CarGurus Exits Wholesale Platform to Go All-In on AI SaaS

Digital transformation is inherently disruptive. For legacy sectors such as automotive, adapting to a digital-first commerce model requires a period of recalibration as companies, partners and consumers adjust to new ways of buying and selling.

CarGurus’ fourth quarter 2025 and full year earnings call Thursday (Feb. 19) only underscored this reality.  The company’s full year results suggest a business stepping back from transactional experimentation and doubling down on what it believes is a more durable identity: a high-margin marketplace and software platform embedded in dealer operations rather than a digital car dealer itself.

“Full-year revenue grew 14% for the second consecutive year, driven by expanding wallet share with accelerating product adoption, improving retention, and adding new dealers. This performance reflects more prolific innovation, particularly AI-driven products that put data and intelligence directly into the hands of our customers,” said Jason Trevisan, CEO at CarGurus.

And the company’s most consequential development in 2025 was not a product launch but an exit. After a strategic reassessment, CarGurus decided to wind down CarOffer, its digital wholesale and instant-cash-offer business, concluding the model was ill-suited to a volatile pricing environment.

By exiting that business and simplifying reporting, executives explained to investors that the business is returning to a simple thesis: rather than owning the transactional risk of car pricing, CarGurus is aiming to own the data, visibility and workflows that shape those prices.

See also: CarGurus Pursues $4 Billion Dealer Software Market With AI-Powered Products

Turning AI Into a Product Layer

If CarGurus is stepping away from transactions, it is moving more aggressively into software-enabled services for dealerships. The company describes its value creation strategy as “embedding data and intelligence across dealer workflows.”

Digital platforms like CarGurus are becoming tasked with turning vast historical datasets into actionable guidance that meets the evolving expectations of their users, helping them answer questions that search filters alone cannot resolve. Like, Which vehicle best fits a lifestyle? Is this price truly competitive in a local market? How should a dealer position inventory to convert uncertain shoppers?

Executives reported that the company’s platform ingested roughly half a billion first-party shopper signals on average each day in 2025.

To that end, CarGurus has begun rolling out AI-driven features, including CarGurus Discover and an AI-powered Dealership Mode, aimed at reshaping how users search for vehicles and how dealers respond to demand signals.

These tools are designed to move beyond static listings into guided discovery, using behavioral data, contextual recommendations, and conversational-style interfaces to narrow choices in what remains an overwhelming purchase category. For dealers, AI-assisted insights can help prioritize leads, optimize pricing visibility, and tailor inventory presentation to likely buyers.

Still, AI-driven product differentiation, while promising, is becoming table stakes across digital commerce. Sustained advantage may depend on execution and the ability to integrate intelligence seamlessly into workflows rather than layering it as a feature set.

See also: Carvana and CarGurus Leverage AI to Drive Digital Transformation in Car Sales

Looking ahead, CarGurus expects first-quarter 2026 revenue between $240.5 million and $245.5 million, with full-year growth projected at 10% to 13%. That outlook implies a modest acceleration relative to 2025, but not a return to the double-digit surges seen during earlier digital adoption waves.

The numbers themselves for the most recent period and full year were steady rather than explosive. Yet in the current automotive environment characterized by constrained inventory recovery, elevated interest rates, and cautious consumer demand, steady may be the new strong.

CarGurus reported revenue of $241.1 million for Q4, up 5.5% year over year and ahead of analyst expectations, alongside non-GAAP earnings per share of $0.63. Adjusted EBITDA of $88.47 million also outpaced forecasts.

Perhaps the most revealing metric in the quarter was not revenue or earnings, but participation. Paying dealers grew to 34,409, an increase of 2,399 from the previous year. In marketplace businesses, supplier-side engagement often serves as a forward indicator of platform health. Dealers tend to expand spending only when they see measurable return on lead quality, conversion rates and inventory visibility.

As supply chains normalize and dealers once again compete for digital attention rather than ration scarce vehicles, marketplaces that can deliver qualified shoppers become strategic partners rather than optional marketing channels.