CarGurus (CARG) FY2025 10-K Risk Factors: 8 New, 9 Dropped

What the changes say

New risks emphasize metric accuracy, valuation-model disputes, cybersecurity, litigation, tariffs, and ESG scrutiny.
Dealer subscription retention, fees, consumer connections, and inventory remain central to revenue.
The previously identified internal-control weakness was remediated in 2024, but future deficiencies could still require restatements.
CarOffer integration and key-personnel risks were removed, while broader acquisition risk remains.

What changed since the prior 10-K

New

NewRisks Related to Our Operations
Certain of our key business metrics are subject to inherent challenges in measurement and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business
Inaccurate or misunderstood business metrics could damage CarGurus’s reputation and business.
NewRisks Related to Our Business and Industry
We may be subject to disputes regarding the accuracy of the pricing and valuation products and features of our marketplaces
Declining inventory, volatile used-car prices, or model errors could make IMV, Deal Ratings, PriceVantage, and related tools inaccurate and disputed.
NewRisks Related to Our Business and Industry
We have made and may continue to make acquisitions that could disrupt our operations and harm our operating results
Failed acquisitions or poor integration of acquired businesses, products, or technologies could disrupt operations and hurt results.
NewRisks Related to Our Operations
Cybersecurity risks and cyber incidents, as well as other significant disruptions of our information technology networks and related systems and resources, could adversely affect our business, disrupt operations, and expose us to liabilities to employees, customers, governmental regulators, and other third parties
Cyberattacks, technology outages, remote work, stored personal information, or attacks on cloud and other third-party providers could disrupt operations and create liabilities.
NewRisks Related to Our Operations
If we fail to maintain effective internal control and remediate any future control deficiencies, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the market price of our Class A common stock
Future internal-control deficiencies could cause financial misstatements, restatements, regulatory action, lost investor confidence, or reduced capital-market access.
NewGeneral Risk Factors
Litigation and other legal proceedings may adversely affect our business, financial condition, and results of operations
Claims, investigations, or litigation involving privacy, consumer protection, employment, intellectual property, taxes, securities, or competition could impose costs and operational restrictions.
NewGeneral Risk Factors
Our business, operations, and financial conditions may be adversely affected by tariffs, trade restrictions, trade disputes, or other changes in trade policy or trade regulation
Tariffs, trade restrictions, or trade disputes could weaken the economy and reduce discretionary purchases of new and used automobiles.
NewGeneral Risk Factors
Many governments, regulators, investors, employees, customers, and other stakeholders are increasingly focused on environmental, social, and governance, or ESG, considerations relating to our business, including climate change and greenhouse gas emissions, human capital, and equity and inclusion
Failure to meet changing ESG goals, laws, or stakeholder expectations could trigger proceedings, higher costs, reputational damage, and stock-price declines.

Dropped

DroppedRisks Related to Our Business and Industry
If the CarOffer business and/or our combined offerings do not grow, our revenue and business could be adversely affected
DroppedRisks Related to Our Business and Industry
We rely, in part, on internet search engines to drive traffic to our websites, and if we fail to appear prominently in the search results, our traffic would decline and our business would be adversely affected
DroppedRisks Related to Our Business and Industry
Our goodwill, intangible assets, and other assets have been subject to impairment in the past and may be subject to further impairment in the future, which could have a material adverse effect on our results of operations, financial condition, or future operating results
Growth of CarOffer and combined CarGurus-CarOffer offerings.
DroppedRisks Related to Our Business and Industry
Our business is subject to risks related to the larger automotive industry ecosystem, which could have a material adverse effect on our business, revenue, results of operations, and financial condition
Internet search-engine visibility and traffic to CarGurus websites.
DroppedRisks Related to Our Business and Industry
We may fail to successfully integrate CarOffer and/or fail to fully realize all of the anticipated benefits of the 2023 CarOffer Transaction, which could harm our business, brands, operating results, and financial condition
Goodwill, intangible-asset, and other asset impairment.
DroppedRisks Related to Our Business and Industry
If our revenue declines or fails to grow, investors’ perceptions of our business may be adversely affected, and the market price of our Class A common stock could decline
DroppedRisks Related to Our Business and Industry
We depend on key personnel to operate our business, and if we are unable to retain, attract, and integrate highly qualified personnel, or if we experience turnover of our key personnel, our ability to develop and successfully grow our business could be materially and adversely affected
DroppedRisks Related to Our Business and Industry
Expectations relating to environmental, social, and governance considerations expose us to potential liabilities, increased costs, reputational harm, and other adverse effects on our business
DroppedGeneral Risk Factors
We must maintain proper and effective internal control over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in us and, as a result, the value of our Class A common stock
Automotive-industry conditions and declining consumer demand for vehicle purchases.

Reworded

100% rewrittenRisks Related to Our Business and Industry
Our business is substantially dependent on our relationships with dealers. If a significant number of dealers terminate their subscriptions with us and/or dealer closures or consolidations occur that reduce demand for our products, our business and financial results would be materially and adversely affected
The current text emphasizes dealer subscription fees and product adoption, while also referencing search visibility and broader automotive conditions; no prior text was provided.
Was: Our business is substantially dependent on our relationships with dealers. If a significant number of dealers terminate their subscription agreements with us and/or dealer closures or consolidations occur that reduce demand for our products, our business and financial results would be materially and adversely affected
100% rewrittenRisks Related to Our Operations
We are subject to a complex framework of laws and regulations, many of which are unsettled, still developing, and contradictory, which have in the past, and could in the future, subject us to claims, challenge our business model, or otherwise harm our business
The risk shifted from broad, unsettled legal and regulatory exposure to potential capital needs and the consequences of insufficient funding.
100% rewrittenRisks Related to Our Business and Industry
If we fail to maintain or increase the number of dealers that pay subscription fees to us, or fail to maintain or increase the fees paid to us for subscriptions, our business and financial results would be materially and adversely affected
The risk now specifies dealer renewal decisions, expected connections and sales, subscription fees, and possible restrictions on free dealer listings.
100% rewrittenRisks Related to Our Operations
A significant disruption in service on our websites or mobile applications could damage our reputation and result in a loss of consumers, which could harm our business, brands, operating results, and financial condition
The focus shifted from privacy, data collection, intellectual-property protection, and data scraping to technology reliability, prior account and billing disruptions, and confidential-information access.
100% rewrittenRisks Related to Our Business and Industry
If we are unable to provide a compelling experience to consumers on our marketplaces, the number of connections between consumers and dealers using our marketplaces may decline and our business and financial results would be materially and adversely affected
The text moved from consumer connections, dealer churn, and marketplace inventory to macroeconomic conditions, valuation disputes, fraud, seasonality, and intellectual-property protection.
Was: If we are unable to provide a compelling experience to consumers on our marketplaces, connections between consumers and dealers using our marketplaces may decline and our business and financial results would be materially and adversely affected
100% rewrittenRisks Related to Our Operations
Our ability to attract consumers to our websites and to provide certain services to our customers depends on the collection of consumer data from various sources, which may be restricted by consumer choice, privacy restrictions, and developments in laws, regulations, and industry standards
The risk expanded from cookies, advertising identifiers, and third-party marketing data to privacy failures, service disruptions, and additional risks from international operations.
97% rewrittenRisks Related to Our Business and Industry
Seasonality and other factors may cause fluctuations in our operating results and our marketing spend
Seasonality is now tied to spring and summer demand, tax refunds, discretionary spending, dealer budgets, inventory, and CarGurus’s growing software and data products.
92% rewrittenRisks Related to Our Operations
We could be subject to adverse changes in tax laws, regulations, and interpretations, plus challenges to our tax positions
The tax discussion now expressly includes corporate income tax and emphasizes estimated obligations, significant judgment, and uncertainty over how laws apply.
90% rewrittenRisks Related to Our Operations
We may be unable to maintain or grow relationships with data providers, or may experience interruptions in the data they provide, which may create a less valuable or transparent shopping experience and negatively affect our business and operating results
88% rewrittenRisks Related to Our Operations
We rely on third-party service providers and strategic partners for many aspects of our business, and any failure to maintain these relationships or to successfully integrate certain third-party platforms could harm our business
72% rewrittenRisks Related to Our Business and Industry
Failure to deal effectively with fraud or other illegal activity could harm our business
56% rewrittenRisks Related to Our Operations
We may be unable to halt the operations of websites that aggregate or misappropriate our data
56% rewrittenRisks Related to Our Business and Industry
The failure to build, maintain, and protect our brands would harm our ability to attract a large consumer audience and to expand the use of our marketplaces by consumers and dealers
55% rewrittenRisks Related to Our Business and Industry
If dealers or other advertisers reduce their spending with us, our advertising revenue and business and our financial results would be harmed
53% rewrittenRisks Related to Our Business and Industry
Our business is substantially dependent on our relationships with dealers. If a significant number of dealers terminate their subscriptions with us and/or dealer closures or consolidations occur that reduce demand for our products, our business and financial results would be materially and adversely affected
Was: Our business is substantially dependent on our relationships with dealers. If a significant number of dealers terminate their subscription agreements with us and/or dealer closures or consolidations occur that reduce demand for our products, our business and financial results would be materially and adversely affected
31% rewrittenRisks Related to Our Class A Common Stock
There can be no assurance that we will continue to repurchase shares or that our share repurchase program will enhance stockholder value, and share repurchases could affect the price of our Class A common stock
27% rewrittenGeneral Risk Factors
We expect our results of operations to fluctuate on a quarterly and annual basis
24% rewrittenRisks Related to Our Operations
Federal Laws and Regulations

All 36 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business and Industry

01Our business is substantially dependent on our relationships with dealers. If a significant number of dealers terminate their subscriptions with us and/or dealer closures or consolidations occur that reduce demand for our products, our business and financial results would be materially and adversely affected100% rewritten
02If we are unable to provide a compelling experience to consumers on our marketplaces, the number of connections between consumers and dealers using our marketplaces may decline and our business and financial results would be materially and adversely affected100% rewritten
07Our business is substantially dependent on our relationships with dealers. If a significant number of dealers terminate their subscriptions with us and/or dealer closures or consolidations occur that reduce demand for our products, our business and financial results would be materially and adversely affected53% rewritten
08If we fail to maintain or increase the number of dealers that pay subscription fees to us, or fail to maintain or increase the fees paid to us for subscriptions, our business and financial results would be materially and adversely affected100% rewritten
09If dealers or other advertisers reduce their spending with us, our advertising revenue and business and our financial results would be harmed55% rewritten
10The failure to build, maintain, and protect our brands would harm our ability to attract a large consumer audience and to expand the use of our marketplaces by consumers and dealers56% rewritten
11We may be subject to disputes regarding the accuracy of the pricing and valuation products and features of our marketplacesNew
12Failure to deal effectively with fraud or other illegal activity could harm our business72% rewritten
13Seasonality and other factors may cause fluctuations in our operating results and our marketing spend97% rewritten
14We have been, and may again be, subject to intellectual property disputes, which are costly to defend and could harm our business and operating results
15Failure to adequately protect our intellectual property could harm our business and operating results
16We have made and may continue to make acquisitions that could disrupt our operations and harm our operating resultsNew

Risks Related to Our Operations

03Certain of our key business metrics are subject to inherent challenges in measurement and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our businessNew
04Our ability to attract consumers to our websites and to provide certain services to our customers depends on the collection of consumer data from various sources, which may be restricted by consumer choice, privacy restrictions, and developments in laws, regulations, and industry standards100% rewritten
05We are subject to a complex framework of laws and regulations, many of which are unsettled, still developing, and contradictory, which have in the past, and could in the future, subject us to claims, challenge our business model, or otherwise harm our business100% rewritten
17We may be unable to halt the operations of websites that aggregate or misappropriate our data56% rewritten
18We may be unable to maintain or grow relationships with data providers, or may experience interruptions in the data they provide, which may create a less valuable or transparent shopping experience and negatively affect our business and operating results90% rewritten
19Cybersecurity risks and cyber incidents, as well as other significant disruptions of our information technology networks and related systems and resources, could adversely affect our business, disrupt operations, and expose us to liabilities to employees, customers, governmental regulators, and other third partiesNew
20We rely on third-party service providers and strategic partners for many aspects of our business, and any failure to maintain these relationships or to successfully integrate certain third-party platforms could harm our business88% rewritten
21A significant disruption in service on our websites or mobile applications could damage our reputation and result in a loss of consumers, which could harm our business, brands, operating results, and financial condition100% rewritten
22We could be subject to adverse changes in tax laws, regulations, and interpretations, plus challenges to our tax positions92% rewritten
23Local Motor Vehicle Sales, Advertising and Brokering, and Consumer Protection Laws
24Federal Laws and Regulations24% rewritten
25The 2022 Revolver contains certain covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our results of operations
26If we fail to maintain effective internal control and remediate any future control deficiencies, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the market price of our Class A common stockNew

Risks Related to Our Class A Common Stock

06The trading price of our Class A common stock has been and may continue to be volatile and the value of our stockholders’ investment in our stock could decline
27Our founder controls a majority of the voting power of our outstanding capital stock and, therefore, has control over key decision-making and could control our actions in a manner that conflicts with the interests of other stockholders
28The multiple class structure of our common stock has the effect of concentrating voting control with our founder and certain other holders of our Class B common stock, which will limit or preclude the ability of our stockholders to influence corporate matters
29Our status as a “controlled company” could make our Class A common stock less attractive to some investors or otherwise harm the trading price of our Class A common stock
30There can be no assurance that we will continue to repurchase shares or that our share repurchase program will enhance stockholder value, and share repurchases could affect the price of our Class A common stock31% rewritten

General Risk Factors

31We participate in a highly competitive market, and pressure from existing and new companies may adversely affect our business and operating results
32We expect our results of operations to fluctuate on a quarterly and annual basis27% rewritten
33Litigation and other legal proceedings may adversely affect our business, financial condition, and results of operationsNew
34Our business, operations, and financial conditions may be adversely affected by tariffs, trade restrictions, trade disputes, or other changes in trade policy or trade regulationNew
35Our results could be adversely affected by events beyond our control, such as natural disasters, public health crises, political crises, negative global climate patterns, or other catastrophic events
36Many governments, regulators, investors, employees, customers, and other stakeholders are increasingly focused on environmental, social, and governance, or ESG, considerations relating to our business, including climate change and greenhouse gas emissions, human capital, and equity and inclusionNew

Other CarGurus 10-Ks

FY2024 10-K risk factors
47 risks
Dealer subscriptions and advertising remain central, while dealer closures, consolidation, and weaker vehicle demand could reduce revenue.
Filed Feb 20, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.