as discount rates, rates of return on assets, and long-term sales growth rates.

The Company amortizes intangible assets over their estimated useful lives on a straight-line basis. Useful lives are established based on analysis of all pertinent factors such as the expected use of the asset, expected useful lives of related assets, provisions that may limit the useful life, historical experience with similar arrangements, and effects of economic factors, demand, competition, obsolescence, and maintenance required to maintain the future cash flows. Amortization is recognized over the relevant estimated useful lives ranging from 3 to 11 years. Amortization expenses related to intangible assets arerecognized within the operating expense caption for depreciation and amortization and cost of revenue in the consolidated income statements.

The Company evaluates the useful lives of these assets as of the acquisition date and at least annually thereafter to ensure the selected useful life remains appropriate. If the estimate of an intangible asset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.

The Company monitors its long-lived assets for impairment indicators on an ongoing basis in accordance with GAAP, and tests for impairment at least annually and whenever events or changes in circumstances occur that could impact the recoverability of these assets. Impairment is evaluated as discussed in the“Impairment of Long-Lived Assets” section above.

Goodwill

Goodwill is recognized when consideration paid in a purchase acquisition exceeds the fair value of the net assets acquired. Goodwill is not amortized, but rather is tested for impairment annually or more frequently if facts and circumstances warrant a review. Conditions that could trigger a more frequent impairment assessment include, but are not limited to, a significant adverse change in certain agreements, significant underperformance relative to historical or projected future operating results, an economic downturn affecting automotive marketplaces, increased competition, a significant reduction in the Company’s stock price for a sustained period, or a reduction of its market capitalization relative to net book value.

The Company evaluates impairment either when required following a triggering event or annually on October 1. The Company initially performs a qualitative assessment to determine whether the existence of events or circumstances indicates that it is more likely than not that the carrying value of each reporting unit is greater than its fair value. The Company may choose to bypass the qualitative assessment and proceed directly to a quantitative assessment to assist in the evaluation. During a qualitative assessment, if the Company determines that it is more likely than not that the carrying value of goodwill is less than its fair value, no further testing is necessary.

If the Company determines that it is more likely than not that the carrying value of goodwill is more than its fair value, the Company will perform a quantitative assessment and compare the estimated fair value of the reporting unit to the carrying value. In determining the estimated fair values of reporting units in a quantitative goodwill impairment test, the Company estimates fair value using a market approach, based on market multiples derived from public companies that it identifies as peers. For each reporting unit, the Company estimates forecasted revenue for the fiscal year and estimates revenue market multiples using publicly available information for each of its peers. The Company reconciles the aggregate fair values of all reporting units to the Company’s market capitalization for reasonableness.

If the carrying value of a reporting unit exceeds its estimated fair value, a goodwill impairment is recognized.

Redeemable Noncontrolling Interest

In connection with the Company’s acquisition of a 51% interest in CarOffer on January 14, 2021 (“2021 CarOffer Transaction”), the Company entered into the Third Amended and Restated Limited Liability Company Agreement, dated November 23, 2021 (the“2021 CarOffer Operating Agreement”), with CarOffer, CarOffer Investors Holding, LLC (“TopCo”), the Member of TopCo, and CarOffer MidCo, LLC (“CarOffer Midco”). The 2021 CarOffer Operating Agreement provided the Company with the right to purchase, and the noncontrolling equity holders with the right to sell to the Company, the noncontrolling CarOffer equity holders’ equity interests in CarOffer at a contractually defined formulaic purchase price, which was based on a multiple of earnings.

Subsequent to the 2021 CarOffer Transaction, the redeemable noncontrolling interest was measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value and its carrying amount adjusted for net loss attributable to the noncontrolling interest and tax distributions to redeemable noncontrolling interest holders. Adjustments to the carrying value of the redeemable noncontrolling interest resulting from changes in the redemption value were recognized within retained earnings in the consolidated balance sheets.

On November 6, 2023, the Company entered into a Membership Interest Purchase Agreement (the “2023 Purchase Agreement”) with TopCo, CarOffer Midco, each of the persons set forth on Schedule 1.1(a) to the 2023 Purchase Agreement, Bruce T. Thompson, as the sellers’ representative, and the responsible party signatory thereto. Pursuant to the 2023 Purchase Agreement the Company acquired the remaining minority equity interests in CarOffer (the “2023 CarOffer Transaction”) for an aggregate consideration of $75.0 million in cash, subject to certain adjustments set forth in the 2023 Purchase Agreement. The 2023 CarOffer Transaction was completed on December 1, 2023. As a result of the 2023 CarOffer Transaction, there was no redeemable noncontrolling interest as of December 31, 2023.

On August 6, 2025, the Board determined, after considering all reasonably available options and a broader strategic reassessment, that it is in the best interests of its stockholders to wind down CarOffer, including the CarOffer Transactions Business. As of December 31, 2025, CarOffer is considered a discontinued operation. For further information, refer to Note 3 of these consolidated financial statements.

Leases

The Company recognizes an operating lease liability for the obligation to make lease payments and an operating lease right-of-use asset for the right to use the underlying assets for the lease term. The Company reviews all material contracts for embedded leases to determine if they have a right-of-use asset. The Company made an accounting policy election to apply the practical expedient under ASC Topic 842, Leases, to not separate lease components from non-lease components for all leases.

The Company recognizes lease payments on a straight-line basis over the lease term. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Variable lease payments that depend on an index or a rate are included in the lease payments and are measured using the prevailing index or rate at the measurement date. Variable lease payments not based on an index or a rate are excluded from lease payments and are expensed as incurred.

The Company allocates lease costs, which includes operating lease costs, finance lease costs, and variable lease payments, across all departments based on headcount in the respective location.

The Company made an accounting policy election to not recognize a lease liability or right-of-use asset on its consolidated balance sheets for leases with an initial term of 12 months or less, and instead to recognize lease payments on a straight-line basis over the lease term as expense and variable lease payments that do not depend on an index or rate as expense in the period in which the achievement of the specified target that triggers the variable lease payments becomes probable.

The Company recognizes sublease income on a straight-line basis over the sublease period. The Company recognizes sublease income as an offset to rent expense within operating expenses in the consolidated income statements as subleasing is not a primary business activity of the Company and is meant to offset occupancy costs.

Contingent Liabilities

The Company has certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues for loss contingencies when losses become probable and can be reasonably estimated. The Company recognizes contingent liabilities within accrued expenses, accrued income taxes, and other current liabilities, and other non-current liabilities in the consolidated balance sheets, as applicable, depending on if the contingency is expected to be resolved within one year or more. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recognized as a liability. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable; however, it discloses the range of such reasonably possible losses, if material.

Income Taxes

The Company is subject to federal and state income taxes in the U.S. and income taxes in foreign jurisdictions in which it operates.

The Company accounts for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected to be recovered or settled.

The asset and liability method requires a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In performing this analysis, the Company considers future taxable income and ongoing prudent and feasible tax planning strategies to assess realizability. Valuation allowances are reassessed periodically to determine whether it is more likely than not that the tax benefits will be realized in the future and if any existing valuation allowance should be released.

The Company accounts for uncertain tax positions by prescribing a more‑likely‑than‑not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company assesses its income tax positions and recognizes an income tax benefit or expense within the provision for income taxes in the consolidated income statements based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. The tax position is measured as the largest amount of benefit or expense that is greater than 50% likely to be realized upon ultimate settlement with the taxing authority during examination. The Company recognizes interest and penalties, if applicable, related to uncertain tax positions as income tax expense within other (expense) income, net in the consolidated income statements. The Company recognizes liabilities related to uncertain tax positions within accrued expenses, accrued income taxes, and other current liabilities, and other non-current liabilities in the consolidated balance sheets, as applicable, depending on if the uncertainty is expected to be resolved within one year or more.

The Organisation for Economic Co-operation and Development introduced an international tax framework under Pillar Two which includes a global minimum tax of 15%. The Company has performed an assessment of its potential exposure to Pillar Two income taxes based on the Company’s most recent tax filings, country-by-country reporting, and financial statements for the constituent entities within the Company. Based on the assessment performed, the Company qualifies for the transitional safe harbor in all jurisdictions in which it operates. The Company does not expect a material exposure to Pillar Two income taxes.

The Tax Cuts and Jobs Act of 2017 subjects a U.S. stockholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. An entity can make an accounting policy election, per the FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, either to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI as a period cost in the year the tax is incurred.

The Company applies a 1% excise tax imposed on certain stock repurchases by publicly traded U.S. corporations made after December 31, 2022.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes significant tax provisions, such as accelerated cost recovery of qualified property and immediate expensing of U.S.-based research and development costs. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The impact of these changes will be recognized in the period in which the legislation was enacted. The OBBBA includes a provision which allows for immediate expensing of domestic research and development costs and accelerated amortization of previously capitalized domestic research and development costs. Based on the Company’s evaluation, the Company has concluded that the OBBBA has not had a material impact on its income tax provision, but did have a material impact on 2025 cash taxes and will have a material impact on 2026 cash taxes.

In December 2023 the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company prospectively adopted ASU 2023-09 during the year ended December 31, 2025, which resulted in additional disclosures. ASU 2023-09 did not have an impact on the Company’s financial position or results of operations.

The Company will continue to monitor the changes in tax laws and regulations to evaluate their potential impact on its business.

Fair Value of Financial Instruments

The Company measures eligible assets and liabilities at fair value with changes in value recognized in earnings. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting.

During the years ended December 31, 2025 and 2024, the Company did not elect to remeasure any of its existing financial assets and did not elect the fair value option for any financial assets transacted. As of December 31, 2025 and 2024, the carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximated their fair values due to the short-term nature of these instruments.

ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a three-level valuation hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price or exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company uses valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

Level 1 — Quoted unadjusted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all observable inputs and significant value drivers are observable in active markets.

Level 3 — Model-derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company.

The Company evaluates the estimated fair value of financial instruments using available market information. The use of different market assumptions, estimation methodologies, or both could have a significant effect on the estimated fair value amounts.

Debt

The Company may obtain access to capital via credit facilities. The amount of borrowings outstanding on credit facilities are recognized within other current liabilities or other non-current liabilities in the consolidated balance sheets, depending on the borrowing base. Costs for unutilized revolving commitments and interest for outstanding borrowings are recognized as interest expense within other (expense) income, net in the consolidated income statements. Interest payments are recognized within operating activities in the consolidated statements of cash flows, and repayments of principle amounts are recognized within financing activities in the consolidated statements of cash flows.

Deferred Financing Costs

The Company capitalizes certain legal and other third-party fees that are directly associated with obtaining access to capital via credit facilities. Deferred financing costs incurred in connection with obtaining access to capital are recognized within other non-current assets in the consolidated balance sheets and within financing activities in the consolidated statements of cash flows. These costs are amortized on a straight-line basis over the term of the applicable credit facility and recognized as interest expense within other (expense) income, net in the consolidated income statements and as an adjustment to consolidated net income in the consolidated statements of cash flows.

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company’s foreign subsidiaries is the local currency of each subsidiary. All assets and liabilities in the balance sheets of entities whose functional currency is a currency other than the U.S. dollar are translated into U.S. dollar equivalents at exchange rates as follows: (i) asset and liability accounts at period‑end rates; (ii) income statement accounts at weighted‑average exchange rates for the period; and (iii) stockholders’ equity accounts at historical exchange rates. The resulting translation adjustments are excluded from consolidated net income and are recognized within accumulated other comprehensive income (loss) in the consolidated balance sheets.

Foreign currency transaction gains and losses are included in consolidated net income for the period. The Company’s foreign subsidiaries have intercompany transactions that are eliminated upon consolidation, and these transactions expose the Company to foreign currency exchange rate fluctuations. Exchange rate fluctuations on short‑term intercompany transactions are recognized in other (expense) income, net in the consolidated income statements. Exchange rate fluctuations on long-term intercompany transactions are recognized within accumulated other comprehensive income (loss) in the consolidated balance sheets.

Revenue Recognition

The Company derives its revenue from (i) dealer subscription fees, (ii) advertising from auto manufacturers and other brand advertisers, and (iii) partnerships with financing services companies.

ASC 606 outlines a comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps:

Identify the contract with a customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to performance obligations in the contract

Recognize revenue when or as the Company satisfies a performance obligation

Dealer Subscription Revenue - Description

The Company offers multiple types of Listings packages to its dealers for its CarGurus platform (availability varies on the Company’s marketplaces): Restricted Listings, which is free; and various levels of Listings packages, each of which require a paid subscription under a monthly, quarterly, semiannual, or annual subscription basis.

The Company’s dealer Listings subscription packages generally auto-renew on a monthly basis and are cancellable by dealers with 30 days’ advance notice prior to the commencement of the applicable renewal term. Subscription pricing is determined based on a dealer’s inventory size, region, and the Company’s assessment of the connections and return on investment (“ROI”) the platform will provide them and is subject to discounts and/or fee reductions that the Company may offer from time to time. The Company also offers all dealers on the platform access to its Dealer Dashboard, which includes a performance summary, dealer insights features, and user review management platform. Only dealers subscribing to a paid Listings package receive access to certain additional features.

The Company also offers dealers subscribing to certain of its Listings packages additional exposure and lead enhancements, such as Audience Targeting. Through Audience Targeting, dealers can buy advertising that appears on other sites on the internet and/or on high-converting social media platforms. Such advertisements can be targeted by the user’s geography, search history, CarGurus website activity, and a number of other factors, allowing dealers to increase their visibility with in-market consumers and drive qualified traffic for dealers.

The Company also offers dealers subscribing to certain of its Listings packages other subscription products such as Digital Deal, which allows shoppers to complete much of the vehicle-purchase process online through the Dealers’ Listings page and gives dealers higher quality leads through upfront consumer-provided information.

The Company also offers dealers subscribing to certain of its Listings packages other subscription products such as Sell My Car, which allows dealers to pay for leads to receive direct access to shoppers actively looking to sell their vehicles. Dealers can acquire inventory from shoppers who are looking to sell directly through the CarGurus Sell My Car page.

Dealer Subscription Revenue - Revenue Recognition

For dealer subscription products the Company provides a single similar service each day for a period of time. Each time increment (i.e., one day), rather than the underlying activities, is distinct and substantially the same and, therefore, the performance obligation of the Company is to provide a series of daily activities over the contract term.

Total consideration for revenue is stated within the contracts. At the portfolio level, there is also variable consideration that needs to be included in the transaction price. Variable consideration consists of sales allowances and concessions that change the transaction price of the unsatisfied or partially unsatisfied performance obligation. There are no contractual cash refund rights, but credits may be issued to a customer at the sole discretion of the Company. The Company recognizes that there are times when there is a customer satisfaction issue or other circumstances that will lead to a credit. Due to the known possibility of future credits, a monthly sales allowance review is performed to defer revenue at a portfolio level for such future adjustments in the period of incurrence. The Company establishes sales allowances at the time of revenue recognition based on its history of adjustments and credits provided to its customers. In assessing the adequacy of the sales allowance, the Company evaluates its history of adjustments and credits made through the date of the issuance of the consolidated financial statements. Sales allowances are recognized as a reduction to revenue in the consolidated income statements. Dealer customers do not have the right to take possession of the Company’s software.

Performance obligations are satisfied over time as the customer simultaneously receives and consumes the benefit of the service. Revenue is recognized ratably over the subscription period beginning on the date the Company starts providing services to the customer under the contract. Revenue is presented net of any taxes collected from customers. Customers are billed in advance on the first day of each calendar month with payment terms generally due upon receipt or 30 days from the date invoiced. Billings are recognized as accounts receivable or short-term deferred revenue when payment is received in advance of services being delivered to the customers.

Advertising Revenue - Description

The Company offers non-dealer advertising to auto manufacturers and other brand advertisers sold on a cost per thousand impressions basis. An impression is an advertisement loaded on a web page. The Company also has advertising sold on a cost-per-click basis. Pricing is primarily based on advertisement size and position on the Company’s websites and mobile applications. Auto manufacturers and other brand advertisers can execute advertising campaigns that are targeted across a wide variety of parameters, including demographic groups, behavioral characteristics, and, for automotive campaigns, specific auto brands, categories such as Certified Pre-Owned, and segments such as hybrid vehicles. The Company does not provide minimum impression guarantees or other types of minimum guarantees in its contracts with customers. Advertising is also sold indirectly through revenue sharing arrangements with advertising exchange partners.

Advertising Revenue - Revenue Recognition

For non-dealer advertising revenue from auto manufacturers and other brand advertisers, the performance obligation is to publish the agreed upon campaign on the Company’s websites and load the related impressions.

Advertising contracts state the transaction price within the agreement with payment generally being based on the number of clicks or impressions delivered on the Company’s websites. Total consideration is based on output and deemed variable consideration constrained by an agreed upon delivery schedule and is allocated to the period in which the service was rendered. Additionally, there are generally no contractual cash refund rights. Certain contracts do contain the right for credits in situations in which impressions are not displayed in compliance with contractual specifications. At an individual contract level, the Company may give a credit for a customer satisfaction issue or other circumstance. Due to the known possibility of future credits, a monthly review is performed to defer revenue at an individual contract level for such future adjustments in the period of incurrence.

Performance obligations for Company-sold advertising revenue and partner-sold advertising revenue are satisfied over time as impressions are delivered. Revenue is recognized based on the total number of impressions delivered within the specified period. Revenue from advertising sold directly by the Company is recognized based on the gross amount charged to the advertiser because the Company is the principal in the arrangement as it controls the ad placement and timing of the campaign, establishes the selling price, and is directly responsible for the fulfillment of the contractual terms including any remedy for issues with such fulfillment. Revenue from advertising sold by partners is recognized based on the net amount of revenue received from the content partners because the Company is the agent in the arrangement as the advertising partner is responsible for fulfillment, including the acceptability of the services delivered. In partner-sold advertising arrangements, the advertising partner has a direct contractual relationship with the advertiser. There is no contractual relationship between the Company and the advertiser for partner-sold transactions. Additionally, for auction-based partner agreements, the Company has latitude in establishing the floor price, but the final price established by the exchange server is at market rates. Revenue is presented net of any taxes collected from customers. Customers are billed monthly in arrears with payment terms generally 30, 60, or 90 days from the date invoiced. Unbilled accounts receivable generally relate to services rendered in the current period, but not invoiced until the subsequent period.

Financing Revenue - Description

The Company also derives revenue from partnerships with certain financing services companies pursuant to which the Company enables eligible consumers on the CarGurus U.S. website to pre-qualify for financing on cars from dealerships that offer financing through such companies. The Company primarily generates revenue from these partnerships based on the number of funded loans from consumers who pre-qualify with its lending partners through its site.

Financing Revenue - Revenue Recognition

For contracts related to the Company’s partnerships with financing services companies, revenue is estimated and recognized on a ratable basis over the contractual term.

Contracts with Multiple Performance Obligations

The Company periodically enters into arrangements that include multiple dealer subscriptions. These contracts include multiple promises that the Company evaluates to determine if the promises are separate performance obligations. Performance obligations are identified based on services to be transferred to a customer that are distinct within the context of the contractual terms. Once the performance obligations have been identified, the Company determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. If required, the transaction price is allocated to each performance obligation in the contract based on a relative standalone selling price method as the performance obligation is being satisfied. For the Company’s arrangements that include multiple dealer subscriptions, the performance obligations were satisfied over a consistent period of time and, therefore, the allocations did not impact the revenue recognized.

Costs to Obtain a Contract

Commissions paid to sales representatives and payroll taxes are considered costs to obtain a contract. Under ASC 606, the costs to obtain a contract require capitalization and amortization of those costs over the period of benefit. Although the guidance specifies the accounting for an individual contract with a customer, as a practical expedient, the Company has opted to apply the guidance to a portfolio of contracts with similar characteristics. The Company has opted to apply another practical expedient to immediately expense the incremental cost of obtaining a contract when the underlying related asset would have been amortized over one year or less. As such, the Company applied this practical expedient to advertising contracts as the term is one year or less and these contracts do not renew automatically. The practical expedient is not applicable to subscription contracts as the period of benefit including renewals is anticipated to be greater than one year. The assets are periodically assessed for impairment.

For subscription customers, the commissions paid on contracts with new customers, in addition to any commission amount related to incremental sales, are capitalized and amortized over the estimated benefit period of the customer relationship taking into account factors such as peer estimates of technology lives and customer lives as well as the Company’s own historical data. Commissions paid that are not directly related to obtaining a new contract are expensed as incurred.

Additionally, the Company allocates employer payroll tax expense to the commission expense in proportion to the overall payroll taxes paid during the respective period. As such, capitalized payroll taxes are amortized in the same manner as the underlying capitalized commissions.

Deferred Revenue

Deferred revenue primarily consists of billings with an enforceable right to payment and payments in advance of revenue recognition and is recognized as the revenue recognition criteria are met. The Company generally invoices its customers monthly. Accordingly, the deferred revenue balances do not represent the total contract value of annual or multiyear subscription agreements. Deferred revenue that is expected to be recognized during the succeeding 12‑month period is recognized as current deferred revenue and the remaining portion is recognized as noncurrent in the consolidated balance sheets. All deferred revenue was recognized as current for all periods presented.

Cost of revenue includes expenses related to supporting and hosting service offerings. These expenses include personnel and related expenses for the Company’s customer support team, including salaries, benefits, incentive compensation, and stock-based compensation; third-party service provider expenses such as advertising, data, and hosting expenses; amortization of developed technology; amortization and impairment of capitalized website development; amortization of capitalized hosting arrangements; and allocated overhead expenses. The Company allocates overhead expenses, such as rent and facility expenses, software expense, and employee benefit expense, to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each operating expense category.

Stock‑Based Compensation

For stock‑based awards granted under the Company’s stock‑based compensation plans, the fair value of each award is determined on the date of grant.

For restricted stock units (“RSUs”) granted subject to service-based vesting conditions, the fair value is determined on the date of grant using the closing price of the Company’s Class A common stock, par value $0.001 per share (the “Class A common stock”), as reported on the Nasdaq Global Select Market. RSUs granted subject to service-based vesting conditions generally vest over afour-year requisite service period.

For stock options granted, the fair value is determined on the date of grant using the Black‑Scholes option‑pricing model. The determination of the fair value is affected by the Company’s stock price and a number of assumptions including expected dividend yield, expected volatility, risk-free interest rate, and expected term. For expected volatility, the Company uses a blended volatility to combine the historical volatility of trading with the volatility for a peer group of companies as the Company does not have historical stock prices for a period that is at least equal to the expected term. Stock options granted generally have a term often years from the date of grant and generally vest over afour-year requisite service period. There wereno stock options granted during the years ended December 31, 2025, 2024, or 2023.

The Company issues shares of Class A common stock upon the vesting of RSUs and the exercise of stock options out of its shares available for issuance.

The Company accounts for forfeitures when they occur.

The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period, with the amount of compensation expense recognized at any date at least equaling the portion of the grant-date fair value of the award that is vested at that date.

The tax effect of differences between tax deductions related to stock compensation and financial statement compensation expense are recognized as an income tax benefit or expense within the provision for income taxes in the consolidated income statements. The permanent differences, including excess tax benefits and expenses, are recognized within accrued expenses, accrued income taxes, and other current liabilities in the consolidated balance sheets and classified as an operating activity in the consolidated statements of cash flows. The temporary differences are recognized within deferred tax assets in the consolidated balance sheets and classified as deferred taxes in the consolidated statements of cash flows.

Common Stock Share Repurchases

Repurchases of the Company’s Class A common stock that are retired are recognized as a reduction to common stock at par value and the remainder is recognized as a reduction to additional paid-in capital in the consolidated balance sheets. If additional paid-in capital is reduced to zero, repurchases of the Class A common stock in excess of the par value are recognized as a reduction to retained earnings in the consolidated balance sheets.

If there is a difference between the trade date and the settlement date for shares repurchased as of period end, a liability is recognized within accrued expenses, accrued income taxes, and other current liabilities in the consolidated balance sheets.

The Company is required to pay a 1% excise tax on certain stock repurchases The excise tax is considered a direct and incremental cost of the share repurchase and is recognized as a reduction to additional paid-in capital in the consolidated balance sheets. Other direct and incremental costs, such as commissions and legal expenses, are recognized as a reduction to additional paid-in capital in the consolidated balance sheets.

Advertising Costs

Advertising costs are expensed as incurred and recognized within sales and marketing expense in the consolidated income statements. For the years ended December 31, 2025, 2024, and 2023, advertising expense was$183.0 million,$160.7 million, and$138.8 million, respectively.

Comprehensive Income

Comprehensive income is defined as the change in stockholders’ equity of a business enterprise during a period from transactions and other events and circumstances from non‑owner sources. Comprehensive income consists of consolidated net income and other comprehensive income, which includes certain changes in equity that are excluded from consolidated net income, such as foreign currency translation adjustments. Accumulated other comprehensive income (loss) is presented separately in the consolidated balance sheets.

Recent Accounting Pronouncements Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies and adopted by the Company on or prior to the specified effective date. Unless otherwise disclosed below, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. As of December 31, 2025, there are no new accounting pronouncements that the Company is considering adopting, other than those described below.

In September 2025 the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which clarifies and modernizes the guidance to reflect the evolution of software development from a sequential to an agile development method. ASU 2025-06 removes all references to project development stages to reflect this change in software development and requires capitalization of software costs to begin when management has authorized and committed to funding the project and it is probable the project will be completed and used to perform the intended function. ASU 2025-06 does not change what internal-use software costs can be capitalized or when such capitalization ceases. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. ASU 2025-06 may be adopted either prospectively, using a modified transition approach, or retrospectively. The Company is currently evaluating the impact of ASU 2025-06 on its future consolidated financial statements and related disclosures.

In November 2024 the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 is intended to provide more detailed expense information and requires additional disaggregated disclosures in the notes to the financial statements for categories of expenses that are included on the face of the income statement. ASU 2024-03 is effective for the fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 may be applied either prospectively to financial statements issued for periods after the effective date of ASU 2024-03 or retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact of ASU 2024-03 on its future consolidated financial statements and related disclosures.

3. Discontinued Operations

On August 6, 2025, the Board determined, after considering all reasonably available options and a broader strategic reassessment, that it is in the best interests of its stockholders to wind down CarOffer, including the CarOffer Transactions Business. Following the broader strategic reassessment, the Company concluded that the CarOffer Transactions Business has proven less effective in today’s more volatile and unpredictable pricing environment, where dealers require more flexibility and broader automation to streamline fulfillment than the model could provide.

The wind-down of CarOffer was completed and the business was considered abandoned for accounting purposes as of December 31, 2025. The Company has presented the financial results of CarOffer as discontinued operations in the consolidated financial statements for all periods presented, except for the consolidated statements of comprehensive income, the consolidated statements of redeemable noncontrolling interest and stockholders’ equity, and the consolidated statements of cash flows. These statements have not been separately reclassified and discontinued operations are included within each for all periods presented.

The assets, liabilities, and results of operations of CarOffer, excluding certain assets that have been repurposed for corporate use, have been presented as discontinued operations for all periods presented in the consolidated balance sheets and income statements in accordance with ASC 205-20, Discontinued Operations, as the disposition represents a strategic shift that has a major effect on the Company’s operations and financial results. No assets or liabilities were classified as discontinued operations as of December 31, 2025. CarOffer’s operations were previously reported within the Digital Wholesale segment.

As of December 31, 2024, major classes of assets and liabilities of discontinued operations included in the consolidated balance sheet were as follows:

For the years ended December 31, 2025, 2024, and 2023, major classes of discontinued operations included in the consolidated income statements were as follows:

(1)

Diluted earnings per share from discontinued operations is calculated using the net income from continuing operations to determine the denominator, in accordance with applicable guidance.

The Company has elected to present its consolidated statement of cash flows on a consolidated basis, inclusive of discontinued operations activity in the table below. For the years ended December 31, 2025, 2024, and 2023, the following table presents significant non-cash items and capital expenditures of the discontinued operations for the periods presented:

(1)

During the year ended December 31, 2025, the Company recognized impairments related to CarOffer of $0.3 million, $0.8 million, $4.8 million, $6.6 million, and $19.6 million for capitalized hosting arrangements, capitalized internal-use software, capitalized website development costs, intangible assets, and goodwill, respectively. During the year ended December 31, 2024, the Company recognized impairments related to CarOffer of $7.6 million and $115.2 million for intangible assets and goodwill, respectively.

As a result of thewind-down, the Company incurred total expenditures of $13.3 million, of which all cash expenditures have been paid. Of this amount, the Company incurred and paid$5.4 million ofone-time restructuring costs, including severance and other employee-related costs and contract termination charges, attributable to discontinued operations.

4. Revenue Recognition

The Company provides disaggregation of revenue by geographic region. Revenue by geographic region is disaggregated by (i) U.S. and (ii) International regions as disclosed in Note 14 of these consolidated financial statements. The Company believes these categories best depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of the relevant year end.

For contracts with an original expected duration greater than one year, the aggregate amount of the transaction price allocated to the performance obligations that were unsatisfied as of December 31, 2025, was approximately$77.3 million, the majority of which the Company expects to recognize over the next 12 months.

For contracts with an original expected duration of one year or less, the Company has applied the practical expedient available under ASC 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations as of December 31, 2025. For performance obligations not satisfied as of December 31, 2025, and to which this expedient applies, the nature of the performance obligations, the variable consideration, and any consideration from contracts with customers not included in the transaction price is consistent with performance obligations satisfied as of December 31, 2025.

As of December 31, 2025 and 2024, assets associated with costs to obtain a contract were$28.8 million and$25.7 million, respectively. For the years ended December 31, 2025, 2024, and 2023, amortization expense associated with costs to obtain a contract was$16.4 million,$14.0 million, and$11.8 million, respectively.

For the years ended December 31, 2025, 2024, and 2023, revenue recognized from amounts included in deferred revenue at the beginning of the period was$21.5 million,$21.1 million, and$11.7 million, respectively.

5. Fair Value of Financial Instruments

As of December 31, 2025 and 2024, assets measured at fair value on a recurring basis consisted of the following:

For the years ended December 31, 2025, 2024, and 2023, dividend income recognized within interest income in the consolidated income statements wasnone, immaterial, and $3.1 million, respectively.

For the years ended December 31, 2025, 2024, and 2023, unrealized and realized gains or losses on investments werenone or immaterial.

6. Property and Equipment, Net

As of December 31, 2025 and 2024, property and equipment, net consisted of the following:

For the years ended December 31, 2025, 2024, and 2023, depreciation and amortization expense, excluding amortization of intangible assets, amortization of capitalized hosting arrangements, disposals, and impairments, was$24.3 million,$16.7 million, and$12.7 million, respectively.

7. Intangible Assets and Goodwill

Intangible Assets

As of December 31, 2025 and 2024, intangible assets, exclusive of assets that have been retired, consisted of the following:

For the years ended December 31, 2025, 2024, and 2023, amortization of intangible assets was$0.9 million,$0.9 million, and$1.0 million, respectively.

As of December 31, 2025, estimated amortization expense of intangible assets for future periods was as follows:

Goodwill

As of December 31, 2025, changes in the carrying value of goodwill were as follows:

The Company performed a qualitative assessment of its goodwill for impairment as of October 1, 2025, and did not identify any impairment. The Company did not identify any indicators of impairment as of December 31, 2025.

8. Accrued Expenses, Accrued Income Taxes, and Other Current Liabilities

As of December 31, 2025 and 2024, accrued expenses, accrued income taxes, and other current liabilities consisted of the following:

9. Debt

As of December 31, 2025 and 2024, the Company hadno long-term debt outstanding.

Revolving Credit Facility

On September 26, 2022, the Company entered into a Credit Agreement with PNC Bank, National Association, as administrative agent and collateral agent and an L/C Issuer (as defined in the Credit Agreement), and the other lenders, L/C Issuers, and parties thereto from time to time (the “Credit Agreement”). The Credit Agreement consists of a revolving credit facility (the “2022 Revolver”), which allows the Company to borrow up to $400.0 million, $50.0 million of which may be comprised of a letter of credit sub-facility (the “2022 Revolver Sub-facility”). The borrowing capacity under the Credit Agreement may be increased in accordance with the terms and subject to the adjustments as set forth in the Credit Agreement. Specifically, the borrowing capacity may be increased by an amount up to the greater of $250.0 million or 100% of Four Quarter Consolidated EBITDA (as defined in the Credit Agreement) if certain criteria are met and subject to certain restrictions. Any such increase requires lender approval. Proceeds of any borrowings may be used for general corporate purposes. The 2022 Revolver is scheduled to mature on September 26, 2027.

The applicable interest rate is, at the Company’s option, based on a number of different benchmark rates and applicable spreads, based on the ratio of the outstanding principal amount of the Company’s secured indebtedness to the trailing four quarters of consolidated EBITDA (as determined under the Credit Agreement, the “Consolidated Secured Net Leverage Ratio”). The Credit Agreement also requires the Company to pay a commitment fee to the lenders with respect of the unutilized revolving commitments at a rate ranging from 0.125% to 0.175% per annum based on the Consolidated Secured Net Leverage Ratio, as determined on a quarterly basis.

The 2022 Revolver is secured by a first priority lien on substantially all tangible and intangible property of the Company, as well as any future guarantors, and pledges of the equity of certain wholly-owned subsidiaries, in each case subject to certain exceptions, limitations, and exclusions from the collateral. The Credit Agreement includes customary events of default and requires the Company to comply with customary affirmative and negative covenants, including a financial covenant requiring that the Company not exceed certain Consolidated Secured Net Leverage Ratio ranges at the end of each fiscal quarter. The Company was in compliance with all covenants as of December 31, 2025.

As of December 31, 2025, there wereno borrowings and$9.4 million in letters of credit outstanding under the 2022 Revolver Sub-facility associated with the Company’s leases, which reduced the borrowing capacity under the 2022 Revolver to$390.6 million. During the year ended December 31, 2025, there were $0.5 million in letters of credit outstanding under the 2022 Revolver Sub-facility related to the Company’s previous Cambridge lease, which has expired. As of December 31, 2024, there wereno borrowings and$9.9 million in letters of credit outstanding under the 2022 Revolver Sub-facility associated with the Company’s leases, which reduced the borrowing capacity under the 2022 Revolver to$390.1 million.

As of December 31, 2025 and 2024, deferred financing costs were$0.9 million and$1.4 million, respectively, recognized within other non-current assets in the consolidated balance sheets.

For the years ended December 31, 2025, 2024, and 2023, amortization expense associated with deferred financing costs was immaterial.

For the years ended December 31, 2025, 2024, and 2023, commitment fees under the 2022 Revolver were immaterial.

10. Commitments and Contingencies

Contractual Obligations and Commitments

As of December 31, 2025, all of the Company’s property and equipment and capitalized hosting arrangements have been purchased with cash with the exception of unpaid amounts as disclosed in the consolidated statements of cash flows.

Leases

The Company’s material lease obligations consist of various leases for office space in: Boston, Massachusetts; Cambridge, Massachusetts; and Addison, Texas.

The Company hasnon-cancellable lease terms through 2039 for its various commenced operating leases, certain of which include theoption to extend the lease term up to two additional periods of five years. These options are not recognized within the right-of-use asset and lease liability. Additionally, certain leases provide for annual rent increases through the terms of the leases, leasehold improvement incentives, and variable payments related to operating expenses, taxes, utilities, insurance, and maintenance expenses. Certain leases also contain non-lease components in the contract. Non-lease components relate to operating expenses, parking, utilities, and maintenance expenses.

The Company hadnon-cancellable lease terms through 2025 for its various operating subleases for which the Company acted as the lessor. Additionally, certain subleases provided for annual rent increases through the terms of the leases and variable payments related to operating expenses, taxes, parking, and utilities. Certain subleases also contained both lease and non-lease components in the contract. Non-lease components related to operating expenses, parking, utilities, and maintenance expenses. As of December 31, 2025, the lease terms for the Company’s subleases expired.

Addison, Texas Lease Impairment

For the years ended December 31, 2025 and 2024, the Company performed interim impairment tests at the CarOffer reporting unit and recognized non-cash impairment charges of $0.5 million and $4.7 million, respectively, related to right-of-use assets.

Following the completion of the wind-down of CarOffer, the Company is holding the Addison lease right-of-use assets as corporate assets and as a result, the lease costs and impairments related to these right-of-use assets are presented in continuing operations for the years ended December 31, 2025, 2024, and 2023.

Lease Expenses

For the years ended December 31, 2025, 2024, and 2023, the Company recognized operating lease costs of$19.2 million,$26.6 million, and$31.0 million, respectively. For the years ended December 31, 2025 and 2024, the Company recognized variable lease payments of $9.1 million and $6.7 million, respectively. For the year ended December 31, 2023, variable lease payments were immaterial. Finance lease costs were immaterial for all periods.

For the years ended December 31, 2025, 2024, and 2023, the Company recognized$1.2 million,$2.0 million, and $1.6 million, respectively, of sublease income.

As of December 31, 2025 and 2024, the weighted average remaining lease term was 12.0 years and 12.8 years, respectively, and the weighted average discount rate was 6.2% and 6.2%, respectively. As the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments. The Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The Company has no historical debt transactions and a collateralized rate is estimated based on a group of peer companies. The Company used the incremental borrowing rate on January 1, 2019, for leases that commenced prior to that date.

Lease Commitments

As of December 31, 2025, future minimum lease payments for all leases were as follows:

The table above does not include options to extend lease terms that are not reasonably certain of being exercised or leases signed but not yet commenced as of December 31, 2025. As of December 31, 2025, there were no leases signed but not commenced.

As of December 31, 2025, there are no future minimum sublease income payments after the year ending December 31, 2025, as the subleases expired during the year ended December 31, 2025.

Letters of Credit

As of December 31, 2025 and 2024,$9.4 million and$9.9 million, respectively, in letters of credit associated with the Company’s leases were included under the 2022 Revolver Sub-facility.

Restricted Cash

As of December 31, 2025, there was no restricted cash. As of December 31, 2024, restricted cash was$2.0 millionand related to pass-through payments from dealers. As of December 31, 2024, all restricted cash was classified as a current asset, as disclosed in the consolidated balance sheets.

Tax Contingencies

The Company is subject to taxation in the U.S. and certain other jurisdictions in which it operates, which could include corporate income tax, sales and use tax, value added tax, excise tax, gross receipts tax, and property tax. State, local, and foreign jurisdictions have differing rules and regulations governing corporate income, sales, use, value added, and other taxes. These rules and regulations are complex and subject to varying interpretations that may change over time due to new court interpretations and newly enacted rules and regulations. As a result, the Company could face the possibility of tax assessments and audits, and its liability for these taxes and associated penalties could exceed its original estimates, which could be material.

Legal Matters

From time to time, the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. The Company recognizes a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. The Company is not presently subject to any pending or threatened litigation that it believes, if determined adversely to the Company, individually or taken together, would reasonably be expected to have a material adverse effect on its business or financial results. However, litigation is inherently unpredictable and the future outcome of legal proceedings and other contingencies may be unexpected or differ from the Company’s estimated liabilities, which could have a material adverse effect on the Company’s future financial results.

11. Stock‑based Compensation

CarGurus, Inc. 2017 Equity Incentive Plan

In October 2017 the Board adopted, and the Company’s stockholders approved, the Company’s Omnibus Incentive Compensation Plan (the “2017 Plan”) for the purpose of granting incentive stock options, non-qualified stock options, stock awards, stock units, other share-based awards, and cash awards to employees, advisors, and consultants to the Company and its subsidiaries and non-employee members of the Board. The 2017 Plan authorizes the issuance or transfer of the sum of: (i)7,800,000 shares of Class A common stock, plus (ii) the number of shares of Class A common stock (up to 4,500,000 shares) equal to the sum of (x) the number of shares of Class A common stock and Class B common stock of the Company subject to outstanding awards under the Company’s 2015 Equity Incentive Plan, as amended (the “2015 Plan”), as of October 10, 2017, that terminate, expire, or are canceled, forfeited, exchanged, or surrendered on or after October 10, 2017, without having been exercised, vested, or paid prior to October 10, 2017, including shares tendered or withheld to satisfy tax withholding obligations with respect to outstanding grants under the 2015 Plan, plus (y) the number of shares of Class A common stock reserved for issuance under the 2015 Plan that remained available for grant under the 2015 Plan as of October 10, 2017. The aggregate number of shares of Class A common stock that may be issued or transferred under the 2017 Plan pursuant to incentive stock options will not exceed 12,300,000 shares of Class A common stock. Any shares withheld to satisfy tax withholding obligations return to the authorized, but unissued, pool under the 2017 Plan and can be reissued by the Company. In conjunction with the adoption of the 2017 Plan, options and RSUs that were outstanding at that time under the 2015 Plan remained outstanding but no additional grants may be made from the 2015 Plan.

Unless determined otherwise by the Compensation Committee of the Board, as of the first trading day of January of each calendar year during the term of the 2017 Plan (excluding any extensions), beginning with calendar year 2019, an additional number of shares of Class A common stock will be added to the number of shares of Class A common stock authorized to be issued or transferred under the 2017 Plan and the number of shares authorized to be issued or transferred pursuant to incentive stock options, equal to 4% of the total number of shares of Class A common stock outstanding on the last trading day in December of the immediately preceding calendar year, or 6,000,000 shares, whichever is less, or such lesser amount as determined by the Board (the “Evergreen Increase”). The Compensation Committee of the Board determined to not effectuate the Evergreen Increase that was otherwise scheduled to have occurred on each of January 2, 2019, January 2, 2020, January 4, 2021, January 2, 2025, and January 2, 2026. On January 3, 2022, January 3, 2023, and January 2, 2024, an additional 4,070,921,4,065,466, and 3,687,010 shares of Class A Common Stock, respectively, was authorized to be issued or transferred under the 2017 Plan pursuant to the Evergreen Increase.

As of December 31, 2025,7,955,891 shares of Class A common stock were available for issuance under the 2017 Plan.

CarGurus, Inc. 2015 Equity Incentive Plan

The 2015 Plan provided for the issuance of stock-based incentives to employees, consultants, and non-employee directors. The 2015 Plan authorized the issuance of up to an aggregate of (i)3,181,740 shares of Class A common stock and (ii)5,161,644 shares of Class B common stock. The Company has not made any awards pursuant to the 2015 Plan since the Company’s stockholders approved the 2017 Plan.

Stock Options

During the year ended December 31, 2025, stock option activity was follows:

(1)

As of December 31, 2025 and 2024, the aggregate intrinsic value was calculated based on the positive difference, if any, between the estimated fair value of common stock on December 31, 2025 and 2024, respectively, or the date of exercise, as appropriate, and the exercise price of the underlying options.

During the years ended December 31, 2024 and 2023, there wereno options granted.

During the years ended December 31, 2024 and 2023, the aggregate intrinsic value for options exercised was$5.9 million and$0.2 million, respectively.

As of December 31, 2025, there was immaterial unrecognized stock-based compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of 0.1 years.

Restricted Stock Units

During the year ended December 31, 2025, RSU activity was follows:

During the years ended December 31, 2024 and 2023, the weighted-average grant-date fair value of RSUs granted was$23.98 and$17.47 per share, respectively.

During the years ended December 31, 2024 and 2023, RSUs that vested and settled totaled 2,793,920 and 2,440,510, respectively.

During both the years ended December 31, 2024 and 2023, the total fair value of RSUs vested was$65.5 million.

As of December 31, 2025, there was$97.3 million of unrecognized stock-based compensation expense related to unvested RSUs that is expected to be recognized over a weighted-average period of 2.6 years.

Stock-based Compensation Expense

For the years ended December 31, 2025, 2024, and 2023, stock-based compensation expense by award type was as follows:

For the years ended December 31, 2025, 2024, and 2023, stock-based compensation expense by where the stock-based compensation expense was recognized in the Company’s consolidated income statements was as follows:

For the years ended December 31, 2025, 2024, and 2023, consolidated stock-based compensation expense excluded $6.7 million, $6.5 million, and $5.5 million, respectively, of capitalized website development costs, capitalized internal-use software costs, and capitalized hosting arrangements. For the years ended December 31, 2025, 2024, and 2023, stock-based compensation expense from continuing operations excluded $6.5 million, $6.2 million, and $5.4 million, respectively, of capitalized website development costs, capitalized internal-use software costs, and capitalized hosting arrangements.

For the year ended December 31, 2025, the income tax benefit related to consolidated stock-based compensation was $3.5 million, partially recognized in the provision for income taxes and partially in net loss from discontinued operations, net of tax benefits on the consolidated income statements. For the years ended December 31, 2024 and 2023, the income tax expense related to consolidated stock-based compensation was $1.1 million and $5.5 million, respectively, partially recognized in the provision for income taxes and partially in net loss from discontinued operations, net of tax benefits on the consolidated income statements.

For the year ended December 31, 2025, the income tax benefit related to stock-based compensation from continuing operations was$3.5 million, recognized in the provision for income taxes on the consolidated income statements. For the years ended December 31, 2024 and 2023, the income tax expense related to stock-based compensation from continuing operations was$0.9 million and$5.6 million, respectively, recognized in the provision for income taxes on the consolidated income statements.

2023 CarOffer Transaction

In connection with the 2023 CarOffer Transaction, the Company redeemed all remaining holders of noncontrolling interests (“Noncontrolling Interest Units”), certain of which were employee owned. For the year ended December 31, 2023, the Company paid $29.0 million for the Noncontrolling Interest Units that were employee owned and accounted for this portion of the 2023 CarOffer Transaction as stock-based compensation in its income statements from discontinued operations. For all other Noncontrolling Interest Units, the Company reduced the remaining redeemable noncontrolling interest tozero and recorded excess cash paid to these unit holders as a deemed dividend of$5.8 million for the year ended December 31, 2023.

As part of the 2023 CarOffer Transaction, all unvested incentive units of CarOffer (“CO Incentive Units”) and unvested Class CO CarOffer units (the“Subject Units”) were modified such that any remaining unvested units received accelerated vesting. The Company purchased all outstanding CO Incentive and Subject Units and recognized approximately $20.7 million of stock-based compensation in its income statements from discontinued operations for the year ended December 31, 2023.

Common Stock Reserved for Future Issuance

As of December 31, 2025, the Company had reserved the following shares of Class A common stock for future issuance:

Common Stock Share Repurchase Programs

In November 2024 the Company announced that the Board authorized a program to purchase up to $200.0 million of its Class A common stock (the “Original 2025 Share Repurchase Program”). In August 2025 the Company announced that the Board amended the Original 2025 Share Repurchase Program to increase the authorization by an additional $150.0 million, for a total authorization to purchase up to $350.0 million of its Class A common stock, and extended the expiration of the Original 2025 Share Repurchase Program from December 31, 2025 to July 31, 2026 (as amended, the “2025 Share Repurchase Program”). The 2025 Share Repurchase Program was completed in November 2025. All repurchased shares under the 2025 Share Repurchase Program were retired. The Company funded share repurchases under the 2025 Share Repurchase Program through cash on hand and cash generated from opera tions.

In November 2023 the Company announced that the Board authorized a program to purchase up to $250.0 million of its Class A common stock, which expired on December 31, 2024 (the “2024 Share Repurchase Program”).

In December 2022 the Company announced that the Board authorized a program to purchase up to $250.0 million of its Class A common stock, which expired on December 31, 2023 (the “2022 Share Repurchase Program”).

During the year ended December 31, 2025, the Company repurchased and retired 10,723,839 shares for$350.0 million, exclusive of commissions and excise tax, at an average cost of$32.65 per share, under the 2025 Share Repurchase Program.

During the year ended December 31, 2024, the Company repurchased and retired 6,357,302 shares for $146.1 million, exclusive of commissions and excise tax, at an average cost of $22.98 per share, under the 2024 Share Repurchase Program.

During the year ended December 31, 2023, the Company repurchased and retired 11,076,755 shares for $204.1 million, exclusive of commissions and excise tax, at an average cost of $18.43 per share, under the 2022 Share Repurchase Program.

12. Earnings Per Share

The Company has two classes of common stock authorized: Class A common stock and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled toone vote per share and each share of Class B common stock is entitled toten votes per share. Each share of Class B common stock is convertible intoone share of Class A common stock at the option of the holder at any time or automatically upon certain events described in the Company’s fourth amended and restated certificate of incorporation, including upon either the death or voluntary termination of the Company’s Executive Chair. The Company allocates undistributed earnings attributable to common stock between the common stock classes on aone‑to‑one basis when computing net income per share. As a result, basic and diluted net income per share of Class A common stock and per share of Class B common stock are equivalent.

During the years ended December 31, 2025 and 2024,770,495 shares and 1,012,428 shares of Class B common stock were converted into Class A common stock, respectively. During the year ended December 31, 2023, no shares of Class B common stock were converted into Class A common stock.

Consolidated basic net income per share (“Basic EPS”) is computed by dividing consolidated net income adjusted for net loss attributable to redeemable noncontrolling interest, deemed dividends on redemption of noncontrolling interest, and changes in the redemption value of redeemable noncontrolling interest, if applicable, by the weighted-average number of common shares outstanding during the reporting period. The Company computes the weighted-average number of common shares outstanding during the reporting period using the total number of shares of Class A common stock and Class B common stock outstanding as of the last day of the previous year plus the weighted-average of any additional shares issued and outstanding during the reporting period, less the weighted-average of any shares repurchased during the period.

Consolidated diluted net income per share (“Diluted EPS”) gives effect to all potentially dilutive securities. Diluted EPS is computed by dividing consolidated net income adjusted for net loss attributable to redeemable noncontrolling interest, deemed dividends on redemption of noncontrolling interest, and changes in the redemption value of redeemable noncontrolling interest, if applicable and dilutive, by the weighted-average number of common shares outstanding during the reporting period using (i) the number of shares of common stock used in the Basic EPS calculation as indicated above, and (ii) if dilutive, the incremental weighted-average common stock that the Company would issue upon the exercise of stock options and the vesting of RSUs. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method.

Continuing basic and diluted net income per share and discontinued basic and diluted net income per share are calculated using the same methodology as described above, as applicable. Diluted earnings per share from discontinued operations is calculated using net income from continuing operations to determine the denominator, in accordance with applicable guidance.

For the years ended December 31, 2025, 2024, and 2023, a reconciliation of the numerator and denominator used in the calculation of continuing, discontinued, and consolidated basic and diluted net income (loss) per share was as follows:

For the years ended December 31, 2025, 2024, and 2023, potentially dilutive common stock equivalents that have been excluded from the calculation of diluted weighted‑average shares outstanding as their effect would have been anti‑dilutive was as follows:

For the years ended December 31, 2025, 2024, and 2023, there were no contingently issuable shares as a result of the 2023 CarOffer Transaction.

13. Income Taxes

For the years ended December 31, 2025, 2024, and 2023, the components of income before income taxes were as follows:

For the years ended December 31, 2025, 2024, and 2023, the components of the provision for income taxes were as follows:

For the year ended December 31, 2025, income taxes paid (net of refunds) were as follows:

For the year ended December 31, 2025, income taxes paid (net of refunds) of $1.3 million in California exceeded 5% of total income taxes paid (net of refunds). No other state or foreign jurisdictions exceeded this threshold.

For the year ended December 31, 2025, the components of the effective tax rate were as follows:

(1)

The Company’s effective tax rate for continuing operations includes the effects of state and local income taxes, net of the federal income tax benefit, which are primarily attributable to California and Massachusetts, where the Company has significant business activities. These states account for more than half of the Company’s total state tax expense.

For the years ended December 31, 2024 and 2023, the components of the effective tax rate were as follows:

For the year ended December 31, 2025, the effective tax rate for continuing operations was 22.2%, which is higher than the statutory tax rate of 21%, primarily due to state and local income taxes and Section 162(m) excess officers’ compensation disallowance, partially offset by federal and state research and development tax credits and windfall tax benefits on share-based compensation.

For the year ended December 31, 2024, the effective tax rate for continuing operations was 23.5%, which is higher than the statutory tax rate of 21%, primarily due to state and local income taxes, non-deductible meals, entertainment, and transportation expenses, and the Section 162 (m) excess officer compensation limitation, partially offset by federal and state research and development tax credits.

For the year ended December 31, 2023, the effective tax rate for continuing operations was 33.6%, which is higher than the statutory tax rate of 21%, primarily due to state and local income taxes inclusive of the impact from the recently passed Massachusetts apportionment tax rule, shortfalls on the taxable compensation of share-based awards, and the Section 162(m) excess officer compensation limitation, partially offset by federal and state research and development tax credits.

As of December 31, 2025 and 2024, the approximate income tax effect of each type of temporary difference and carryforward was as follows:

For the years ended December 31, 2025 and 2024, the change in the valuation allowance was immaterial. Based upon the level of historical U.S. earnings and future projections over the period in which the net deferred tax assets are deductible, the Company believes it is more likely than not that it will realize the benefits of these deductible differences, with the exception of the deferred tax asset related to intangible assets in Ireland.

As of December 31, 2025, the Company hadno federal net operating loss (“NOL”) carryforwards and had state NOL carryforwards of$2.6 million. The federal NOL carryforward, subject to an annual limitation of 80% of taxable income, does not expire. The state NOL carryforwards expire at various dates through 2040. As of December 31, 2025, the Company had federal and state tax credit carryforwards of$0.6 million and$3.7 million, respectively, available to reduce future tax liabilities. The federal tax credit carryforward expires in 2040. A portion of the state tax credit carryforwards indefinitely as it is related to California with the remainder expiring in 2040. Utilization of the NOL and tax credit carryforwards may be subject to an annual limitation due to ownership change limitations that have occurred previously or that could occur in the future, as provided by Section 382 of the Internal Revenue Code (“Section 382”), as well as similar state provisions. Ownership changes may limit the amount of NOL or tax credit carryforwards that can be utilized annually tooffset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of 5% stockholders in the stock of a corporation by more than 50% in the aggregate over athree-year period.

As of December 31, 2025, 2024, and 2023, changes in the gross uncertain tax position (excluding interest and penalties) were as follows:

For the years ended December 31, 2025, 2024, and 2023, income tax liability related to uncertain tax positions, exclusive of immaterial interest or penalties related to uncertain tax provisions, was$1.2 million,$0.9 million, and $0.8 million, respectively, which would favorably affect the Company’s effective tax rate, if recognized.

The Company permanently reinvests the earnings, if any, of its foreign subsidiaries and, therefore, does not provide for U.S. income taxes that could result from the distribution of those earnings to the Company. As of December 31, 2025 and December 31, 2024, the amount of unrecognized deferred U.S. taxes on these earnings was immaterial.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and in various foreign jurisdictions. The Company’s tax filings remain subject to audits by applicable tax authorities for a certain length of time following the tax year to which those filings relate. Tax years 2022 and forward generally remain open for examination for federal and state tax purposes. Tax years 2021 and forward generally remain open for examination for foreign tax purposes.

14. Segment and Geographic Information

Beginning in the fourth quarter of 2025, in connection with the wind-down of CarOffer, the Company’schief executive officer, who acts as the CODM, began to manage the business, make operating decisions, and evaluate operating performance based on consolidated results. Accordingly, the change led to revisions to the nature and substance of information regularly provided to and used by the CODM, and served to align the Company’s reported results with its ongoing growth strategy. As a result, beginning in the fourth quarter of 2025 the Company reports its financial results as asingle reportable segment. Accordingly, the Company has recast prior year segment disclosures for comparability.

Theconsolidated income statements represent the Company’s segment presentation and are presented in the same manner as the CODM reviews the Company’s operating results in assessing performance and allocating resources. In evaluating performance, the CODM reviews revenue and income from operations. Income from operations is also used in the Company’s annual budgeting and monthly forecasting process and is compared against budgeted and forecasted amounts to evaluate performance and make decisions for the allocation of capital and other resources.

The Company’s significant segment expenses consist of cost of revenue and sales and marketing expense. Significant segment expenses are presented in the consolidated income statements. The Company’s other segment items consist of product, technology, and development expense, general and administrative expense, impairment expense, and depreciation and amortization expense, which have been disclosed separately on the consolidated income statements to meet disclosure requirements.

Segment assets are reported on the consolidated balance sheets as total assets.

For the years ended December 31, 2025, 2024, and 2023, revenue by geographical region was as follows:

As of December 31, 2025, 2024, and 2023, long-lived assets outside of the U.S. were immaterial.

15. Employee Benefit Plans

The Company maintains a defined contribution savings plan for all eligible U.S. employees under Section 401(k) of the Internal Revenue Code. For the years ended December 31, 2025, 2024, and 2023, the Company matched 50% of an employee’s annual contributions to the 401(k) plan, up to a maximum of 8% of the employee’s base salary, bonus, and commissions paid during the year. Matching contributions are subject to vesting based on the employee’s start date and length of service. Employees can designate the investment of their 401(k) accounts into several mutual funds. The Company does not allow investment in its Class A common stock through the 401(k) plan.

For the years ended December 31, 2025, 2024, and 2023, total employer contributions to the 401(k) plan were$6.8 million,$6.2 million, and$6.2 million, respectively.

16. Quarterly Financial Results (unaudited)

As discussed in Note 3 of these consolidated financial statements, as a result of the wind-down of CarOffer, the historical net income (loss) of CarOffer is reported in the Company’s consolidated income statements as discontinued operations. The following table presents certain unaudited quarterly financial information for the eight quarters ended December 31, 2025, to allow for a meaningful comparison of continuing operations. This information has been prepared on the same basis as the audited financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the unaudited quarterly results of operations set forth herein.

(1)

The amounts were computed independently for each quarter, and the sum of the quarters may not total the annual amounts.

(2)

Diluted earnings per share from discontinued operations is calculated using net income from continuing operations to determine the denominator, in accordance with applicable guidance.

17. Subsequent Event

In February 2026 the Company announced that the Board authorized a program pursuant to which it may purchase up to $250.0 million of its Class A common stock (the “2026 Share Repurchase Program”). Share repurchases under the 2026 Share Repurchase Program may be made through a variety of methods, including but not limited to open market purchases, privately negotiated transactions, and transactions that may be effected pursuant to one or more plans under Rule 10b5-1 and/or Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The 2026 Share Repurchase Program does not obligate the Company to repurchase any minimum dollar amount or number of shares. The 2026 Share Repurchase Program has an expiration date of December 31, 2026, and prior to its expiration may be modified, suspended, or discontinued by the Board at any time without prior notice. All repurchased shares under the 2026 Share Repurchase Program will be retired. The Company expects to fund share repurchases under the 2026 Share Repurchase Program through cash on hand and cash generated from operations.