Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 31, 2017,~~July 30, 2020, the registrant had ~~77,877,494~~93,000,322 shares of Class A common stock, $0.001 par value per share, and ~~28,213,276~~19,975,155 shares of Class B common stock, par value $0.001 per share, outstanding.

This report contains forward‑looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward‑looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward‑looking statements because they contain words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “likely,” “may,” “might,~~” “likely,~~” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. Forward-looking statements contained in this report include, but are not limited to, statements about:

You should not rely upon forward‑looking statements as predictions of future events. We have based the forward‑looking statements contained in this report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, and growth prospects. The outcome of the events described in these forward‑looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward‑looking statements contained in this report. Further, our forward‑looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions or joint ventures in which we may be involved, or investments we may make. We cannot assure you that the results, events, and circumstances reflected in the forward‑looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward‑looking statements.

The forward‑looking statements made in this report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward‑looking ~~statements~~statement made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law.

At
September 30,
2017

At
December 31,
2016

Assets

Current assets

Cash and cash equivalents

$
25,636

$
29,476

Investments

60,000

44,774

Accounts receivable, net of allowance for doubtful accounts of $141
   and $164, respectively

10,123

6,653

Prepaid income taxes

—

1,815

Prepaid expenses and other current assets

3,485

2,789

Total current assets

99,244

85,507

Property and equipment, net (Note 4)

16,100

12,780

Restricted cash

1,783

2,044

Deferred tax assets

371

—

Other long-term assets (Note 5)

4,158

—

Total assets

$
121,656

$
100,331

Liabilities, convertible preferred stock, and stockholders’
   deficit

Current liabilities

Accounts payable

$
22,737

$
16,426

Accrued expenses (Note 6)

9,953

8,384

Deferred revenue

4,598

3,330

Accrued income taxes

156

—

Deferred rent

1,144

910

Total current liabilities

38,588

29,050

Deferred rent, net of current portion

5,701

5,673

Deferred tax liabilities

—

292

Other non-current liabilities

969

590

Total liabilities

45,258

35,605

Commitments and contingencies (Note 7)

Convertible preferred stock (Note 8)

132,698

132,698

Stockholders’ deficit:

Class A common stock, $0.001 par value per share; 120,020,700 shares
   authorized, 14,107,816 and 14,022,132 shares issued and outstanding
   at September 30, 2017 and December 31, 2016, respectively.

14

14

Class B common stock, $0.001 par value per share; 80,013,800 shares
   authorized, 28,213,276 and 28,044,264 shares issued and outstanding
   at September 30, 2017 and December 31, 2016, respectively.

28

28

Additional paid-in capital

4,225

3,714

Accumulated deficit

(60,766
)

(71,698
)
Accumulated other comprehensive income (loss)

199

(30
)
Total stockholders’ deficit

(56,300
)

(67,972
)
Total liabilities, convertible preferred stock, and stockholders’
   deficit

$
121,656

$
100,331

	At June 30, 2020			At December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	133,199		$	59,920
Investments		43,000			111,692
Accounts receivable, net of allowance for doubtful accounts of $672 and $240, respectively		16,844			22,124
Prepaid expenses and prepaid income taxes		11,141			10,452
Deferred contract costs		9,652			9,544
Other current assets		1,849			4,972
Restricted cash		396			250
Total current assets		216,081			218,954
Property and equipment, net		26,881			27,950
Intangible assets		10,599			3,920
Goodwill		27,623			15,207
Operating lease right-of-use assets		66,086			59,986
Restricted cash		10,627			10,553
Deferred tax assets		37,206			42,713
Deferred contract costs, net of current portion		8,825			10,514
Other non-current assets		3,508			3,826
Total assets	$	407,436		$	393,623
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	10,438		$	36,731
Accrued expenses, accrued income taxes and other current liabilities		12,991			18,262
Deferred revenue		8,195			9,984
Operating lease liabilities		11,523			8,781
Total current liabilities		43,147			73,758
Operating lease liabilities		65,073			60,818
Deferred tax liabilities		314			284
Other non–current liabilities		3,047			1,908
Total liabilities		111,581			136,768
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding		—			—
Class A common stock, $0.001 par value per share; 500,000,000 shares authorized; 92,862,607 and 91,819,649 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively		93			92
Class B common stock, $0.001 par value per share; 100,000,000 shares authorized; 19,975,155 and 20,314,644 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively		20			20
Additional paid-in capital		224,418			205,234
Retained earnings		71,686			51,859
Accumulated other comprehensive loss		(362	)		(350	)
Total stockholders’ equity		295,855			256,855
Total liabilities and stockholders’ equity	$	407,436		$	393,623

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016			2017			2016			2020		2019			2020		2019
Revenue	$	82,989		$	53,136		$	226,264		$	137,377		$	94,737	$	145,031		$	252,426	$	280,301
Cost of revenue⁽¹⁾		4,720			2,852			12,367			6,671			9,880		8,628			21,490		16,348
Gross profit		78,269			50,284			213,897			130,706			84,857		136,403			230,936		263,953
Operating expenses:
Sales and marketing		63,891			40,510			168,495			108,823			38,583		101,789			132,178		193,105
Product, technology, and development		5,796			2,984			14,153			8,134			21,887		17,346			44,971		33,318
General and administrative		5,006			3,101			14,098			8,719			14,158		12,540			30,018		24,300
Depreciation and amortization		713			432			1,909			1,065			1,520		1,180			3,041		2,247
Total operating expenses		75,406			47,027			198,655			126,741			76,148		132,855			210,208		252,970
Income from operations		2,863			3,257			15,242			3,965			8,709		3,548			20,728		10,983
Other income, net:
Interest income														317		744			879		1,488
Other income, net		106			107			323			260			157		105			323		1,007
Total other income, net														474		849			1,202		2,495
Income before income taxes		2,969			3,364			15,565			4,225			9,183		4,397			21,930		13,478
Provision for income taxes		590			1,226			4,633			1,566
Provision for (benefit from) income taxes														2,052		(1,610	)		2,103		(5,113	)
Net income	$	2,379		$	2,138		$	10,932		$	2,659		$	7,131	$	6,007		$	19,827	$	18,591
Reconciliation of net income to net income attributable to common stockholders:
Net income	$	2,379		$	2,138		$	10,932		$	2,659
Net income attributable to participating securities		(1,401	)		(1,260	)		(6,446	)		(1,554	)
Net income attributable to common stockholders — basic	$	978		$	878		$	4,486		$	1,105
Net income	$	2,379		$	2,138		$	10,932		$	2,659
Net income attributable to participating securities		(1,345	)		(1,222	)		(6,198	)		(1,507	)
Net income attributable to common stockholders — diluted	$	1,034		$	916		$	4,734		$	1,152
Net income per share attributable to common stockholders: (Note 10)
Net income per share attributable to common stockholders: (Note 11)
Basic	$	0.02		$	0.02		$	0.11		$	0.02		$	0.06	$	0.05		$	0.18	$	0.17
Diluted	$	0.02		$	0.02		$	0.10		$	0.02		$	0.06	$	0.05		$	0.17	$	0.16
Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders:
Basic		42,262,035			44,692,419			42,168,904			44,665,063			112,734,393		111,299,345			112,544,743		111,051,070
Diluted		46,567,173			48,069,373			46,310,630			48,040,754			113,737,465		113,388,509			113,947,241		113,398,793

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

	Class A Common Stock					Class B Common Stock					Additional Paid–in			Retained		Accumulated Other Comprehensive			Total Stockholders’
	Shares			Amount		Shares			Amount		Capital			Earnings		(Loss) Income			Equity
Balance at December 31, 2019		91,819,649		$	92		20,314,644		$	20	$	205,234		$	51,859	$	(350	)	$	256,855
Net income		—			—		—			—		—			12,696		—			12,696
Stock–based compensation expense		—			—		—			—		11,793			—		—			11,793
Issuance of common stock upon exercise of stock options		160,668			—		—			—		514			—		—			514
Issuance of common stock upon vesting of restricted stock units		308,303			1		—			—		(1	)		—		—			—
Payment of withholding taxes on net share settlements of equity awards		(106,934	)		—		—			—		(3,397	)		—		—			(3,397	)
Conversion of common stock		335,741			—		(335,741	)		—		—			—		—			—
Foreign currency translation adjustment		—			—		—			—		—			—		(493	)		(493	)
Balance at March 31, 2020		92,517,427		$	93		19,978,903		$	20	$	214,143		$	64,555	$	(843	)	$	277,968
Net income		—			—		—			—		—			7,131		—			7,131
Stock–based compensation expense		—			—		—			—		12,249			—		—			12,249
Issuance of common stock upon exercise of stock options		84,796			—		—			—		415			—		—			415
Issuance of common stock upon vesting of restricted stock units		375,645			—		—			—		—			—		—			—
Payment of withholding taxes on net share settlements of equity awards		(119,009	)		—		—			—		(2,389	)		—		—			(2,389	)
Conversion of common stock		3,748			—		(3,748	)		—		—			—		—			—
Foreign currency translation adjustment		—			—		—			—		—			—		481			481
Balance at June 30, 2020		92,862,607		$	93		19,975,155		$	20	$	224,418		$	71,686	$	(362	)	$	295,855




Balance at December 31, 2018		89,728,223		$	90		20,702,084		$	21	$	184,216		$	9,713	$	71		$	194,111
Net income		—			—		—			—		—			12,584		—			12,584
Stock–based compensation expense		—			—		—			—		7,995			—		—			7,995
Issuance of common stock upon exercise of stock options		447,210			—		—			—		697			—		—			697
Issuance of common stock upon vesting of restricted stock units		297,374			—		—			—		—			—		—			—
Payment of withholding taxes on net share settlements of equity awards		(102,034	)		—		—			—		(3,954	)		—		—			(3,954	)
Foreign currency translation adjustment		—			—		—			—		—			—		(424	)		(424	)
Balance at March 31, 2019		90,370,773		$	90		20,702,084		$	21	$	188,954		$	22,297	$	(353	)	$	211,009
Net income		—			—		—			—		—			6,007		—			6,007
Stock–based compensation expense		—			—		—			—		9,260			—		—			9,260
Issuance of common stock upon exercise of stock options		133,838			—		—			—		391			—		—			391
Issuance of common stock upon vesting of restricted stock units		362,447			1		—			—		(1	)		—		—			—
Payment of withholding taxes and option costs on net share settlement of restricted stock units and stock options		(122,137	)		—		—			—		(4,637	)		—		—			(4,637	)
Foreign currency translation adjustment		—			—		—			—					—		356			356
Balance at June 30, 2019		90,744,921		$	91		20,702,084		$	21	$	193,967		$	28,304	$	3		$	222,386

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2020			2019
Operating Activities
Net income	$	10,932		$	2,659		$	19,827		$	18,591
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,670			1,381			6,347			3,541
Unrealized currency loss on foreign denominated transactions		96			—
Currency gain on foreign denominated transactions								(91	)		(840	)
Deferred taxes		(663	)		204			4,695			(5,316	)
Provision for doubtful accounts		544			334			1,658			368
Stock-based compensation expense		224			236			23,375			16,629
Amortization of deferred contract costs								5,641			3,634
Changes in operating assets and liabilities:
Accounts receivable		(4,013	)		(568	)
Prepaid expenses, prepaid income taxes, and other current assets		1,143			(2,838	)
Accounts receivable, net								5,653			(3,838	)
Prepaid expenses, prepaid income taxes, and other assets								2,835			(2,071	)
Deferred contract costs								(4,074	)		(7,768	)
Accounts payable		6,409			11,485			(25,914	)		6,032
Accrued expenses		(741	)		2,153
Accrued expenses, accrued income taxes, and other current liabilities								(5,294	)		(1,309	)
Deferred revenue		1,265			1,705			(1,788	)		(332	)
Deferred rent		262			2,049
Accrued income taxes		156			1,190
Lease obligations								898			(1,880	)
Other non-current liabilities		258			461			1,160			288
Net cash provided by operating activities		18,542			20,451			34,928			25,729
Investing Activities
Purchases of property and equipment		(4,247	)		(4,009	)		(2,571	)		(8,584	)
Capitalization of website development costs		(1,487	)		(913	)		(1,695	)		(1,527	)
Cash paid for acquisition, net of cash acquired								(21,004	)		(19,139	)
Investments in certificates of deposit		(50,000	)		(41,774	)		—			(96,527	)
Maturities of certificates of deposit		34,774			5,000			68,692			100,000
Net cash used in investing activities		(20,960	)		(41,696	)
Net cash provided by (used in) investing activities								43,422			(25,777	)
Financing Activities
Proceeds from issuance of preferred stock		—			60,000
Proceeds from exercise of unit options and stock options		288			92
Payment of deferred initial public offering costs		(2,128	)		—
Cash paid for repurchase of preferred stock, common stock, and vested options		—			(1,262	)
Net cash (used in) provided by financing activities		(1,840	)		58,830
Proceeds from exercise of stock options								929			1,088
Payment of finance lease obligations								(18	)		(12	)
Payment of withholding taxes on net share settlement of restricted stock units								(5,786	)		(8,591	)
Net cash used in financing activities								(4,875	)		(7,515	)
Impact of foreign currency on cash, cash equivalents, and restricted cash		157			(26	)		24			17
Net (decrease) increase in cash, cash equivalents, and restricted cash		(4,101	)		37,559
Net increase (decrease) in cash, cash equivalents, and restricted cash								73,499			(7,546	)
Cash, cash equivalents, and restricted cash at beginning of period		31,520			62,863			70,723			37,558
Cash, cash equivalents, and restricted cash at end of period	$	27,419		$	100,422		$	144,222		$	30,012
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	4,220		$	6		$	26		$	88
Cash paid for interest	$	17		$	20
Supplemental disclosure of non-cash investing and financing activities:
Unpaid purchases of property and equipment	$	739		$	1,774		$	7		$	2,650
Unpaid deferred initial public offering costs	$	2,014		$	—
Unpaid preferred stock issuance costs	$	—		$	268
Capitalized stock-based compensation expense in website development and internal-use software costs							$	667		$	626
Cash paid for operating lease liabilities							$	6,260		$	5,605

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

CarGurus, Inc. (the “Company”), is a global, online automotive marketplace connecting buyers and sellers of new and used cars. Using proprietary technology, search algorithms, and innovative data analytics, the Company provides information and analysis that create a differentiated automotive search experience for consumers. The Company’s marketplace empowers users worldwide with unbiased third-party validation on pricing and dealer reputation, ~~and~~as well as other useful information that aids them in finding “Great Deals from Top-Rated Dealers.”

The Company is headquartered in Cambridge, Massachusetts and was incorporated in the ~~state~~State of Delaware on June 26, 2015. The Company operates principally in the United States. In addition to the United States, it operates online marketplaces under the CarGurus brand in Canada and ~~has~~the United Kingdom. The Company also ~~launched~~operated online marketplaces in ~~Canada,~~Germany, Italy, and Spain until it ceased the operations of each of these marketplaces in the second quarter of 2020. In the United States and the United Kingdom, the Company also operates the Autolist and ~~Germany.~~PistonHeads online marketplaces, respectively, as independent brands. The Company has ~~wholly owned~~ subsidiaries in the United States, Canada, Ireland, and the United Kingdom.

~~The~~ Additionally, the Company ~~is subject to a number~~has 2 reportable segments, United States and International. See Note 13 of ~~risks and uncertainties common to companies~~the Unaudited Condensed Consolidated Financial Statements included elsewhere in 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. this Quarterly Report.

The accompanying interim condensed consolidated financial statements (the “Unaudited Condensed Consolidated Financial Statements”) and related disclosures have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The Unaudited Condensed Consolidated Financial Statements are unaudited. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, ~~2016~~2019 included in the Company’s ~~final prospectus related to~~Annual Report on Form 10-K for the ~~initial public offering (“IPO”),~~year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) ~~pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended,~~ on ~~October 12, 2017~~February 14, 2020 (the ~~“Prospectus”~~“2019 Annual Report”).

The Unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with ~~generally accepted accounting principles in the United States (“GAAP”)~~GAAP have been condensed or omitted pursuant to such rules and regulations. The Unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, results of operations, comprehensive income, changes in shareholders’ equity for the three ~~months~~ and ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016,~~2020 and cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~ 2019. These interim ~~periods~~period results are not necessarily indicative of the results to be expected for any other interim period or the full year.

The accompanying Unaudited Condensed Consolidated Financial Statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the Unaudited Condensed Consolidated Financial Statements. As of ~~September~~June 30, ~~2017,~~ 2020, there have been no material changes in the Company's significant accounting policies from those that were disclosed in the ~~Prospectus~~ ~~except as discussed below.~~

~~In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09,~~ ~~Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ (“ASU 2016-09”). The guidance identifies areas for simplification involving several aspects of accounting for share-based payments, including income tax consequences, classification of awards as either equity or liabilities, an option to make a policy election to recognize gross stock-based compensation expense with actual forfeitures recognized as they occur, as well as certain classification changes on the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017 and elected to account for forfeitures when they occur, on a modified retrospective basis. The cumulative effect adjustment related to the Company's accounting policy change for forfeitures was not material. In accordance with the adoption of this guidance, the tax effect of differences between tax deductions related to stock compensation and the corresponding financial statement expense compensation will no longer be recorded to additional paid-in capital in the balance sheet. Instead, such amounts will be recorded to tax expense. During the three and nine months ended September 30, 2017, the Company recorded tax benefits of $267 and $640, respectively, related to differences between tax deductions related to stock compensation and the corresponding financial statement expense compensation. The Company also elected to prospectively apply the change in presentation of excess tax benefits, wherein excess tax benefits recognized on stock-based

compensation expense is now classified as an operating activity in the consolidated statements of cash flows. The Company did not adjust the classifications of excess tax benefits in its condensed consolidated statements of cash flows for the nine months ended September 30, 2016. The adoption did not have any other material impact on the Company's condensed consolidated financial statements.2019 Annual Report.

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of ~~CarGurus, Inc.~~the Company and its ~~wholly-owned~~ subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. ~~The Company prepares its Unaudited Condensed Consolidated Financial Statements and related disclosures in conformity with GAAP.~~

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure ~~other than those disclosed in this Quarterly Report on Form 10-Q.~~.

~~In preparing its Unaudited Condensed Consolidated Financial Statements~~The preparation of financial statements in ~~accordance~~conformity with GAAP ~~the Company is required~~requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, ~~revenue, costs, and expenses, and disclosure~~disclosures of contingent assets and liabilities ~~which are~~at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Significant estimates relied upon in ~~the~~ preparing these Unaudited Condensed Consolidated Financial Statements ~~and accompanying disclosures. The accounting estimates that require the most difficult and subjective judgments~~ include revenue recognition, ~~and revenue reserves, contingent liabilities, allowances~~allowance for doubtful accounts ~~expected future cash flows used to evaluate~~and sales allowances, variable consideration, the recoverability of long-lived assets, the valuation and recoverability of goodwill and intangible assets, the expensing and capitalization of product, technology, and development costs for website development and ~~internal-use~~internal‑use software, ~~the determination of the fair value of stock awards issued, stock-based compensation expense,~~ and the recoverability of the ~~Company's~~Company’s net deferred tax assets and related valuation allowance.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company ~~evaluates~~bases its estimates ~~and assumptions~~ on ~~an ongoing basis using~~ historical experience and various other ~~factors and adjusts those estimates and~~ assumptions ~~when facts and circumstances dictate.~~that it believes to be reasonable under the circumstances. Actual results ~~could materially~~may differ from ~~the Company’s~~management’s estimates ~~and assumptions.~~

~~The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act,~~if these results differ from historical experience, or ~~JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to~~ other ~~public companies that are~~assumptions do not emerging growth companies. The Company may take advantage of these exemptions until the Company is no longer an emerging growth company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. The Company has elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company may take advantage of these exemptions up until December 31, 2022 or such earlier time that it is no longer an emerging growth company. The Company would ceaseturn out to be ~~an emerging growth company~~substantially accurate, even if it has more than $1.07 billion in annual revenue, it has more than $700.0 million in market value of its stock held by non-affiliates (and it has been a public company for at least 12 months, and has filed one annual report on Form 10-K), or it issues more than $1.0 billion of non-convertible debt securities over a three-year period.such assumptions are reasonable when made.

TheThe Company has no significant ~~off-balance~~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, investments, and trade accounts receivable.

The Company maintains its cash, cash equivalents, and investments principally with accredited financial institutions of high credit standing. Although the Company deposits its cash, cash equivalents, and investments with multiple financial institutions, its deposits ~~at times,~~ may often exceed ~~federally~~governmental insured limits.

Credit risk with respect to accounts receivable is dispersed due to the large number of customers. The Company routinely assesses the creditworthiness of its customers. The Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the ~~Company's~~Company’s accounts receivable.

For the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2020 and ~~the year ended December 31, 2016, no~~2019, 0 individual customer accounted for more than 10% of total revenue.

As of ~~September~~June 30, ~~2017, three customers accounted for 17%~~2020, ~~15%, and 10% of net accounts receivable, respectively. As of December 31, 2016, two customers accounted for 24% and 15% of net accounts receivable, respectively. No other individual~~0 customer accounted for more than 10% of net accounts receivable. As of December 31, 2019, 1 customer accounted for18% of net accounts receivable.

Included in net accounts receivable at ~~September~~June 30, ~~2017 or~~2020 and December 31, ~~2016.~~2019, are $8,414 and $8,880, respectively, of unbilled accounts receivable primarily related to advertising customers that are generally billed within a quarter subsequent to services being rendered and revenues recognized in excess of billings during the second quarter related to spreading fee reductions resulting from the COVID-19 pandemic over the remaining contract term.

The Company is exposed to credit losses primarily through its trade accounts receivable. The Company determines the required allowance for expected credit losses using information such as historical loss trends, current conditions, and reasonable and supportable forecasts of economic conditions such as the impacts of the novel strain of coronavirus that surfaced in Wuhan, China in December 2019 and was subsequently declared a pandemic by the World Health Organization (“COVID-19”). Amounts are charged against the allowance when it is determined that expected credit losses may occur.

In light of the COVID-19 pandemic, the Company assessed the implications on accounts receivable and increased its allowance for doubtful accounts to $672 as of June 30, 2020 as compared to $240 as of December 31, 2019. The increase in account delinquencies due to the COVID-19 pandemic resulted in $1,658of bad debt expense and $1,226 of write offs, net of recoveries for the six months ended June 30, 2020.

Below is a summary of the changes in the Company’s allowance for doubtful accounts for the six months ended June 30, 2020:

The following table summarizes revenue from contracts with customers by geographical region and by revenue source for the three and six months ended June 30, 2020 and 2019.

The Company provides disaggregation of revenue based on the United States versus International geographical region classification and based on the marketplace subscription versus advertising and other revenue classification as it believes these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

ASC Topic 606, Revenue from Contracts with Customers (“Topic 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 quarter 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 June 30, 2020 was approximately $15.6 million, 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 Topic 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations as of June 30, 2020. For performance obligations not satisfied as of June 30, 2020, 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 June 30, 2020. The remaining duration is less than one year.

Revenue recognized during the six months ended June 30, 2020 from amounts included in deferred revenue at the beginning of the period was approximately $9,984.

On March 18, 2020, in response to the COVID-19 pandemic, the Company announced a 50% fee reduction on all marketplace subscriptions for the April service period for paying dealers in the United States, Canada and the United Kingdom as well as a 100% fee reduction for paying dealers in Italy. On April 16, 2020, the Company announced a 50% fee reduction on all May marketplace subscriptions for paying dealers in the United States, Canada and the United Kingdom and suspension of all charges for paying dealers in Italy as the Company ceased the operations of its Italian marketplace in May 2020. On April 29, 2020, the Company announced a 20% and 50% fee reduction on all June marketplace subscriptions for paying dealers in the United States and United Kingdom, respectively. On May 5, 2020, the Company also announced a 20% fee reduction on all June marketplace subscriptions for paying dealers in Canada. These fee reductions resulted in a modification to contracts with initial contractual periods greater than one month. For any contract modified, the Company calculated the remaining transaction price and allocated the consideration over the remaining performance obligations.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating Step 2 of the goodwill impairment test. Under previous guidance, Step 2 of the goodwill impairment test required entities to calculate the implied fair value of goodwill in the same manner as the amount of goodwill recognized in a business combination by assigning the fair value of a reporting unit to all of the assets and liabilities of the reporting unit. The carrying value in excess of the implied fair value was recognized as goodwill impairment. Under ASU 2017-04, goodwill impairment is recognized based on Step 1 of the goodwill impairment test, which calculates the carrying value in excess of the reporting unit’s fair value. The standard was effective beginning in January 2020, with early adoption permitted. The Company adopted the guidance on January 1, 2020 and applied it on a prospective basis. The adoption did not have a material impact on the Unaudited Condensed Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 and its subsequent related updates establish a forward-looking “expected loss model” that requires entities to estimate current expected credit losses on accounts receivable and financial instruments by using all practical and relevant information. ASU 2016-13 and its subsequent related updates were effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance on January 1, 2020 and applied it on a prospective basis. The adoption did not have a material impact on the Unaudited Condensed Consolidated Financial Statements.

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 discussed, 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.

In ~~May 2014,~~December 2019, the FASB issued ASU ~~No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (“2019-12, Income Taxes – Simplifying the Accounting for Income Taxes (“ASU ~~2014-09”~~2019-12”)~~, which modifies how all entities recognize revenue, and consolidates into one Accounting Standards Codification (“ASC”) Topic (ASC Topic 606,~~ ~~Revenue from Contracts with Customers~~). ASU 2019-12 simplifies the accounting for income taxes by removing several exceptions in the current standard and adding guidance ~~found~~to reduce complexity in ASC Topic 605, and various other revenue accounting standards for specialized transactions and industries. ASU 2014-09 outlines a comprehensive five-step revenue recognition model based on the principlecertain areas, such as requiring that an entity ~~should recognize revenue to depict~~reflect the ~~transfer~~effect of ~~promised goods~~an enacted change in tax laws 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. ASU 2014-09 may be applied using either a full retrospective approach, under which all years includedrates in the ~~financial statements will be presented under~~annual effective tax rate computation in the ~~revised guidance, or a modified retrospective approach, under which financial statements will be prepared under~~interim period that includes the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities will recognize a cumulative catch-up adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the entity at the date of adoption.

~~In August 2015, the FASB issued ASU No. 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date~~ ~~(“ASU 2015-14”), which defers the effective date of ASU 2014-09 by one year. ASU 2014-09~~enactment date. The standard is ~~now~~ effective for ~~public entities for annual reporting~~fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, including interim periods within those annual reporting periods. The Company has developed an implementation plan to adopt this new guidance. As part of this plan, the Company is currently assessing the impact of the new guidance on its results of operations. Based on the Company’s procedures performed to date, nothing has come to its attention that would indicate that the adoption of ASU 2014-09 will have a material impact on its revenue recognition; however, further analysis is required and the Company will continue to evaluate this assessment throughout 2017 and 2018. While the Company is still evaluating the impact that this guidance will have on its financial statements and related disclosures, the Company’s preliminary assessment is that there will be an impact relating to the accounting for costs to acquire a contract. Under ASU 2015-14, the Company will be required to capitalize certain costs, primarily commission expense to sales representatives, on its consolidated balance sheet and amortize such costs over the period of performance for the underlying customer contracts. The Company is still evaluating the impact of capitalizing costs to execute a contract.

~~In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842)~~ (“ASU 2016-02”). ASU 2016-02 requires a lessee to recognize most leases on the balance sheet but recognize expenses on the income statement in a manner similar to current practice. The update states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying assets for the lease term. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement, and presentation of expenses and cash flows arising from a lease. For public entities, the new standard is effective for interim and annual periods beginning on or after January 1, 2019, with early adoption permitted. For non-public entities, the new standard is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact this guidance may have on its consolidated financial statements.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~ (“ASU 2016-15”). ASU 2016-15 is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. For public entities, the guidance in ASU 2016-15 is required for annual reporting periods beginning after December 15, 2017, with early adoption permitted. For non-public entities, the guidance is effective for annual reporting periods beginning after December 15, 2018,2020, with early adoption permitted. The Company is currently ~~in the process of evaluating~~assessing the impact ~~and timing of adoption of ASU 2016-15~~that adopting this guidance will have on its ~~consolidated financial statements.~~Unaudited Condensed Consolidated Financial Statements.

On January 16, 2020, the Company acquired Autolist, an automotive shopping platform based in San Francisco, California, pursuant to an Agreement and Plan of Merger by and among the Company, Alpine Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), Auto List, Inc., a Delaware corporation (“Target”), and the securityholders’ representative therein, pursuant to which, among other things, the Company acquired Target through the merger of Merger Sub with and into Target (the “Merger”), with Target surviving as a wholly owned subsidiary of the Company. The Company paid an aggregate of $21.0 million, net of cash acquired, to consummate the Merger. The amount paid includes $2.2 million that is held in escrow to secure post-closing claims. The Merger is intended to both expand the Company’s consumer audience in the United States and enhance its value proposition for subscribing dealers.

As of June 30, 2020, the Company incurred total acquisition-related costs of $1.4 million related to the Merger. For the three months ended June 30, 2020, the Company incurred immaterial acquisition-related costs and for the six months ended June 30, 2020, the Company incurred total acquisition-related costs of $1.0 million. Acquisition-related costs were excluded from the purchase price allocation as they were primarily comprised of one-time severance and bonus related expenses.For the six months ended June 30, 2020, $0.5 million, $0.3 million and $0.2 million of acquisition-related costs were recorded as operating expense and allocated to product, technology, and development, general and administrative, and sales and marketing, respectively, within the Unaudited Condensed Consolidated Income Statement.

The acquisition has been accounted for as a business combination under the acquisition method and, accordingly, the total purchase price is allocated to the acquired assets and assumed liabilities. The following table presents the preliminary purchase price allocation recorded in the Company’s Unaudited Condensed Consolidated Balance Sheet as of the acquisition date, which is subject to finalization for estimates of the fair value of assets acquired and liabilities assumed as of the acquisition date, including, but not limited to tangible assets, intangible assets and tax-related items, and the related tax and effects of any changes made:

Actual and pro forma results for this acquisition have not been presented as the financial impact to the Company’s Unaudited Condensed Consolidated Financial Statements is not material.

4. Fair Value of Financial Instruments Including Cash, Cash Equivalents, and Investments

~~ASC 820,~~ ~~Fair Value Measurements and Disclosures~~, 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 valuation techniques that may be used to measure fair value are as follows:~~

~~Market Approach~~ ~~— Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.~~

~~Income Approach~~ — Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option pricing models, and excess earnings method.

~~Cost Approach~~ ~~— Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).~~

The following tables present, for each of the fair value levels, the Company’s assets that are measured at fair value on a recurring basis at ~~September~~June 30, ~~2017~~2020 and at December 31, ~~2016:~~2019:

Certificates of deposit at June 30, 2020 and December 31, 2019 had maturity dates of one year or less.

The Company measures eligible assets and liabilities at fair value with changes in value recognized in earnings. There were 0 liabilities that were measured at fair value as of June 30, 2020 and December 31, 2019. 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. The Company did not elect to remeasure any of its existing financial assets ~~or liabilities,~~ and did not elect the fair value option for any financial assets ~~and liabilities~~ transacted induring the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 or the year ended December 31, ~~2016.~~2019.

The Company considers all highly liquid investments with an original maturity of ~~three months~~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 or less 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.

Cash and cash equivalents primarily consist of cash on deposit with banks and amounts held in interest-bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair market value.

The following is a summary of ~~cash, cash equivalents, and~~ investments as of ~~September~~June 30, ~~2017~~2020 and December ~~30, 2016.~~31, 2019:

~~Certificates of deposit at September 30, 2017 had maturity dates ranging from nine to twelve months. Certificates of deposit at December 31, 2016 had maturity dates ranging from six to twelve months.~~

Depreciation and amortization expense, ~~on property~~excluding amortization of intangible assets, was $2,872, $1,750, $5,430 and ~~equipment~~ $3,222for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 and ~~for~~ the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019, respectively.

The Company tests goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. As a result of the COVID-19 pandemic, the Company assessed its goodwill for impairment concluding that there was ~~$1,083, $545, $2,670, and $1,381 respectively.~~0 impairment as of June 30, 2020.

~~Other long-term~~Intangible assets ~~consists~~as of June 30, 2020 and December 31, 2019 consist of the following:

~~Deferred IPO issuance costs, which primarily consist~~The Company recorded amortization expense related to intangible assets of ~~direct incremental legal~~$485, $164, $917 and ~~accounting fees relating to~~ $319 for the ~~IPO, are capitalized.~~ three months ended June 30, 2020 and 2019 and the six months ended June 30, 2020, and 2019, respectively.

The ~~deferred issuance costs will be offset against IPO proceeds upon the completion~~estimated useful life of the ~~Company's IPO, which occurred~~PistonHeads brand and customer relationships is 11 years and 3 years, respectively. The estimated useful life of the Autolist brand, customer relationships and developed technology is 9 years, 3 years and 3 years, respectively. The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in ~~October 2017.~~circumstances occur that could impact the recoverability of these assets. As a result of ~~September~~the COVID-19 pandemic, the Company assessed its long-lived assets for impairment and concluded that there was 0 impairment as of June 30, 2017, $4,142 of deferred IPO issuance costs were recorded in other long-term assets in the accompanying unaudited condensed consolidated balance sheet. As of December 31, 2016, there were no deferred IPO issuance costs recorded.2020.

Estimated amortization expense of intangible assets for future periods as of June 30, 2020 is as follows:

Accrued expenses, ~~consists~~accrued income taxes and other current liabilities consist of the following:

The decrease of $4,533in the accrued bonus balance is primarily due to the payout of the fiscal year 2019 bonus in the first quarter of 2020 as well as a lower overall estimated bonus payout for fiscal year 2020.

On April 13, 2020, the Board of Directors of the Company approved an expense reduction plan to address the impact of the COVID-19 pandemic on the Company’s business (the “Expense Reduction Plan”), pursuant to which the Company initiated a reduction in its workforce of approximately 13%, ceased operation of its Germany, Italy and Spain marketplaces, and halted expansion efforts in any new international markets. The Expense Reduction Plan was completed in the second quarter of 2020.

The Expense Reduction Plan was completed in the second quarter of 2020 and during such quarter resulted in restructuring charges of $3,248 for employee severance and related benefits expense and $1,019for write-off of capitalized website development costs and deferred contract costs from international marketplaces.

The following table summarizes restructuring accrual activity for employee severance and related benefits expense for the three months ended June 30, 2020:

7.For the three months ended June 30, 2020, $2,160, $737, $207 and $144 of employee severance and related benefits expense was recorded as sales and marketing, product, technology, and development, cost of revenue, and general and administrative, respectively, within the Unaudited Condensed Consolidated Income Statement. All of the accrued employee severance and related benefits as of June 30, 2020 are expected to be paid within the next 12 months and were recorded within accrued expenses, accrued income taxes and other current liabilities on the Unaudited Condensed Consolidated Balance Sheets. For the six months ended June 30, 2020, $667 of employee severance and related benefits expense was recorded as stock-based compensation expense within the Unaudited Condensed Consolidated Statements of Cash Flows.

During the three months ended June 30, 2020, the Company recognized $1,019for write-off of capitalized website development costs and deferred contract costs from international marketplaces. For the three months ended June 30, 2020, $844 and $175 of the write-off of capitalized website development costs and deferred contract costs from international marketplaces were recorded as cost of revenue and sales and marketing, respectively, within the Unaudited Condensed Consolidated Income Statement. For the six months ended June 30, 2020, $844 of the write-off of capitalized website development costs from international marketplaces were recorded as depreciation and amortization within the Unaudited Condensed Consolidated Statements of Cash Flows.

The Company’s lease obligations consist of various leases for office space in Massachusetts and Dublin with various lease terms through January 2024. The terms of the Company’s Massachusetts lease agreements provide for rental payments that increase on an annual basis. The Company recognizes rent expense on a straight-line basis over the lease period. The Company does not have any debt or material capital lease obligations as of December 31, 2016 and allAll of the Company’s property, equipment, and internal-use software have been purchased with ~~cash.~~cash with the exception of amounts related to unpaid property and equipment as disclosed in the Unaudited Condensed Consolidated Statements of Cash Flows and immaterial amountsrelated to obligations under one finance lease as of June 30, 2020. The Company has no material long-term purchase obligations outstanding with any ~~vendors~~vendor or third ~~parties.~~party.

The Company's operating lease obligations consist of various leases for office space in: Boston, Massachusetts; Cambridge, Massachusetts; Detroit, Michigan; San Francisco, California; Austin Texas; Dublin, Ireland; and London, United Kingdom. The

Company terminated its leases in Los Angeles, California and New York City, New York during the second quarter of 2020. The Company also has an operating lease obligation for data center space in Needham, Massachusetts.

As of ~~September~~June 30, ~~2017,~~2020, there were no material changes in the Company’s ~~contractual obligations and commitments~~leases from those disclosed in the ~~Prospectus filed with the SEC,~~2019 Annual Report, other than as discussed below.

On ~~September 26, 2017,~~June 12, 2020, the Company amended its operating lease agreement in Boston, Massachusetts at 1001 Boylston Street, which was originally entered into aon December 19, 2019. Pursuant to this amendment, the Company exercised its right to reduce the amount of office space agreed to under the lease to 225,428 square feet, and the parties agreed to certain other changes to the lease as set forth in the amendment. As the lease has been signed but the lease term has not commenced, there is no impact to the Unaudited Condensed Consolidated Financial Statements.

On January 10, 2019, Auto List, Inc., which the Company acquired on January 16, 2020, entered into an operating lease in San Francisco, California at 332 Pine St. for ~~approximately 13,326~~the lease of 6,345 square feet of ~~rentable~~ office space ~~located at Upper Hatch Street, Dublin, Ireland.~~with a non-cancellable lease term through 2024. The lease ~~ends on August 11, 2023. Excluding operating costs,~~provides for annual rent ~~payments for~~increases through the ~~first year is $0.5 million. In August 2018, the rent amount is subject to a national rent review, which will establish the rent payments for the remainder~~term of the lease.

The Company’s leases in Boston, Massachusetts, Cambridge, Massachusetts and San Francisco, California have associated letters of credit, which are recorded as restricted cash within the Unaudited Condensed Consolidated Balance Sheet. At ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, restricted cash was ~~$1,783~~$11,023 and ~~$2,044, respectively. Restricted~~$10,803, respectively, and primarily related to cash ~~for both periods was~~ held at a financial institution in an ~~interest-bearing~~interest‑bearing cash account as collateral for ~~two~~the letters of credit related to the contractual provisions for the Company’s building leases. At June 30, 2020 and December 31, 2019, portions of restricted cash were classified as a short-term asset and long‑term asset, as disclosed on the ~~Company's building leases that require~~Unaudited Condensed Consolidated Balance Sheet. Additionally, the Company’s lease agreement for 121 First St. in Cambridge, Massachusetts has an associated security ~~deposits.~~deposit, which is recorded in
other non-current assets within the Unaudited Condensed Consolidated Balance Sheet.

~~The Company, from~~From time to time ~~is party~~the Company may become involved in legal proceedings or be subject to ~~litigation~~claims arising in the ordinary course of its business. ~~Management does~~The Company is not ~~believe~~presently subject to any pending or threatened litigation that it believes, if determined adversely to the ~~outcome of these claims will~~Company, individually, or taken together, would reasonably be expected to have a material adverse effect on ~~the consolidated~~its business or financial ~~position, results of operations or cash flows of the Company based on the status of proceedings at this time.~~results.

In the ordinary course of business, the Company enters into agreements with its customers, partners and service providers that ~~are consistent with industry practice~~include commercial provisions with respect to licensing, infringement, indemnification, and other ~~standard~~common provisions. The Company does not, in the ordinary course, agree to guaranty or indemnification obligations for the Company under its contracts with customers. Based on historical experience and information known at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~ 2019, the Company has not incurred any costs for guarantees or indemnities.

The following two tables show stock compensation expense by award type and ~~Stockholders’ Equity~~where the stock compensation expense is recorded in the Company’s Unaudited Condensed Consolidated Income Statements:

Excluded from stock-based compensation expense is $419, $317, $667, and $626 of capitalized website development and internal-use software costs for the three months ended June ~~21, 2017,~~30, 2020 and 2019 and the six months ended June 30, 2020, and 2019, respectively.

During the three months ended June 30, 2020 and 2019 and the six months ended June 30, 2020 and 2019, the Company ~~amended~~withheld 119,009, 122,137, 225,943, and restated its Certificate of Incorporation pursuant to the Third Amended and Restated Certificate of Incorporation. Under the Third Amended and Restated Certificate of Incorporation, the total number of shares of all classes of stock which the Company shall have authority to issue is (i) 120,020,700224,171 shares of Class A common stock, ~~par value $0.001~~respectively, to satisfy employee tax withholding requirements due to net share settlements. The shares withheld return to the authorized, but unissued pool under the Company’s Omnibus Equity Compensation Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements were $2,389, $4,637, $5,786 and $8,591 for the three months ended June 30, 2020 and 2019 and the six months ended June 30, 2020, and 2019, respectively, and are reflected as a financing activity within the Unaudited Condensed Consolidated Statements of Cash Flows.

Net income per share ~~(ii) 80,013,800 shares of Class B common stock, par value $0.001 per share,~~for the three and (iii) 11,091,782 shares of Preferred Stock, par value $0.001 per share, of which 3,333,000 shares are designated Series A Preferred Stock, 3,329,497 shares are designated Series B Preferred Stock, 1,648,978 shares are designated Series C Preferred Stock, 1,673,105 shares are designated Series D convertible preferred stock, or Series D Preferred Stock,six months ended June 30, 2020 and 1,107,202 shares are designated Series E convertible preferred stock, or Series E Preferred Stock. The Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock are referred to collectively as2019 is computed by dividing net income by the ~~Preferred Stock.~~

Upon the effectiveness of the Third Amended and Restated Certificate of Incorporation, (i) each share of Class A common stock issued and outstanding was recapitalized, reclassified, and reconstituted into two (2) fully paid and non-assessable shares of outstanding Class A common stock and four (4) fully paid and non-assessable shares of outstanding Class B common stock, and (ii) each share of Class B common stock of the Corporation issued and outstanding was recapitalized, reclassified, and reconstituted into two (2) fully paid and non-assessable shares of outstanding Class A common stock and four (4) fully paid and non-assessable shares of outstanding Class B common stock.

~~Further, upon the effectiveness of the Third Amended and Restated Certificate of Incorporation, the~~weighted-average number of common shares outstanding during the reporting period. The Company computes the weighted-average number of common ~~stock as to which each~~shares outstanding ~~option to purchase common stock is exercisable for and each outstanding restricted stock unit (“RSU”) is convertible into was adjusted such that upon exercise~~during the reporting period using the total number of ~~outstanding stock options or vesting of outstanding RSUs, each holder will receive two (2) fully paid and non-assessable~~ shares of Class A common stock and ~~four (4) fully paid and non-assessable shares of~~ Class B common stock ~~in respect of each share of common stock previously underlying such option or RSU. The exercise price per share of common stock underlying each~~ outstanding ~~option was adjusted upon the effectiveness~~as of the ~~Third Amended and Restated Certificate of Incorporation to be one-sixth~~last day of the exercise price per share in effect immediately prior to such adjustment and the fair market value per share of common stock issuable upon settlement of such RSU was adjusted to be one-sixth of the fair market value per share in effect immediately prior to the recapitalization.

~~All share and per share data shown in the accompanying Unaudited Condensed Consolidated Financial Statements and related notes have been retroactively revised to reflect the share recapitalization.~~

On October 16, 2017, in connection with the closing of the Company’s IPO, each share of Preferred Stock was converted into approximately six shares of Class A common stock pursuant to the terms of the Third Amended and Restated Certificate of Incorporation. Immediately following the closing of the Company’s IPO and the conversion of the Preferred Stock, the Company’s Fourth Amended and Restated Certificate of Incorporation became effective. Under the Fourth Amended and Restated Certificate of Incorporation, the capital structure of the Company was adjusted. See Note 12 to these Unaudited Condensed Consolidated Financial Statements for additional information regarding the conversion of the Preferred Stock and the impact of the effectiveness of the Company’s Fourth Amended and Restated Certificate of Incorporation.

Each share of Class A common stock entitles the holder to one (1) vote for each share on all matters submitted to a vote of the Company’s stockholders at all meetings of stockholders and written actions in lieu of meetings. Each share of Class B common stock entitles the holder to ten votes for each share on all matters submitted to a vote of the Company’s stockholders at all meetings of stockholders and written actions in lieu of meetings.

~~Holders of common stock are entitled to receive dividends, when and if declared by the Board.~~

At September 30, 2017, each share of Class B common stock was convertible into one share of Class A common stock at the option of the holder at any time. Automatic conversion was to occur upon the occurrence of a Transfer, as was defined in the Third

Amended and Restated Certificate of Incorporation, of such share of Class B common stock. Upon either the death or voluntary termination of the Company’s Chief Executive Officer, all shares of Class B common stock will automatically be converted into one share of Class A common stock.

Upon the effectiveness of the Company’s Fourth Amended and Restated Certificate of Incorporation, additional terms of conversion and transfer were implemented. See Note 12 to these Unaudited Condensed Consolidated Financial Statements for additional information regarding the current conversion and transfer terms of the Company’s common stock.

On August 23, 2016, the Company completed a Series E Preferred Stock financing in the amount of $59,732, net of issuance costs of approximately $268. In connection with this issuance, the Company used the proceeds received to repurchase and retire certain outstanding shares of Series A, Series B, and Series C Preferred Stock and common stock, as well as certain vested stock options and RSUs, from existing stockholders in the fourth quarter of 2016. The difference between the amount implicitly paid to repurchase the various classes of Preferred Stock and the corresponding carrying value of the underlying shares ($32,087) was treated as a deemed dividend and was recorded against retained earnings. As the shares of common stock were repurchased for constructive retirement in the fourth quarter of 2016, the excess purchase price over the corresponding par value was charged directly to retained earnings.

~~The Company’s Preferred Stock at both September 30, 2017 and December 31, 2016 was as follows:~~

At both September 30, 2017 and December 31, 2016, 20,188,226 shares of Class A common stock and 40,376,452 shares of Class B common stock were reserved for conversion of the outstanding Preferred Stock.

For the three months ended September 30, 2017 and 2016 total stock-based compensation expense was $74 and $88, respectively. For the nine months ended September 30, 2017 and 2016 total stock-based compensation expense was $224 and $236, respectively. All stock-based compensation expense for these periods related to stock options.

On January 1, 2017, the Company adopted ASU 2016-09 and elected to account for forfeitures when they occur, on a modified retrospective basis. The cumulative effect adjustment related to the Company's accounting policy change for forfeitures was not material.

~~As of September 30, 2017, there was approximately $0.5 million of unrecognized stock-based compensation expense related to stock options which is expected to be recognized over 2.1 years.~~

In addition to stock options, the Company has historically granted RSUs which are subject to both a service-based vesting and a performance-based vesting condition achieved upon a liquidity event, defined as either a change of control or an IPO. As of September 30, 2017, t~~otal unrecognized stock-based compensation expense related to these RSUs was approximately $10.1 million and is expected to be recognized over 3.1 years.As of September 30, 2017, the Company had not recognized compensation cost related to stock-based awards with these performance conditions as the liquidity event had not occurred.~~The Securities and Exchange Commission’s declaration of effectiveness of the Company’s registration statement on Form S-1 on October 11, 2017 satisfied the liquidity event performance condition. The cumulative unrecognized stock-based compensation expense related to these awards was $2.5 million through October 11, 2017.

~~Net income per share information is determined using the two-class method, which includes~~previous year end reporting period plus the weighted-average ~~number~~ of any additional shares ~~of common stock~~issued and outstanding during the ~~period and other securities that participate in dividends (a participating security).~~ reporting period.

The Company ~~considers the convertible Preferred Stock to be participating securities because they include rights to participate in dividends with the common stock.~~

Under the two-class method, basic net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share attributable to common stockholders is computed using the more dilutive of (1) the two-class method or (2) the if-converted method. The Company allocates net income first to preferred stockholders based on dividend rights under the Company’s certificate of incorporation and then to preferred and common stockholders based on ownership interests. Net losses are not allocated to preferred stockholders as they do not have an obligation to share in the Company’s net losses.

~~For all periods presented and as of the date of this Current Report on Form 10-Q, the Company had and~~ has two classes of common stock ~~outstanding:~~authorized: Class A common stock and Class B common stock. ~~As more fully described in Note 8, the~~The rights of the holders of Class A and Class B common stock ~~were and~~ are identical, except with respect to voting and conversion. Each share of Class A common stock ~~was and~~ is entitled to ~~one (1)~~1 vote per share and each share of Class B common stock ~~was and~~ is entitled to ~~ten (10)~~10 votes per share. Each share of Class B common stock ~~was and~~ is convertible into ~~one~~1 share of Class A common stock at the option of the holder at any ~~time. In addition, each share of Class B common stock was and is~~time or automatically ~~convertible into one share of Class A common stock~~ upon ~~any transfer of such share, which is defined to include entering into a voting agreement, whether or not for value, except for~~ certain ~~transfers~~events described in ~~both~~ the Company’s ~~Third Amended~~amended and ~~Restated Certificate~~restated certificate of ~~Incorporation and Fourth Amended and Restated Certificate of Incorporation,~~incorporation, including ~~without limitation, transfers to certain family members of the transferor stockholder. Upon~~on either the death or voluntary termination of the Company’s Chief Executive ~~Officer, all~~ Officer. The Company allocates undistributed earnings attributable to common stock between the common stock classes on a one‑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 three months ended June 30, 2020, holders of Class B common stock converted 3,748shares of Class B common stock ~~were and are automatically convertible into one share of~~to Class A common stock. ~~Upon~~ During the ~~effectiveness~~three months ended June 30, 2019, 0 holders of ~~the Company’s Fourth Amended and Restated Certificate~~Class B common stock convertedshares of ~~Incorporation, additional terms of conversion and transfer were implemented. See Note 12~~Class B common stock to ~~these Unaudited Condensed Consolidated Financial Statements for additional information regarding the current conversion and transfer terms of the Company’s~~Class A common stock. During the six months ended June 30, 2020, holders of Class B common stock converted 339,489 shares of Class B common stock to Class A common stock. During the six months ended June 30, 2019, 0 holders of Class B common stock converted shares of Class B common stock to Class A common stock.

Diluted net income ~~(loss)~~ per share gives effect to all potentially dilutive securities. Potential dilutive securities for the three and six months ended June 30, 2020 and 2019 consist of shares of common stock issuable upon the exercise of stock options and shares of common stock issuable upon the vesting of ~~RSUs, and shares of common~~restricted stock ~~issuable upon the conversion of the outstanding convertible preferred stock.~~units (“RSUs”). The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method; however, outstanding RSUs, which are contingently issuable upon the achievement of a liquidity event have been excluded from the dilutive share calculation as it was not probable the vesting criteria for these awards would be met in any of the periods presented.method.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016, the two-class method was used in the computation of~~2019, diluted net income per share aswas calculated by dividing net income by the ~~result was more dilutive.~~weighted-average number of shares of common stock outstanding during the period plus the dilutive impact of stock options and shares of common stock issuable upon the vesting of RSUs.

The following table presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income ~~(loss)~~ per share:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Numerator:

Net income

$
2,379

$
2,138

$
10,932

$
2,659

Net income attributable to participating securities

(1,401
)

(1,260
)

(6,446
)

(1,554
)
Net income attributable to common
   stockholders — basic

$
978

$
878

$
4,486

$
1,105

Net income

$
2,379

$
2,138

$
10,932

$
2,659

Net income attributable to participating securities

(1,345
)

(1,222
)

(6,198
)

(1,507
)
Net income attributable to common
   stockholders — diluted

$
1,034

$
916

$
4,734

$
1,152

Denominator:

Weighted-average number of shares of common stock used
   in computing net income per share attributable to
   common stockholders — basic

42,262,035

44,692,419

42,168,904

44,665,063

Dilutive effect of share equivalents resulting from stock
   options

4,305,138

3,376,954

4,141,726

3,375,691

Weighted-average number of shares of common stock
   used in computing net income per
   share — diluted

46,567,173

48,069,373

46,310,630

48,040,754

Net income per share attributable to common
   stockholders:

Basic

$
0.02

$
0.02

$
0.11

$
0.02

Diluted

$
0.02

$
0.02

$
0.10

$
0.02

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Numerator:
Net income	$	7,131	$	6,007	$	19,827	$	18,591
Denominator:
Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders — basic		112,734,393		111,299,345		112,544,743		111,051,070
Dilutive effect of share equivalents resulting from stock options		674,063		1,195,429		735,474		1,322,752
Dilutive effect of share equivalents resulting from unvested restricted stock units		329,009		893,735		667,024		1,024,971
Weighted-average number of shares of common stock used in computing net income per share — diluted		113,737,465		113,388,509		113,947,241		113,398,793
Net income per share attributable to common stockholders:
Basic	$	0.06	$	0.05	$	0.18	$	0.17
Diluted	$	0.06	$	0.05	$	0.17	$	0.16

The following potentially dilutive common stock equivalents have been excluded from the calculation of diluted weighted-average shares outstanding for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, as their effect would have been anti-dilutive for the periods presented:

~~11.~~During the three months ended June 30, 2020, the Company recorded income tax expense of $2,052, representing an effective tax rate of 22.3%. The effective tax rate for the three months ended June 30, 2020 was higher than the statutory tax rate of 21% principally due to permanent non-deductible expenses and shortfalls on the taxable compensation of share-based awards, partially offset by federal and state research and development tax credits.

During the six months ended June 30, 2020, the Company recorded an income tax provision of $2,103 representing an effective tax rate of9.6%. The effective tax rate for the six months ended June 30, 2020 was lower than the statutory tax rate of 21% principally due to a discrete benefit recognized as a result of the enactment of the CARES Act (as defined below), excess stock deductions from the taxable compensation of stock-based awards and federal and state research and development tax credits, partially offset by state and local income taxes.

During the three months ended June 30, 2019, the Company recorded income tax benefit of $1,610, representing an effective tax rate of (36.6)%. The effective tax rate for the three months ended June 30, 2019 was lower than the statutory tax rate of 21% principally due to excess stock deductions from the taxable compensation of share-based awards and federal and state research and development tax credits, partially offset by state and local income taxes.

During the six months ended June 30, 2019, the Company recorded an income tax benefit of $5,113, representing an effective tax rate of(37.9)%. The effective tax rate for the six months ended June 30, 2019 was lower than the statutory tax rate of 21% principally due to the excess stock deductions from the taxable compensation of stock-based awards and federal and state research and development tax credits, partially offset by state and local income taxes.

The Company and its subsidiaries are subject to various U.S. federal, state, and foreign income taxes. The Company is currently open to examination by the Internal Revenue Service and state jurisdictions for the tax years of 2016 and after. The Company is currently open to examination in its foreign jurisdictions for tax years 2017 and after. In 2019, the Internal Revenue Service commenced a federal employment tax audit with respect to the 2016, 2017 and 2018 calendar years, which is still open. In July 2020, the Internal Revenue Service commenced a corporate income tax audit with respect to the 2017 calendar year, which is still open.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Among other things, the CARES Act includes a net operating loss (“NOL”) carryback provision allowing for NOLs from the 2018, 2019 and 2020 tax years to be used to offset taxable income for the tax years from 2013 to 2017. The Company has filed a carryback claim, which will reduce its current gross NOL balance by approximately $18,723 and increase its deferred federal research and development credit by approximately $2,645. The Company does not expect this election to negatively impact its analysis on the valuation allowance for its NOLs or deferred federal research and development credit.

The CARES Act also updates the Tax Cuts and Jobs Act of 2017, allowing for the depreciation of leasehold improvements over 15 years, rather than 39 years, and eligibility for bonus depreciation, rather than non-eligibility for bonus depreciation. The Company has made an estimate for the impact as it relates to the 2019 tax year and will file its 2019 return in accordance with the updated guidance in the CARES Act.

The CARES Act includes other provisions that may be utilized if the Company meets the eligibility requirements. Although the Company continues to review and evaluate the potential impact and benefit of the CARES Act on its entire business, the Company has primarily focused its review on two provisions that affect both income taxes and non-income taxes. First, the CARES Act temporarily removes the 80% limitation on NOLs to offset taxable income for tax years prior to 2021. Second, the CARES Act allows for the deferral of the employer portion of the Social Security Tax for up to two years, with half due by December 31, 2021 and the remainder due by December 31, 2022.

The Company has ~~two~~2 reportable segments, United States and International. Segment information is presented in the same manner as the Company’s chief operating decision maker ~~(“CODM”~~(the “CODM”), reviews the Company’s operating results in assessing performance and allocating resources. The CODM reviews revenue and operating income (loss) for each reportable segment as a proxy for the operating performance of the Company’s United States and International operations. The Company’s Chief Executive Officer is the CODM on behalf of both reportable segments.

The United States segment derives revenues from marketplace subscriptions, advertising services, and other revenues from customers within the United States. The International segment derives revenues from marketplace subscriptions, advertising services, and other revenues from customers outside of the United States. A majority of the Company’s operational overhead expenses, including technology and personnel costs, and other general and administrative costs associated with running the Company’s business, are incurred in the United States and not allocated to the ~~international~~International segment. Assets and costs discretely incurred by reportable segments, including depreciation and amortization, are included in the calculation of reportable segment income (loss) ~~income~~ from operations. Segment operating income (loss) does not reflect the transfer pricing adjustments related to the Company’s foreign subsidiaries, which are recorded for statutory reporting purposes. Asset information is assessed and reviewed on a global basis.

Information regarding the Company’s operations by segment and geographical area is presented as follows:

As of ~~September~~June 30, ~~2017 and December 31, 2016, property and equipment~~2020, total assets held outside of the United States ~~was not material.~~

~~On October 16, 2017,~~were $27,918, primarily attributable to $15,214 of goodwill and $3,592 of intangible assets. As of December 31, 2019, total assets held outside of the ~~Company completed the IPO, in which the Company issued~~United States were $32,528, primarily attributable to $15,207 of goodwill and ~~sold 3,205,000 shares~~$3,920 of its Class A common stock, including the full exercise by the underwriters of their option to purchase 705,000 shares of Class A common stock, at a public offering price of $16.00 per share for aggregate gross proceeds of $51.3 million.intangible assets. The Company received approximately $43.0 million in net proceeds after deducting $3.6 million of underwriting discounts and commissions and approximately $4.7 million in offering costs. In addition to shares of Class A common stock issued and sold byceased the Company, certain selling shareholders sold an aggregate of 7,605,000 shares of Class A common stock, including the full exercise by the underwriters of their option to purchase 705,000 shares of Class A common stock, as partoperations of the ~~IPO. Upon~~International segment online marketplaces in Germany, Italy, and Spain in the ~~closing~~second quarter of 2020.

For the three months ended June 30, 2020, employee severance and related benefits expense attributable to the United States and International segments were $2,492 and $756, respectively. For the three months ended June 30, 2020, the entirety of the ~~IPO, all~~write-off of ~~the outstanding shares of convertible Preferred Stock automatically converted into 20,188,226 shares of Class A common stock~~capitalized website development costs and 40,376,452 shares of Class B common stock. The 40,376,452 shares of Class B common stock subsequently converted into 40,376,452 shares of Class A common stock resulting in a total conversion of all outstanding shares of Preferred Stock into 60,564,678 shares of Class A common stock. Subsequentdeferred contract costs from international marketplaces was attributable to the ~~closing of the IPO, there were no shares of Preferred Stock outstanding.~~International segment.

Allen & Company LLC acted as an underwriter in the IPO. Immediately prior to the IPO, Allen & Company LLC and its associated persons, including Ian Smith, a member of the Company’s board of directors, beneficially owned shares of the Company’s outstanding preferred stock representing 13.5% of the Company’s outstanding preferred stock. In connection with Allen & Company LLC’s role as an underwriter in the IPO, pursuant to the underwriting agreement, Allen & Company LLC purchased 2,190,200 shares of our Class A common stock in the IPO at $14.88 per share for a total purchase price of $32,590,176, after deducting underwriting discounts and commissions paid to Allen & Company LLC of $2,453,024. Receipt of such proceeds may be deemed to be a related person transaction pursuant to the Company’s related person transaction policy.

In connection with the IPO, in October 2017, the Company’s board of directors adopted, and the Company’s stockholders approved, the Omnibus Equity Compensation Plan (the “2017 Plan”) for the purpose of granting incentive stock options, non-qualified stock options, restricted stock, restricted stock units, and other share-based awards to employees, non-employee directors, and consultants. The 2017 Plan is the successor to the Amended and Restated 2015 Equity Incentive Plan (the “2015 Plan”). In conjunction with the adoption of the 2017 Plan, options and RSUs from the 2015 Plan will remain outstanding but no additional grants will be made from the 2015 Plan.

Also, in connection with the closing of the IPO, each share of Series A Preferred Stock automatically converted into 6.0000023 shares of common stock, each share of Series B Preferred Stock converted into 6.0000015 shares of common stock, each share of Series C Preferred Stock converted into 6 shares of common stock, each share of Series D Preferred Stock converted into 6.0000159 shares of common stock and each share of Series E Preferred Stock converted into 6 shares of common stock, one-third of which number of shares of common stock was Class A common stock and two thirds of which number of shares of common stock was Class B common stock. Each such share of Class B common stock issued upon conversion of the Preferred Stock was then immediately converted into one share of Class A common stock.

Immediately following such conversion, the Company’s Fourth Amended and Restated Certificate of Incorporation became effective. Pursuant to the Fourth Amended and Restated Certificate of Incorporation, the Company is authorized to issue 500,000,000

shares of Class A common stock, 100,000,000 shares of Class B common stock, and 10,000,000 shares of preferred stock, all with a par value of $0.001 per share. The preferred stock is currently undesignated and no preferred stock is outstanding.

In addition, pursuant to the Fourth Amended and Restated Certificate of Incorporation, all shares of Class B common stock will automatically convert into shares of Class A common stock, on a share for share basis, upon the date falling after the first to occur of the death of Langley Steinert, the Company’s Chief Executive Officer, President and Chairman, his voluntary termination of all employment with the Company and service on the Company’s board of directors or the sum of the number of shares of capital stock held by Langley Steinert, by any Family Member of Langley Steinert, and by any Permitted Entity of Langley Steinert (as such terms are defined in the Fourth Amended and Restated Certificate of Incorporation), assuming the exercise and settlement in full of all outstanding options and convertible securities and calculated on an as-converted to Class A common stock basis, being less than 9,091,484. Shares of Class B common stock will not automatically convert into shares of Class A common stock upon the termination of Mr. Steinert's status as an officer and director, unless such termination is either made voluntarily by Mr. Steinert or due to Mr. Steinert's death. Once converted into Class A common stock, the converted shares of Class B common stock will not be reissued. In addition, if all shares of Class B common stock are converted into Class A common stock, then any outstanding options or convertible securities with the right to purchase or acquire shares of Class B common stock shall become a right to purchase or acquire shares of Class A common stock.

~~On October 25, 2017, the Company granted a total of 762,704 RSUs with a grant date fair value of $29.01 per share. The total aggregate value of these RSUs is approximately $22.1 million.~~

Item 2. Management’s ~~Discussio~~nDiscussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our Unaudited Condensed Consolidated Financial Statements, and the related notes thereto, appearing elsewhere in this ~~report,~~Quarterly Report on Form 10-Q, or Quarterly Report, and our consolidated financial statements and the related notes and other financial information included in our ~~final prospectus~~Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission, ~~pursuant to Rule 424(b) under the Securities Act of 1933, as amended,~~or SEC, on ~~October 12, 2017.~~February 14, 2020, or our 2019 Annual Report. Some of the information contained in this discussion and analysis or elsewhere in this ~~report,~~Quarterly Report, including information with respect to our plans and strategy for our business and our performance and future success, includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” You should review the “Risk Factors” section of this ~~report~~Quarterly Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. In this discussion, we use financial measures that are considered non-GAAP financial measures under ~~Securities and Exchange Commission~~SEC rules. These rules regarding non-GAAP financial measures require supplemental explanation and reconciliation, which isare included elsewhere in this ~~report.~~Quarterly Report. Investors should not consider non-GAAP financial measures in isolation from or in substitution for, financial information presented in compliance with ~~U.S.~~United States generally accepted accounting principles, or GAAP.

CarGurus is a global, online automotive marketplace connecting buyers and sellers of new and used cars. Using proprietary technology, search algorithms, and innovative data analytics, we provide information and analysis that create a differentiated automotive search experience for consumers. Our trusted marketplace empowers users with unbiased ~~third-party~~third‑party validation on pricing and dealer reputation as well as other information that aids them in finding “Great Deals from Top-Rated Dealers.”

In addition to the United States, we operate online marketplaces under the CarGurus brand in Canada and the United Kingdom. We also operated online marketplaces in Germany, Italy, and Spain until we ceased the operations of each of these marketplaces in the second quarter of 2020. In the United States and the United Kingdom, we also operate the Autolist and ~~Germany.~~

~~On October 16, 2017,~~PistonHeads online marketplaces, respectively, as independent brands. We have subsidiaries in the United States, Canada, Ireland, and the United Kingdom. Additionally, we ~~completed our initial public offering, or the IPO, in which we issued~~have two reportable segments, United States and ~~sold 3,205,000 shares~~International. See Note 13 of our ~~Class A common stock at a public offering price of $16.00 per share for aggregate gross proceeds of $51.3 million. We received approximately $43.0 million~~Unaudited Condensed Consolidated Financial Statements included elsewhere in ~~net proceeds after deducting $3.6 million of underwriting discounts and commissions and approximately $4.7 million in offering costs.~~ Upon the closing of the IPO, all of the outstanding shares of our Preferred Stock automatically converted into 20,188,226 shares of Class A common stock and 40,376,452 shares of Class B common stock. The 40,376,452 shares of Class B common stock subsequently converted into 40,376,452 shares of Class A common stock resulting in a total conversion of all outstanding shares of Preferred Stock into 60,564,678 shares of Class A common stock at the conversion rates then in effect. Subsequent to the closing of the IPO, there were no shares of Preferred Stock outstanding.this Quarterly Report.

We generate marketplace subscription revenue from dealers primarily through ~~Listing~~Listings and Dealer Display subscriptions, and advertising and other revenue from automobile manufacturers and other auto-related brand ~~advertisers. Our~~advertisers as well as partnerships with financing services companies. We generated revenue ~~for~~of $94.7 million in the ~~nine~~three months ended ~~September~~June 30, ~~2017 was $226.3 million,~~2020, a ~~65% increase~~35% decrease from ~~$137.4~~$145.0 million of revenue in the ~~nine~~three months ended ~~September~~June 30, ~~2016.~~2019. Our revenue for the six months ended June 30, 2020 was $252.4 million, a 10% decrease from $280.3 million of revenue in the six months ended June 30, 2019.

For the three months ended ~~September~~June 30, ~~2017,~~2020, we generated net income of ~~$2.4~~$7.1 million and our Adjusted EBITDA was ~~$4.0~~$27.5 million, compared to net income of ~~$2.1~~$6.0 million and Adjusted EBITDA of ~~$3.9~~$14.5 million, for the three months ended ~~September~~June 30, ~~2016.~~2019. For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, we generated net income of ~~$10.9~~$19.8 million and our Adjusted EBITDA was ~~$18.1~~$55.2 million, compared to net income of ~~$2.7~~$18.6 million and Adjusted EBITDA of ~~$5.6~~$31.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2019. See “Adjusted EBITDA” below for more information regarding our use of Adjusted EBITDA, a non-GAAP financial measure, and a reconciliation of Adjusted EBITDA to our net income.

In December 2019, a novel strain of coronavirus, or COVID-19, surfaced in Wuhan, China. The virus was declared a pandemic by the World Health Organization and has spread to over 200 countries, including the United States, Canada and the United Kingdom, and continues to spread globally. This pandemic has caused an international health crisis and resulted in significant disruptions to the global economy as well as businesses and capital markets around the world.

The long-term implications of the COVID-19 pandemic and the resulting global crisis on our results of operations and overall financial performance remain uncertain. The COVID-19 pandemic and its adverse effects have ~~two reportable segments,~~become widespread in the locations where we, and our customers, suppliers and third-party business partners conduct business and as a result, we have experienced disruptions in our operations. For example, in March, we closed all of our offices (including our corporate headquarters) in the United States, Ireland and United Kingdom and began requiring our employees to work remotely until further notice. In addition, in an effort to limit the spread of COVID-19, many countries, as well as states in the United States, implemented or mandated and continue to implement or mandate significant restrictions on travel and commerce, shelter-in-place or stay-at-home orders, and business closures. Many of these shelter-in-place or stay-at-home orders resulted in restrictions on the ability to buy and sell automobiles by excluding

dealerships from the list of essential businesses and/or by closing or reducing the services provided by the agencies that process the registration of automotive titles. While certain jurisdictions, including many within the United States, have implemented or are implementing policies with the goal of re-opening these markets, restrictions may be re-imposed in these markets due to increases in COVID-19 cases. In addition, these restrictions and concerns about the spread of the disease have disrupted the operations of car dealerships, which has adversely affected the market for automobile purchases. Even as consumer demand gradually returns in jurisdictions implementing phased re-opening policies and/or in connection with stimulus programs, the automotive industry is experiencing, and may continue to experience, inventory supply problems, especially resulting from wholesale used-car auction closures and escalating auction prices, which have adversely affected the level of used-car inventory held by our paying dealers and displayed on our websites.

As a result of the travel and commerce restrictions and the impact on their businesses, a number of our paying dealers have temporarily closed, or are operating on a reduced capacity, and many dealerships are facing significant financial challenges. On March 18, 2020, in response to the COVID-19 pandemic, we announced a 50% fee reduction on all marketplace subscriptions for the April service period for paying dealers in the United States, Canada and the United Kingdom, as well as a suspension of all charges for paying dealers in Italy. On April 16, 2020, we announced a 50% fee reduction on all May marketplace subscriptions for paying dealers in the United States, Canada and the United Kingdom, as well as a continuation of our suspension of all charges for paying dealers in Italy as we ceased the operations of our Italian marketplace in May 2020. On April 29, 2020, we announced a 20% and 50% fee reduction on all June marketplace subscriptions for paying dealers in the United States and ~~International.~~United Kingdom, respectively. On May 5, 2020, we also announced a 20% fee reduction on all June marketplace subscriptions for paying dealers in Canada. These fee reductions resulted in a modification to contracts with initial contractual periods greater than one month. For any contract modified, we calculated the remaining transaction price and allocated the consideration over the remaining performance obligations. These fee reductions materially and adversely impacted revenue for the second quarter of 2020. In July 2020, we returned to normal contractual billings in all markets.

In addition, despite our proactive fee reductions, we have experienced and may continue to experience constrained customer demand which had a material adverse impact on our business, results of operations and overall financial performance. Specifically, we have experienced and may continue to experience an adverse impact on our revenue as a result of customers cancelling their subscriptions due to closures of their dealerships, reluctance of prospective dealer customers to subscribe to or renew a subscription to a paid product, and customers reducing advertising spend due to cost constraints. We also experienced an increase in account delinquencies from dealer customers challenged by the COVID-19 pandemic that failed to pay us on time or at all. Cancellations by paying dealers began to stabilize in May, which we believe resulted from the resumption of consumer activity as well as the fee reductions that we provided to our customers.

These effects from the COVID-19 pandemic on our revenue and cash flows caused us to implement certain cost-savings measures across our business. For example, we initiated a reduction in our workforce of approximately 13% and implemented several other cost saving initiatives. These cost saving initiatives included a reduction in consumer marketing spend and a reduction in discretionary spend across the business as well as a 50% executive base salary reduction for three months. Additionally, we ceased marketplace operations in Germany, Italy, and Spain, and halted any new international expansion efforts, which we believe will allow us to focus our financial and human capital resources on our more established international markets in Canada and the United Kingdom. As consumer activity gradually increased and governments began to implement phased re-opening policies, we sequentially increased our consumer marketing expenses each month during the second quarter of 2020.

We continue to monitor and assess the effects of the COVID-19 pandemic on our commercial operations, including the impact on our revenue in 2020. However, we cannot at this time accurately predict what effects these conditions will ultimately have on our revenue and operations. See ~~Note 11~~the “Risk Factors” section of this Quarterly Report for further discussion of the impacts of the COVID-19 pandemic on our ~~Unaudited Condensed Consolidated Financial Statements included elsewhere in this report for more information.~~business.

We regularly review a number of metrics, including the key metrics listed below, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make operating and strategic decisions. We believe it is important to evaluate these metrics for the United States and International segments. The International ~~is defined as all non-U.S. markets in which we operate.~~segment derives revenues from marketplace subscriptions, advertising services, and other revenues from customers outside of the United States. International markets ~~will likely~~ perform differently from the ~~U.S.~~United States market due to a variety of factors, including our operating history in ~~the~~each market, our rate of investment, market size, market maturity, competition and other dynamics unique to each country.

We are conducting an enterprise-system upgrade, or the Internal System Upgrade, and an overhaul of our data architecture, which have provided us with improved accuracy in dealer-level data and is expected to yield more efficient sales account

management. Our data team has also completed a data-reconciliation effort to align our historical data to the new structure. Following these efforts, we modified our method for calculating paying dealers to align our data with the Internal System Upgrade, and we have replaced our Average Annual Revenue per Subscribing Dealer, or AARSD, key metric with Quarterly Average Revenue per Subscribing Dealer, or QARSD. Transitioning to QARSD allows us to provide investors with quarterly marketplace subscription revenue in both the U.S. and International segments, which was not previously disclosed through AARSD. We also believe that QARSD, as a quarterly metric, is a more immediate indicator compared to AARSD of the value proposition of our products and the return on investment, or ROI, that our paying dealers realize from our products. We believe these changes provide investors with improved indicators of performance and trends in our business.

For each of our websites, we define a monthly unique user as an individual who has visited ~~our~~such website within a calendar month, based on data as measured by Google Analytics. We calculate average monthly unique users as the sum of the monthly unique users in a given period, divided by the number of months in that period. We count a unique user the first time a computer or mobile device with a unique device identifier accesses one of our ~~website~~websites during a calendar month. If an individual accesses ~~our~~a website using a different device within a given month, the first access by each such device is counted as a separate unique user. We view our average monthly unique users as a key indicator of the quality of our user experience, the effectiveness of our advertising and traffic acquisition, and the strength of our brand awareness. Measuring unique users is important to us and we believe it provides useful information to our investors because our marketplace subscription revenue depends, in part, on our ability to provide dealers with connections to our users and exposure to our marketplace audience. We define connections as interactions between consumers and dealers on our marketplace through phone calls, email, managed text and chat, and clicks to access the dealer’s website ~~and~~or map directions to the dealership.

We define monthly sessions as the number of distinct visits to our ~~website~~websites that take place each month within a given time frame, as measured and defined by Google Analytics. We calculate average monthly sessions as the sum of the monthly sessions in a given period, divided by the number of months in that period. A session is defined as beginning with the first page view from a computer or mobile device and ending at the earliest of when a user closes their browser window, after 30 minutes of inactivity, or each night at midnight (i) Eastern Time ~~each night.~~for our United States and Canada websites, other than the Autolist website, (ii) Pacific Time for the Autolist website, (iii) Greenwich Mean Time for our U.K. websites, and (iv) Central European Time (or Central European Summer Time when daylight savings is observed) for our Germany, Italy, and Spain websites, which ceased operations in the second quarter of 2020. A session can be made up of multiple page views and visitor actions, such as performing a search, visiting vehicle detail pages, and connecting with a dealer. We believe that measuring the volume of sessions in a time period, when considered in conjunction with the number of unique users in that time period, is an important indicator to us of consumer satisfaction and engagement with our ~~marketplace.~~marketplace, and we believe it provides useful information to our investors because the more satisfied and engaged consumers we have, the more valuable our service is to dealers.

~~Paying dealers are the number of dealers subscribing to one of our Enhanced or Featured Listing products~~We now calculate a paying dealer as a dealer account with an active, paid marketplace subscription at the end of a defined period. WeThis new definition relies on subscriptions based on dealer accounts as opposed to distinct associated inventory feeds because, as dealer accounts are tied to our billings system, we believe ~~that the~~they produce a more consistent reporting measure than inventory feeds. The number of paying dealers we have is important to us and we believe it provides valuable information to investors because it is indicative of the value proposition of our ~~Listing~~marketplace products, ~~and~~as well as our sales and marketing success and opportunity, including our ability to retain paying dealers and develop new dealer relationships.

We ~~measure the average annual revenue we receive from each paying dealer. We~~ define ~~AARSD, as~~QARSD, which is measured at the end of a ~~defined period,~~fiscal quarter, as the ~~total~~ marketplace subscription revenue during ~~the trailing 12 months~~that quarter divided by the average number of paying dealers in that marketplace during the same ~~trailing 12-month period. Our~~quarter. We calculate the average number of paying dealers for a period by adding the number of paying dealers at the end of the prior period and the end of the current period and dividing by two. This information is important to us, and we believe it provides useful information to investors, because we believe that our ability to grow ~~the AARSD~~QARSD is an indicator of the value proposition of our products and the ~~return on investment, or~~ ROI that our paying dealers realize from our products. ~~Increases~~In addition, increases in ~~AARSD~~QARSD, which we believe reflect the value of exposure to our engaged audience in relation to subscription cost, are driven in part by our ability to grow the volume of connections to our users and the quality of those connections, ~~effectively illustrate the value of brand exposure~~which result in increased opportunity to ~~our engaged audience in relation to subscription cost,~~ upsell package levels and cross-sell additional products to our paying dealers.

To provide investors with additional information regarding our financial results, we monitor and have presented within this Quarterly Report, ~~on Form 10-Q~~ Adjusted EBITDA, which is a ~~non-GAAP~~non‑GAAP financial measure. This ~~non-GAAP~~non‑GAAP financial measure is not based on any standardized methodology prescribed by U.S. generally accepted accounting principles, or GAAP, and is not necessarily comparable to ~~similarly-titled~~similarly titled measures presented by other companies.

We define Adjusted EBITDA as net income, adjusted to exclude: depreciation and amortization, ~~stock-based~~stock‑based compensation expense, acquisition-related expenses, restructuring expenses, other ~~expense (income),~~income, net, and the provision for (benefit from) income ~~taxes, and other one-time, non-recurring items, when applicable.~~taxes. We ~~monitor~~have presented Adjusted EBITDA within this Quarterly Report, because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA can produce a useful measure for period‑to‑period comparisons of our business.

We use Adjusted EBITDA to evaluate our operating performance and trends and make planning decisions. We believe Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision‑making. In addition, we evaluate our Adjusted EBITDA in relation to our revenue. We refer to this as ~~a non-GAAP financial measure to supplement the financial information we present on a GAAP basis to provide investors with additional information regarding our financial results.~~Adjusted EBITDA margin and define it as Adjusted EBITDA divided by total revenue.

Our Adjusted EBITDA is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, ~~(loss),~~ which is the most directly comparable GAAP equivalent. Some of these limitations are:

Because of these limitations, we consider, and you should consider, Adjusted EBITDA together with other operating and financial performance measures presented in accordance with GAAP.

The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable measure calculated in accordance with GAAP, for each of the periods ~~presented:~~presented.

Components of Unaudited Condensed Consolidated Income Statements ~~of Operations~~

~~Our~~We derive revenue ~~is derived~~ from two primary sources: (1) marketplace subscription revenue, which consists primarily of ~~listing~~Listings, and ~~display advertising~~Dealer Display subscriptions, ~~from dealers,~~ and (2) advertising and other revenue, which consists primarily of display advertising revenue from auto manufacturers and other ~~auto-related~~auto‑related brand ~~advertisers.~~advertisers as well as partnerships with financing services companies.

We offer ~~three~~multiple types of marketplace ~~Listing products~~Listings packages to our ~~dealers:~~dealers through our platform: Restricted Listings (formerly referred to as Basic ~~Listing,~~Listings), which is free; and ~~Enhanced or Featured Listing,~~various levels of Listings packages, which each require a paid subscription under a monthly, quarterly, semiannual, or annual subscription basis. As

During the first quarter of ~~September~~2020, we temporarily suspended our Restricted Listings product in the U.S. and Canada and put certain non-paying dealers in these countries into a suspended activity program. In this temporary program, which concluded for U.S. dealers during the second quarter of 2020 and is continuing for Canada dealers, we collected (or continue to collect, as applicable) leads from consumers but did not (or do not, as applicable) provide these leads to non-paying dealers. This program included (or includes, as applicable) formerly paying dealers who terminated their paid subscription with us due to the COVID-19 pandemic. We forwarded (or continue to forward, as applicable) leads collected under this suspended activity program to dealers on the earlier of their restoring their paid subscription or on an anonymized basis once we reinstated (or reinstate, as applicable) Restricted Listings, as the case may be.

Our subscriptions for customers generally auto-renew on a monthly basis and are cancellable by dealers with 30 ~~2017,~~days’ advance notice at the end of the committed term, although we did not require dealers to provide 30 days’ advance notice of termination for dealers who have canceled as a result of the COVID-19 pandemic. We also offer all dealers on our platform access to our Dealer Dashboard, which includes a performance summary, Dealer Insights tool, and user review management platform. Only dealers subscribing to a paid Listings package also have access to the Pricing Tool and Market Analysis tool. Subscription pricing is determined based on a dealer’s inventory size, region, and our assessment of the connections and ~~return on investment (“ROI”) our~~ROI the platform will provide ~~them. We also~~them and is subject to discounts and/or fee reductions that we may offer ~~dealers access~~from time to our Dealer Dashboard, which includes a performance summary, Dealer Insights tool, user review management platform, Pricing Tool, and Market Analysis tool. The Pricing Tool and Market Analysis tool are available only to paying dealers.time.

In addition to ~~listing their~~displaying inventory in our marketplace and ~~gaining~~providing access to ~~our~~the Dealer Dashboard, we offer ~~Enhanced and Featured Listing~~ dealers subscribing to certain of our Listings packages other subscription advertising and customer acquisition products and enhancements, including those marketed under our Real-time Performance Marketing suite, such as Dealer Display. With Dealer Display, dealers can buy display advertising that appears in our marketplace, ~~and~~ on other sites on the ~~Internet, which~~internet and/or on Facebook, a highly converting social platform. Such advertisements can be targeted by the user’s geography, search history, CarGurus website activity (including showing a user relevant vehicles from a dealer’s inventory that the user has not yet discovered on our marketplace), and a number of other targeting factors, allowing dealers to increase their visibility with in-market consumers and ~~dealer search engine marketing,~~drive qualified traffic for dealers.

We also offer paid Listings packages for the Autolist website and paid Listings and display products for the PistonHeads website.

As a result of the COVID-19 pandemic, we experienced a material adverse impact on our marketplace revenue as paying dealers cancelled their subscriptions with us (including, in some cases, with our permission prior to the end of the applicable contract term and notice period) and due to the fee reductions provided to customers in April, May and June, which ~~helps~~resulted in reductions in the overall transaction price that were spread over the remaining contract term. In July 2020, we returned to normal contractual billings in all markets. Cancellations by paying dealers ~~more effectively acquire customers through paid search, social media, and retargeted advertising.~~

~~Marketplace subscription revenue is recognized on a monthly basis~~began to stabilize in May, which we believe resulted from the resumption of consumer activity as well as the ~~service~~fee reductions that we provided to our customers, although it is ~~delivered~~possible that additional dealers will cancel their subscriptions with us as they continue to experience the ~~dealer.~~effects of the COVID-19 pandemic.

Advertising and other revenue consists primarily of non-dealer display advertising revenue from auto manufacturers and other auto-related brand advertisers sold on a cost per thousand impressions, or CPM, basis. An impression is an advertisement loaded on a web page. In addition to advertising sold on a CPM basis, we also have advertising sold on a cost per click basis. Auto manufacturers and other brand advertisers can execute advertising campaigns that are targeted across a wide variety of parameters, including demographic groups, behavioral characteristics, specific auto brands, categories such as Certified Pre-Owned, and segments such as hybrid vehicles.

Advertising and other revenue also includes revenue from partnerships with certain financing services companies pursuant to which we enable eligible consumers on our United States website to pre-qualify for financing on cars from dealerships that offer financing through such companies. Our revenues from these financing partnerships are based on a funded-loan basis.

We also offer non-dealer display products for the Autolist and PistonHeads websites.

As a result of the COVID-19 pandemic, we experienced a material adverse impact on our advertising revenue as some advertisers cancelled or reduced their advertising with us (including, in certain cases, with our permission prior to the end of the applicable contract term). Cancellations by advertising customers began to stabilize in May, which we believe resulted from the resumption of consumer activity. It is possible, however, that advertising customers will continue to cancel or reduce their advertising with us as they continue to experience the effects of the COVID-19 pandemic.

In addition, a reduction in consumer visits to our sites during the COVID-19 pandemic resulted in the delivery of fewer impressions for our advertising customers in the second quarter of 2020, which has caused, and may continue to cause, an adverse impact on our advertising revenues; this impact was partially offset by, and may continue to be offset by, the increase in consumer visits over the course of the second quarter to our sites as we increased our consumer marketing expenses in response to the recovery in consumer and car shopping activity.

Revenue from partnerships with financing services companies was not adversely impacted by the COVID-19 pandemic.

Cost of revenue primarily consists of costs related to supporting and hosting our product offerings. These costs include salaries, benefits, incentive compensation, and stock-based compensation ~~expense related to the~~for our customer support team and third-party service provider costs such as data center and networking expenses, allocated overhead costs, depreciation ~~and amortization~~ expense associated with our property and equipment, and amortization of capitalized website development costs. We allocate overhead costs, such as rent and facility costs, information technology costs, and employee benefit costs, to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each operating expense category. We expect these expenses to increase as we continue to scale our business and introduce new products.

Sales and marketing expenses consist primarily of personnel and related expenses for our sales and marketing ~~staff,~~team, including salaries, benefits, incentive compensation, commissions, stock-based compensation, and travel costs; costs associated with consumer marketing, such as traffic acquisition, brand building, and public relations activities; costs associated with dealer marketing, such as content marketing, customer and promotional events, and industry events; amortization of internal-use software; and allocated ~~overhead.~~overhead costs. A portion of our commissions that are related to obtaining a new contract is capitalized and amortized over the estimated benefit period of customer relationships. All other sales and marketing costs are expensed as incurred. We expect sales and marketing expenses to ~~increase as we grow our audience and attempt to strengthen our brand awareness and, as informed by trends in our business and the competitive landscape of our market,~~ fluctuate from quarter to quarter as we respond to the COVID-19 pandemic and changes in the competitive landscape and attempt to restore our consumer audience and our brand awareness, which will impact our quarterly results of operations.

Product, technology, and development expenses, which include research and development costs, consist primarily of personnel ~~costs of~~and related expenses for our development team, including ~~payroll,~~salaries, benefits, incentive compensation, stock-based compensation ~~expense~~ and allocated overhead costs. Other than website development and internal-use software costs as well as other costs that qualify for capitalization, research and development costs are expensed as incurred. WeDespite our implementation of several cost saving initiatives associated with the COVID-19 pandemic, we expect product, technology, and development expenses to increase as we develop new solutions and make improvements to our existing platform.

General and administrative expenses consist primarily of personnel ~~costs~~ and related expenses for our executive, finance, legal, human resources, and administrative ~~personnel,~~teams, including salaries, benefits, incentive compensation, and stock-based compensation, ~~expenses,~~ in addition to the costs associated with professional fees for external legal, accounting and other consulting services, insurance premiums, payment processing and billing costs, and allocated overhead costs. WeGeneral and administrative costs are expensed as incurred. Despite our implementation of several cost saving initiatives associated with the COVID-19 pandemic, we expect general and administrative expenses to increase as we ~~incur the costs of compliance associated with being a publicly traded company, including legal, audit, and consulting fees.~~seek to grow our business.

Depreciation and amortization expenses consist of depreciation on property and equipment and ~~leasehold improvements.~~amortization of intangible assets.

Other ~~(expense)~~ income, net consists primarily of interest income earned on our cash, cash equivalents, and investments, ~~interest expense on lease obligations,~~sublease income and net foreign exchange gains and losses.

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions in which we operate. We have ~~recorded~~recognized a provision for income taxes for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017~~2020 and ~~2016 as~~ a ~~result of our consolidated taxable~~benefit from income ~~position.~~taxes for the three months ended June 30, 2019. We recognize deferred tax assets and liabilities based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates. We regularly assess the need to record 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. ~~We have not provided a~~Our valuation allowance against our net deferred tax assets ~~at September~~as of June 30, ~~2017 or~~2020 and December 31, ~~2016.~~2019 was immaterial.

The following table sets forth our selected consolidated statements of operations data for each of the periods indicated. The period-to-period comparison of financial results is not necessarily indicative of future results.

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2017		2016		2017		2016		2020		2019			2020		2019
	(dollars in thousands)								(dollars in thousands)					(dollars in thousands)
Revenue:
Marketplace subscription	$	73,937	$	46,477	$	201,889	$	118,115	$	79,953	$	129,096		$	221,819	$	249,939
Advertising and other		9,052		6,659		24,375		19,262		14,784		15,935			30,607		30,362
Total revenue		82,989		53,136		226,264		137,377		94,737		145,031			252,426		280,301
Cost of revenue		4,720		2,852		12,367		6,671		9,880		8,628			21,490		16,348
Gross profit		78,269		50,284		213,897		130,706		84,857		136,403			230,936		263,953
Operating expenses:
Sales and marketing		63,891		40,510		168,495		108,823		38,583		101,789			132,178		193,105
Product, technology, and development		5,796		2,984		14,153		8,134		21,887		17,346			44,971		33,318
General and administrative		5,006		3,101		14,098		8,719		14,158		12,540			30,018		24,300
Depreciation and amortization		713		432		1,909		1,065		1,520		1,180			3,041		2,247
Total operating expenses		75,406		47,027		198,655		126,741		76,148		132,855			210,208		252,970
Income from operations		2,863		3,257		15,242		3,965		8,709		3,548			20,728		10,983
Other income, net:
Interest income										317		744			879		1,488
Other income, net		106		107		323		260		157		105			323		1,007
Total other income, net										474		849			1,202		2,495
Income before income taxes		2,969		3,364		15,565		4,225		9,183		4,397			21,930		13,478
Provision for income taxes		590		1,226		4,633		1,566
Provision for (benefit from) income taxes										2,052		(1,610	)		2,103		(5,113	)
Net income	$	2,379	$	2,138	$	10,932	$	2,659	$	7,131	$	6,007		$	19,827	$	18,591

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
	(dollars in thousands)												(dollars in thousands)						(dollars in thousands)
Additional Financial Data:
Revenue
United States	$	80,394		$	52,435		$	219,954		$	136,195		$	89,746		$	137,010		$	237,752		$	265,413
International		2,595			701			6,310			1,182			4,991			8,021			14,674			14,888
Total	$	82,989		$	53,136		$	226,264		$	137,377		$	94,737		$	145,031		$	252,426		$	280,301
Income from Operations
Income (Loss) from Operations
United States	$	9,337		$	8,351		$	33,617		$	16,818		$	15,337		$	14,119		$	35,599		$	31,500
International		(6,474	)		(5,094	)		(18,375	)		(12,853	)		(6,628	)		(10,571	)		(14,871	)		(20,517	)
Total	$	2,863		$	3,257		$	15,242		$	3,965		$	8,709		$	3,548		$	20,728		$	10,983

The following table sets forth our selected consolidated statements of operations data as a percentage of revenue for each of the periods indicated.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Revenue:
Marketplace subscription		89	%		87	%		89	%		86	%		84	%		89	%		88	%		89	%
Advertising and other		11			13			11			14			16			11			12			11
Total revenue		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%
Cost of revenue		5			5			5			5			10			6			9			6
Gross profit		95			95			95			95			90			94			91			94
Operating expenses:
Sales and marketing		77			76			75			79			41			70			52			68
Product, technology, and development		7			6			6			6			23			12			18			12
General and administrative		6			6			6			6			15			9			12			9
Depreciation and amortization		1			1			1			1			2			1			1			1
Total operating expenses		91			89			88			92			81			92			83			90
Income from operations		4			6			7			3			9			2			8			4
Other income, net:
Interest income														1			1			1			1
Other income, net		0			0			0			0			0			0			0			0
Total other income, net														1			1			1			1
Income before income taxes		4			6			7			3			10			3			9			5
Provision for income taxes		1			2			2			1
Provision for (benefit from) income taxes														2			(1	)		1			(2	)
Net income		3	%		4	%		5	%		2	%		8	%		4	%		8	%		7	%

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Additional Financial Data:
Revenue
United States		97	%		99	%		97	%		99	%		95	%		94	%		94	%		95	%
International		3			1			3			1			5			6			6			5
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%
Income from Operations
Income (Loss) from Operations
United States		11	%		16	%		15	%		12	%		16	%		10	%		14	%		11	%
International		(8	)		(10	)		(8	)		(9	)		(7	)		(8	)		(6	)		(7	)
Total		3	%		6	%		7	%		3	%		9	%		2	%		8	%		4	%

For the ~~Three Months Ended September~~three months ended June 30, ~~2017~~2020 and ~~2016~~2019

	Three Months Ended September 30,						Change					Three Months Ended June 30,						Change
	2017			2016			Amount		%			2020			2019			Amount			%
	(dollars in thousands)											(dollars in thousands)
Revenue
Marketplace subscription	$	73,937		$	46,477		$	27,460		59	%	$	79,953		$	129,096		$	(49,143	)		(38	)%
Advertising and other		9,052			6,659			2,393		36			14,784			15,935			(1,151	)		(7	)
Total	$	82,989		$	53,136		$	29,853		56	%	$	94,737		$	145,031		$	(50,294	)		(35	)%
Percentage of total revenue:
Marketplace subscription		89	%		87	%							84	%		89	%
Advertising and other		11			13								16			11
Total		100	%		100	%							100	%		100	%

Overall revenue ~~increased~~decreased by ~~$29.9~~$50.3 million, or ~~56%~~35%, in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the three months ended ~~September~~June 30, ~~2016.~~2019. Marketplace subscription revenue ~~increased~~decreased by ~~59%~~38%, while advertising and other revenue ~~increased~~decreased by ~~36%~~7%.

Marketplace subscription revenue ~~increased~~decreased by ~~$27.5~~$49.1 million in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the three months ended ~~September~~June 30, ~~2016,~~2019 and represented ~~89%~~84% of total revenue infor the three months ended ~~September~~June 30, ~~2017, as compared to 87% of total revenue in~~2020 and 89% for the three months ended ~~September~~June 30, ~~2016.~~ 2019. This ~~increase~~decrease in marketplace subscription revenue was primarily attributable ~~primarily~~ to the impact of the COVID-19 pandemic. We experienced a ~~37% growth~~reduction in marketplace revenue as paying dealers cancelled their subscriptions with us (including, in some cases, with our permission prior to the end of the applicable contract term and notice period) and due to the fee reductions provided to customers in April, May and June, which resulted in reductions in the number of paying dealers, from 19,403 at September 30, 2016 to 26,553 at September 30, 2017, and to a 16% growth in our U.S. AARSD from $9,939 as of September 30, 2016 to $11,526 as of September 30, 2017. We believeoverall transaction price that ~~this increase in paying dealers was driven by~~were spread over the overall growth in the number of unique users to our website and the continued efforts from our sales and marketing teams to convert Basic Listing dealers to Enhanced and Featured Listing paying dealers.remaining contract term.

Advertising and other revenue ~~increased $2.4~~decreased by $1.2 million in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the three months ended ~~September~~June 30, ~~2016,~~2019 and represented ~~11%~~16% of total revenue for the three months ended June 30, 2020 and 11% for the three months ended June 30, 2019. This decrease in advertising and other revenue was primarily attributable to the impact of the COVID-19 pandemic. We experienced a reduction in advertising revenue as some advertisers cancelled or reduced their advertising with us (including, in some cases, with our permission prior to the end of the applicable contract term). This reduction was offset in part by growth in consumer financing revenue.

United States revenue decreased $47.3 million, or 34%, in the three months ended June 30, 2020 compared to the three months ended June 30, 2019,due primarily the impact of the COVID-19 pandemic as paying dealers cancelled their subscriptions with us (including, in certain cases, with our permission prior to the end of the applicable contract term and notice period) and due to the fee reductions provided to customers in April, May and June.

International revenue decreased $3.0 million, or 38%, in the three months ended ~~September~~June 30, 2017, compared to 13% of total revenue in the three months ended September 30, 2016. The increase in advertising and other revenue is due primarily to a 10% increase in the number of impressions delivered and a 41% increase in the average price per thousand impressions in the three months ended September 30, 20172020 compared to the three months ended ~~September~~June 30, ~~2016.~~2019, due primarily to the impact of the COVID-19 pandemic as paying dealers cancelled their subscriptions with us (including, in some cases, with our permission prior to the end of the applicable contract term and notice period) and due to the fee reductions provided to customers in April, May and June.

Cost of revenue increased ~~$28.0~~$1.3 million, or ~~53%~~15%, in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the three months ended ~~September~~June 30, ~~2016,~~2019. The increase was primarily due ~~primarily~~ to a ~~29%~~$1.0 million increase in ~~the number of U.S. paying dealers.~~

~~International revenue increased $1.9 million in the three months ended September 30, 2017 compared~~amortization due to the ~~three months ended September 30, 2016, due~~write-off of international websites in connection with the Expense Reduction Plan and amortization of website development costs, as well as a $0.7 million increase in costs primarily related to a ~~258% increase~~reduction of vendor rebates. These increases were offset in part by a $0.6 million decrease in costs related to connecting consumers with dealers through a variety of methods, including phone calls, email, and managed text and chat, due to the ~~number~~effects of ~~international paying dealers.~~

Cost of revenue increased $1.9 million, or 65%, in the three months ended September 30, 2017 compared to the three months ended September 30, 2016, due primarily to costs associated with servicing our revenue growth. Key drivers of the increase included employee-related costs of our customer support team to support the growth in customers and an increase in fees related to servicing our growing advertising revenue.

Sales and marketing expenses ~~increased $23.4~~decreased $63.2 million, or ~~58%~~62%, in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the three months ended ~~September~~June 30, ~~2016,~~2019. The decrease was due primarily to ~~an increase~~a $60.6 million decrease in advertising costs, a $1.4 million decrease in marketing costs related to events and research expenses, a $0.9 million decrease in consulting expenses, and a decrease in other sales and marketing expense as a result of ~~$19.4~~cost-savings efforts we implemented in response to the COVID-19 pandemic. These decreases were offset in part by an increase of $2.2 million ~~a $2.9 million increase~~ in ~~salaries, commissions,~~employee severance and related ~~expenses due to our increased revenue and a 33% increase in headcount, a $0.5 million increase in expenses related to marketing events, and a $0.2 million increase in consulting fees.~~benefits expense arising from the Expense Reduction Plan.

Product, technology, and development expenses increased ~~$2.8~~$4.5 million, or ~~94%~~26%, in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the three months ended ~~September~~June 30, ~~2016,~~2019. The increase was due primarily to ana $3.2 million increase in salaries and employee-related costs, exclusive of stock-based compensation expense and employee severance and related ~~employment expenses related~~benefits expense, which increased $1.3 million and $0.7 million, respectively. The increase in salaries and employee-related costs and stock-based compensation expense was due primarily to a ~~59%~~20% increase in headcount to support our growth plans and product innovations. The increase in employee severance and related benefits expense was related to the Expense Reduction Plan. These increases were offset in part by a $0.5 million decrease in consulting and recruiting expenses and a decrease in other product, technology, and development expenses as a result of cost-savings efforts we implemented in response to the COVID-19 pandemic. The increase for the three months ended June 30, 2020 is inclusive of product, technology, and development expenses associated with the integration and development of Autolist technology of $1.2 million.

General and administrative expenses increased ~~$1.9~~$1.6 million, or ~~61%~~13%, in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the three months ended ~~September~~June 30, ~~2016,~~2019. The increase was due primarily to ana $0.8 million increase ~~of $1.4 million~~ in salaries and ~~other~~ employee-related costs, ~~driven by an~~exclusive of stock-based compensation expense, which increased $1.1 million. The increase in ~~headcount needed~~salaries and employee-related costs and stock-based compensation expense was due primarily to ~~grow our business and provide personnel~~a 4% increase in headcount. The increase for the three months ended June 30, 2020 was offset in part by a decrease of $0.6 million in costs related to ~~support our expanded operations. Payment~~payment processing and billing ~~costs also increased $0.4 million~~ due to ~~increased~~decreased customer ~~transactions.~~transactions as a result of decreased revenue and a decrease in other general and administrative expenses as a result of cost-savings efforts we implemented in response to the COVID-19 pandemic.

Depreciation and amortization expenses increased $0.3 million, or ~~65%~~29%, in the three months ended June 30, 2020 compared to the three months ended June 30, 2019, due primarily to an increase in depreciation related to the leasehold improvements associated with additional office space leasedat 55 Cambridge Parkway in Cambridge, Massachusetts as well as amortization of intangible assets primarily related to Autolist.

Total other income, net decreased $0.4 million, or 44%, in the three months ended June 30, 2020 compared to the three months ended June 30, 2019. The $0.4 million decrease in interest income was primarily due to lower investments in certificates of deposit during the three months ended ~~September~~June 30, ~~2017 compared to the three months ended September 30, 2016, due primarily to increased amortization of additional leasehold improvements.~~2020.

~~Other income, net was relatively consistent in the three months ended September 30, 2017 compared to the three months ended September 30, 2016.~~

The provision for income taxes decreased $0.6 million in the three months ended September 30, 2017 compared to the three months ended September 30, 2016, due primarily to higher excess tax deductions relating to stock-based compensation awards and R&D tax creditsrecorded during the three months ended ~~September~~June 30, ~~2017.~~2020, as compared to the benefit from income taxes recorded during the three months ended June 30, 2019 was principally due to $0.8 million of tax expense related to shortfalls on the taxable compensation of share-based awards recorded during the three months ended June 30, 2020, compared to $2.4 million of tax benefit related to excess stock-based compensation deductions recorded during the three months ended June 30, 2019.

United States income from operations increased ~~$1.0~~$1.2 million, or ~~12%~~9%, in the three months ended ~~September~~June 30, ~~2017~~2020 compared to the three months ended June 30, 2019. This increase was due to decreases in operating expenses of $49.0 million, offset by decreases in revenue of $47.3 million and an increase in cost of revenue of $0.5 million.

International loss from operations decreased $3.9 million, or 37%, in the three months ended June 30, 2020 compared to the three months ended ~~September~~June 30, ~~2016.~~ 2019. The decrease in International loss from operations is the result of a $7.7 million decrease in operating expenses due to ceasing of operations in certain markets, offset in part by a decrease in international revenues of $3.0 million and an increase in cost of revenue of $0.8 million.

Overall revenue decreased by $27.9 million, or 10%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. Marketplace subscription revenue decreased by 11%, while advertising and other revenue grew by 1%.

Marketplace subscription revenue decreased by $28.1 million in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 and represented 88% of total revenue for the six months ended June 30, 2020 and 89% of revenue for the six months ended June 30, 2019. This decrease in marketplace subscription revenue was primarily attributable to the impact of the COVID-19 pandemic. We experienced a reduction in marketplace revenue as paying dealers cancelled their subscriptions with us (including, in some cases, with our permission prior to the end of the applicable contract term and notice period) and due to the fee reductions provided to customers in April, May and June, which resulted in reductions in the overall transaction price that were spread over the remaining contract term.

Advertising and other revenue increased by $0.2 million in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 and represented 12% of total revenue for the six months ended June 30, 2020 and 11% of total revenue for the six months ended June 30, 2019. The increase in advertising and other revenue was primarily due to $2.1 million of revenue from Autolist and an increase in revenues from consumer financing, offset by the impact of the COVID-19 pandemic. We experienced a reduction in advertising revenue as some advertisers cancelled or reduced their advertising with us (including, in some cases, with our permission prior to the end of the applicable contract term).

United States revenue decreased $27.7 million, or 10%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, due primarily the impact of the COVID-19 pandemic as paying dealers cancelled their subscriptions with us (including, in some cases, with our permission prior to the end of the applicable contract term and notice period) and due to the fee reductions provided to customers in April, May and June.

International revenue decreased $0.2 million, or 1%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, due primarily the impact of the COVID-19 pandemic as paying dealers cancelled their subscriptions with us (including, in some cases, with our permission prior to the end of the applicable contract term and notice period) and due to the fee reductions provided to customers in April, May and June.

Cost of revenue increased $5.1 million, or 31%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019.The increase was due primarily to a $1.6 million increase in amortization due to the write-off of international websites in connection with the Expense Reduction Plan and amortization of website development costs, a $1.4 million increase in fees related to provisioning advertising campaigns on our websites, a $1.1 million increase in data center and hosting costs and a $1.0 million increase in costs primarily related to a reduction of vendor rebates. These increases were offset in part by a $0.6 million decrease in

costs related to connecting consumers with dealers through a variety of methods, including phone calls, email, and managed text and chat, due to the effects of the COVID-19 pandemic. The increase for the six months ended June 30, 2020 was also partially attributable to cost of revenue associated with Autolist of $0.5 million.

Sales and marketing expenses decreased $60.9 million, or 32%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease was due primarily to a $60.2 million decrease in advertising costs attributable to cost-savings efforts we implemented in response to the COVID-19 pandemic, a $1.5 million decrease in marketing costs related to events and research expenses, a $0.9 million decrease in consulting and recruiting expenses, and a decrease in other sales and marketing expense as a result of cost-savings efforts we implemented in response to the COVID-19 pandemic. These decreases were offset in part by an increase of $1.2 million in salaries and employee-related costs, exclusive of employee severance and related benefits expense, which increased $2.2 million. The increase in salaries and employee-related costs was due to an increase in merit increases and promotions. The increase in employee severance and related benefits expense was related to the Expense Reduction Plan. The decrease for the six months ended June 30, 2020 was also partially offset by increased sales and marketing expenses associated with the integration and marketing of Autolist of $0.9 million.

Product, technology, and development expenses increased $11.7 million, or 35%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The increase was due primarily to a $6.8 million increase in salaries and employee-related costs, exclusive of stock-based compensation expense and employee severance and related benefits expense, which increased $3.5 million and $0.7 million, respectively. The increase in salaries and employee-related costs and stock-based compensation expense was due primarily to a 20% increase in headcount to support our growth plans and product innovations. The increase in employee severance and related benefits expense was related to the Expense Reduction Plan. The increase in product, technology, and development expenses for the six months ended June 30, 2020 was also due in part to a $1.1 million increase in rent costs due to additional office space at 55 Cambridge Parkway, in Cambridge, Massachusetts. These increases were offset in part by a $0.5 million decrease in consulting and recruiting expenses and a decrease in other product, technology, and development expenses as a result of cost-savings efforts we implemented in response to the COVID-19 pandemic. The increase for the six months ended June 30, 2020 is inclusive of product, technology, and development expenses associated with the integration and development of Autolist technology of $2.8 million.

General and administrative expenses increased $5.7 million, or 24%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The increase was due primarily to a $1.6 million increase in salaries and employee-related costs, exclusive of stock-based compensation expense, which increased $2.5 million. The increase in salaries and employee-related costs and stock-based compensation expense was due primarily to a 4% increase in headcount. The increase was also due in part to a $1.3 million increase in bad debt expense as a result of increasing our allowance for doubtful accounts as a result of the impact of the COVID-19 pandemic. The increase for the six months ended was offset in part by a decrease in various general and administrative expenses as a result of cost-savings efforts we implemented in response to the COVID-19 pandemic.

Depreciation and amortization expenses increased $0.8 million, or 35%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, due primarily to an increase in depreciation related to the leasehold improvements associated with additional office space leased at 55 Cambridge Parkway in Cambridge, Massachusetts as well as amortization of intangible assets primarily related to Autolist.

Total other income, net decreased $1.3 million, or 52%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The $0.6 million decrease in interest income was primarily due to lower investments in certificates of deposit during the six months ended June 30, 2020. The $0.6 million decrease in other income, net was primarily due to a $0.8 million decrease in unrealized gain. In the six months ended June 30, 2019 we had an unrealized gain associated with an intercompany receivable related to the acquisition of PistonHeads.

The provision for income taxes recorded during the six months ended June 30, 2020, as compared to the benefit from income taxes recorded during the six months ended June 30, 2019 was principally due to $0.5 million of tax benefit related to excess stock-based compensation deductions recorded during the six months ended June 30, 2020, compared to $7.7 million recorded during the six months ended June 30, 2019, as well as a decrease in federal and state research and development tax credits as compared to the six months ended June 30, 2019, as a result of the decreased excess stock-based compensation included in research and development wages.

United States income from operations increased $4.1 million or 13%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. This increase was due to decreases in operating expenses of $35.9 million and cost of revenue of ~~$28.0~~$4.1 million, offset by decreases in revenue of $27.7 million.

International loss from operations decreased $5.6 million, or 28%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease in International loss from operations is the result of a decrease in operating expenses of $6.8 million due to ceasing of operations in certain markets, offset in part by an increase in cost of revenue of ~~$1.5~~$1.0 million and ~~operating expenses of $25.5 million.~~

International loss from operations increased $1.4 million, or 27%, in the three months ended September 30, 2017 compared to the three months ended September 30, 2016. The increase in international loss from operations reflects our continued investment in international markets and expansion into new countries.

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

Overall revenue increased by $88.9 million, or 65%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Marketplace subscription revenue increased by 71%, while advertising and other revenue increased by 27%.

Marketplace subscription revenue increased by $83.8 million in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, and represented 89% of total revenue in the nine months ended September 30, 2017, as compared to 86% of total revenue in the nine months ended September 30, 2016. This increase in marketplace subscription revenue was attributable primarily to a 37% growth in the number of paying dealers, from 19,403 as of September 30, 2016 to 26,553 as of September 30, 2017, and to a 16% growth in our U.S. AARSD from $9,939 as of September 30, 2016 to $11,526 as of September 30, 2017. We believe that this increase in paying dealers was driven by the overall growth in the number of unique users to our website and the continued efforts from our sales and marketing teams to convert Basic Listing dealers to Enhanced and Featured Listing paying dealers.

Advertising and other revenue increased $5.1 million in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, and represented 11% of total revenue in the nine months ended September 30, 2017, compared to 14% of total revenue in the nine months ended September 30, 2016. The increase in advertising and other revenue is due primarily to a 24% increase in the number of impressions delivered and a 22% increase in the average price per thousand impressions in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. These increases were partially offset by a reduction in other advertising revenue.

U.S. revenue increased $83.8 million, or 61%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to a 29% increase in the number of U.S. paying dealers.

International revenue increased $5.1 million in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to a 258% increase in the number of international paying dealers.

Cost of revenue increased $5.7 million, or 85%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to costs associated with servicing our revenue growth. Key drivers of the increase included employee-related costs of our customer support team to support the growth in customers and an increase in fees related to servicing our growing advertising revenue.

Sales and marketing expenses increased $59.7 million, or 55%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to an increase in advertising costs of $45.6 million, a $9.0 million increase in salaries, commissions, and related expenses due to our increased revenue and a 33% increase in headcount, a $1.6 million increase in expenses related to marketing events, and a $1.3 million increase in consulting fees.

Product, technology, and development expenses increased $6.0 million, or 74%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to an increase in salaries and related employment expenses related to a 59% increase in headcount to support our growth and product innovations.

General and administrative expenses increased $5.4 million, or 62%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to an increase of $3.2 million in salaries and other employee-related costs driven by an increase in headcount needed to grow our business and provide personnel to support our expanded operations. Payment processing and billing costs also increased $1.2 million due to increased customer transactions.

Depreciation and amortization expenses increased $0.8 million, or 79%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to increased amortization of additional leasehold improvements.

Other income, net increased $0.1 million, or 24%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to an increase in interest income from the investment of excess cash balances.

The provision for income taxes increased $3.1 million in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily to the increase in U.S. profitability.

~~U.S. income from operations increased $16.8 million, or 100%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. This increase was due to an increase~~decrease in revenue of ~~$83.8 million, offset in part by an increase in cost of revenue of $4.4 million and operating expenses of $62.6~~$0.2 million.

International loss from operations increased $5.5 million, or 43%, in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The increase in International loss from operations reflects our continued investment in international markets and expansion into new countries.

At June 30, 2020 and December 31, 2019, our principal sources of liquidity were cash and cash equivalents of $133.2 million and $59.9 million, respectively, and investments in certificates of deposit with terms of greater than 90 days but less than one year of $43.0 million and $111.7 million at June 30, 2020 and December 31, 2019, respectively.

Our cash flows from operating, investing, and financing activities, as reflected in the ~~unaudited condensed consolidated statements~~Unaudited Condensed Consolidated Statements of ~~cash flows,~~Cash Flows, are summarized in the following table:

~~At September 30, 2017, our principal sources of liquidity were cash and cash equivalents of $25.6 million and investments of $60.0 million.~~ Our operations ~~were initially financed by a capitalization of approximately $5 million from external capital and subsequently~~ have been financed primarily from operating activities and ~~sales of preferred stock.~~our initial public offering. We generated cash from operating activities of ~~$18.5 million and $20.5~~$34.9 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020, and ~~2016, respectively, and we expect to generate cash from operations for~~$25.7 million during the ~~foreseeable future.~~six months ended June 30, 2019.

In addition, on October 16, 2017, we closed our initial public offering, in which we issued and sold 3,205,000 shares of our Class A common stock at a public offering price of $16.00 per share for aggregate gross proceeds of $51.3 million. We received approximately $43.0 million in net proceeds after deducting $3.6 million of underwriting discounts and commissions and approximately $4.7 million in offering costs. We believe that ~~the proceeds from our IPO and~~ our existing sources of liquidity will be sufficient to fund our operations for at least the next 12 ~~months. However,~~months from the date of the filing of this Quarterly Report. During the second quarter of 2020 in connection with the COVID-19 pandemic, we implemented the Expense Reduction Plan, pursuant to which we reduced our workforce, ceased operation of certain international marketplaces, halted expansion efforts in any new international markets, and implemented targeted reductions in sales and marketing expenses, including across both algorithmic traffic acquisition and brand spend, and discretionary operating expenses. Our future capital requirements will depend on many factors, including the further impact of the COVID-19 pandemic, our ~~rate of~~ revenue, ~~growth, the expansion of~~costs associated with our sales and marketing activities and the support of our product, technology, and development efforts, our investments in international markets, and the timing and extent of our ~~investment~~cost savings related to the Expense Reduction Plan. Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in ~~international markets.~~ the “Risk Factors” section of this Quarterly Report.

To the extent that existing cash, cash equivalents, and investments and cash from operations are insufficient to fund our future activities, we may need to raise additional funds through a public or private equity or debt financing. Additional funds may not be available on terms favorable to us, or at ~~all.~~ all, including due to increased volatility in the capital markets attributable to the COVID-19 pandemic.

Cash provided by operating activities of $34.9 million during the ~~first nine~~six months ~~of 2017~~ended June 30, 2020 was ~~$18.5 million,~~ due primarily to net income of ~~$10.9~~ $19.8 million, adjusted for $23.4 million of stock-based compensation expense for equity classified awards, $6.3 million of depreciation and amortization, $5.6 million of amortization of deferred contract costs, $4.7 million of deferred taxes, and $1.7 million of provision for doubtful accounts. Cash provided by operating activities was also attributable to a ~~$6.4~~$5.7 million decrease in accounts receivable, a $2.8 decrease in prepaid expenses, prepaid income taxes, and other assets, a $1.2 million increase in other non-current liabilities, and a $0.9 million increase in lease obligations. The increases in cash flow from operations were partially offset by a $25.9 million decrease in accounts payable, a $1.8 million decrease in deferred revenue, a $5.3 million decrease in accrued expenses, accrued income taxes, and other current liabilities and a $4.1 million increase in deferred contract costs.

Cash provided by operating activities of $25.7 million during the six months ended June 30, 2019 was due primarily to net income of $18.6 million, adjusted for $16.6 million of stock-based compensation expense, $3.6 million of amortization of deferred contract costs and $3.5 million of depreciation and amortization, partially offset by $5.3 million of deferred taxes. Cash provided by operating activities was also attributable to a $6.0 million increase in accounts payable, ~~and $2.7 million of depreciation and amortization. These drivers were~~ partially offset by a ~~$4.0~~$7.8 million increase in deferred contract costs, a $3.8 million increase in accounts ~~receivable.~~receivable, a $2.0 increase in prepaid expenses, prepaid income taxes, and other assets, a $1.9 million decrease in lease obligations, and a $1.3 million decrease in accrued expenses, accrued income taxes, and other current liabilities.

Cash provided by ~~operating~~investing activities of $43.4 million during the ~~first nine~~six months ended June 30, 2020 was due to maturities of ~~2016 was $20.5~~certificates of deposit of $68.7 million, ~~due primarily~~offset in part by $21.0 million of cash paid for acquisitions, $2.6 million related to ~~an increase in accounts payable~~the capitalization of ~~$11.5~~website development costs, and $1.7 million ~~net income of $2.7 million, an increase in accrued expense of $2.2 million, an increase in deferred rent of $2.0 million, and an increase in deferred revenue of $1.7 million.~~

~~Our investing activities consist primarily~~ of purchases of property and ~~equipment, capitalized website development costs, and short-term investments.~~equipment.

Cash used in investing activities of ~~$21.0~~$25.8 million during the ~~first nine~~six months ~~of 2017~~ended June 30, 2019 was due ~~to $50.0~~$19.1 million of ~~investments in certificates of deposit, net of maturities of $34.8 million, approximately $4.3~~acquisition cash payments, $8.7 million of ~~investments in furniture, computer~~purchases of property and equipment ~~and leasehold improvements,~~ and $1.5 million related to the capitalization of website development costs.

~~Cash used in investing activities~~ This was offset by $100.0 million of ~~$41.7 million during the first nine months~~maturities of ~~2016 resulted from $41.8 million~~certificates of deposit, net of investments in certificates of deposit ~~net~~ of ~~maturities of $5.0 million, $4.0 million of investments in furniture, computer equipment, and leasehold improvements, and $0.9 million related to the capitalization of website development costs.~~$96.5 million.

Cash used in financing activities of ~~$1.8~~$4.9 million during the ~~first nine~~six months ended June 30, 2020 was due primarily to the payment of ~~2017 reflects $2.1~~withholding taxes on net share settlements of restricted stock units of $5.8 million, ~~of initial public offering costs,~~ partially offset by ~~$0.3~~$0.9 million related to the proceeds from the issuance of common stock related to the exercise of vested stock options.

Cash ~~provided by~~used in financing activities of ~~$58.8~~$7.5 million during the ~~first nine~~six months ended June 30, 2019 was due primarily to the payment of ~~2016 primarily reflects $60.0~~withholding taxes and option costs on net share settlements of restricted stock units and stock options of $8.6 million, ofpartially offset by $1.1 million related to the proceeds from the issuance of ~~Series E preferred stock, which was partially offset by the $1.3 million used for the repurchase of previously issued preferred stock,~~ common stock related to the exercise of vested ~~options, and restricted~~ stock ~~units.~~options.

As of ~~September~~June 30, ~~2017,~~2020, there were no material changes in our contractual obligations and commitments from those disclosed in ~~the Form S-1 filed with the Securities and Exchange Commission, or SEC, on September 15, 2017,~~our 2019 Annual Report, other than those appearing in the notes to the Unaudited Condensed Consolidated Financial Statements appearing elsewhere in this ~~report.~~Quarterly Report, which are hereby incorporated by reference.

As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, we did not have any off-balance sheet arrangements, ~~except for operating~~other than leases ~~entered into~~that are less than twelve months in ~~the normal course~~duration, that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of ~~business.~~

In preparing our Unaudited Condensed Consolidated Financial Statements in accordance with GAAP, we are required to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs and expenses, and disclosure of contingent assets and liabilities that are reported in the Unaudited Condensed Consolidated Financial Statements and accompanying disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.

The accounting estimates that require the most difficult and subjective judgments include revenue recognition, ~~and revenue reserves, contingent liabilities, allowances~~allowance for doubtful accounts ~~expected future cash flows used to evaluate~~and sales allowances, variable consideration, the recoverability of long-lived assets, the valuation and recoverability of goodwill and intangible assets, the expensing and capitalization of product, technology, and development costs for website development and internal-use software, ~~the determination of the fair value of stock awards issued, stock-based compensation expense,~~ and the recoverability of our net deferred tax assets and related valuation allowance. ~~Therefore,~~Accordingly, these are the policies we ~~consider these~~believe are the most critical to beaid in fully understanding and evaluating our ~~critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates and assumptions.~~ Unaudited Condensed Consolidated Financial Statements.

For a detailed explanation of the judgments made in these areas, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~final prospectus related to our IPO filed with the~~ ~~SEC~~ ~~pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, on October 12, 2017.~~

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may take advantage of these exemptions until we are no longer an emerging growth company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards; and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until December 31, 2022 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we have more than $700.0 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months, and have filed one annual report on Form 10-K), or we issue more than $1.0 billion of non-convertible debt securities over a three-year period.2019 Annual Report.

Information concerning recently issued accounting pronouncements may be found in Note 2 to our Unaudited Condensed Consolidated Financial Statements ~~included~~appearing elsewhere in this Quarterly ~~Report on Form 10-Q.~~Report.

Market risk represents the risk of loss that may affect our financial position due to adverse changes in financial market prices and rates. We are exposed to market risks ~~related to changes in interest rates.~~as described below.

We did not have any long-term borrowings at ~~September~~June 30, ~~2017~~2020 or at December 31, ~~2016.~~2019.

We had cash, cash equivalents, and investments of ~~$85.6~~$176.2 million and ~~$74.3~~$171.6 million at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively, which consist of bank deposits, money market funds, and certificates of deposit with maturity dates ranging from six to ~~twelve~~nine months. Such interest-earning instruments carry a degree of interest rate risk.Given recent changes in the interest rate environment and in an effort to ensure liquidity, we expect lower returns from our investments for the foreseeable future. To date, fluctuations in interest income have not been ~~significant.~~material to the operations of the business.

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

We do not believe that inflation has had a material effect on our business, financial condition, or results of operations to date. However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results, and financial condition.

Historically, because our operations and sales have been primarily in the United States, we have not faced any significant foreign currency risk. As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, we ~~have~~had foreign currency exposures in the British pound, the Euro and the ~~Euro,~~Canadian dollar, although such exposure is not significant.

Our foreign subsidiaries have intercompany accounts that are eliminated upon consolidation, and these accounts expose us to foreign currency exchange rate fluctuations. Exchange rate fluctuations on short-term intercompany accounts are recorded in our Unaudited Condensed Consolidated ~~Financial~~Income Statements ~~of operations~~ under the heading, other income, net. Long-term intercompany accounts are recorded at their historical rates.

As we seek to grow our international operations in Canada and the United Kingdom, our risks associated with fluctuation in currency rates may become greater, and we will continue to reassess our approach to managing these risks.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly ~~Report on Form 10-Q.~~Report. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report ~~on Form 10-Q~~ that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently subject to any pending or threatened litigation that we believe, if determined adversely to us, would individually, or taken together, reasonably be expected to have a material adverse effect on our business or financial results.

Investing in our Class A common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information contained in this ~~report,~~Quarterly Report, including “Management’s Discussion and inAnalysis of Financial Condition and Results of Operations” and our ~~other public filings in~~consolidated financial statements and related notes, before evaluating our business. Our business, financial condition, operating results, cash flow, and prospects could be materially and adversely affected by any of these risks or uncertainties. In that event, the trading price of our Class A common stock could decline. See “Special Note Regarding ~~Forward-Looking Statements”.~~Forward‑Looking Statements.”

Our business, financial condition and results of operations have been and we expect them to continue to be adversely affected by the ongoing novel coronavirus disease 2019, or COVID-19, outbreak.

In December 2019, a novel strain of coronavirus, now referred to as COVID-19, surfaced in Wuhan, China. The virus was declared a pandemic by the World Health Organization and has spread to over 200 countries, including the United States, Canada and the United Kingdom, and continues to spread globally. This pandemic has caused an international health crisis and resulted in significant disruptions to the global economy as well as businesses and capital markets around the world.

Our operations have been materially adversely affected by a range of factors related to the COVID-19 pandemic. In March, we closed all of our offices (including our corporate headquarters) in the United States, Ireland and United Kingdom and began requiring our employees to work remotely until further notice, which has disrupted and may continue to disrupt how we operate our business. In addition, in an effort to limit the spread of COVID-19, many countries, as well as states in the United States, implemented or mandated and continue to implement or mandate significant restrictions on travel and commerce, shelter-in-place or stay-at-home orders, and business closures. Many of these shelter-in-place or stay-at-home orders resulted in restrictions on the ability to buy and sell automobiles by excluding dealerships from the list of essential businesses and/or by closing or reducing the services provided by the agencies that process the registration of automotive titles. While certain jurisdictions, including many within the United States, have implemented or are implementing policies with the goal of re-opening these markets, restrictions may be re-imposed in these markets due to increases in COVID-19 cases. In addition, these restrictions and concerns about the spread of the disease have adversely impacted consumers’ interest in car shopping and disrupted the operations of car dealerships, which has adversely affected the market for automobile purchases.

While consumer demand is gradually returning in jurisdictions implementing phased re-opening policies and/or in connection with stimulus programs, the automotive industry is also facing inventory supply problems, especially for used vehicles. The industry has experienced, and may continue to experience, a decline in used-car inventory for a number of reasons attributable to the COVID-19 pandemic, including: (i) reduced trade-ins from diminished vehicle sales; (ii) lease extensions on vehicles that consumers would have otherwise returned to the dealership; and (iii) the closure of wholesale auctions limiting dealers’ ability to source stock and/or replenish inventory. Further, these auction closures and the limited supply of inventory in auctions that either remained open or have since reopened has led to an increase in bids per vehicle and corresponding increases to wholesale auction prices. As the price of restocking inventory through wholesale auctions increases, dealers have increased, and may continue to increase, the prices they charge consumers. A high volume of price increases on vehicle sales at a rapid rate could temporarily impact our proprietary Instant Market Values, or IMV, and distribution of Deal Ratings. In addition, if our paying dealers continue to operate at reduced inventory levels or with increased costs, they may reduce or be unwilling to increase their advertising spend with us and/or may terminate their subscriptions at the conclusion of the committed term or may only be willing to renew their subscriptions at a lower level of fees. It may also impede our ability to add new paying dealers if dealers perceive they have less of a need for our products and services because of their limited inventory. Inventory challenges in the automotive industry has adversely impacted, and could continue to adversely impact, the amount of inventory on our websites, which could contribute to a decline in the number of consumer visits to our site and/or the number of connections between consumers and dealers through our marketplace. These inventory-related issues resulting from the COVID-19 pandemic may materially and adversely impact our business, financial condition and results of operations.

As a result of the travel and commerce restrictions and the impact on their businesses, a number of our paying dealers temporarily closed or are operating on a reduced capacity, and many dealerships are facing significant financial challenges. Such closures and circumstances led some paying dealers to cancel their subscriptions and/or reduce their advertising spend with us, which has had and may continue to have a material adverse effect on our revenues, and on our business, financial condition and results of operations. Additionally, in response to the increasing cancelations and the drop in consumer demand at the beginning of the COVID-19 pandemic, we reduced our spending on brand advertising and traffic acquisition, which resulted in fewer consumers using our platform during the second quarter of 2020, which in turn has and may continue to materially and adversely affect our business, financial condition and results of operations. Our business relies on the ability of consumers to borrow funds to acquire automobiles and banks and other financing companies may limit or restrict lending to consumers, which may materially and adversely affect our business.

Further, because of the significant financial challenges that dealerships have faced and continue to face as a result of the COVID-19 pandemic, we took measures to help our paying dealers maintain their business health during the COVID-19 pandemic. We proactively reduced the subscription fees for paying dealers by at least 50% on all marketplace subscriptions for the April and May 2020 service periods, as well as provided a fee reduction on all June 2020 marketplace subscriptions of 20% for paying dealers in the United States and Canada and 50% for paying dealers in the United Kingdom. As a result, the level of fees we received from paying dealers materially decreased during this period, resulting in a material decline in our revenue and a material adverse effect to our business, financial condition and results of operations. In addition, despite our proactive fee reductions, we experienced, and may continue to experience, increased customer cancellation rates and slowed paying dealer additions during the three months ended June 30, 2020, which has materially and adversely affected our business, financial condition and results of operations. While we returned to normal contractual billings in all markets for the July 2020 service period, we may decide to re-institute billings relief in the future as we continue assess the effects of the COVID-19 pandemic on our paying dealers and business operations. For the three months ended June 30, 2020, we also experienced, and may continue to experience, an increase in account delinquencies from dealer customers challenged by the COVID-19 pandemic that failed to pay us on time or at all.

These effects from the COVID-19 pandemic on our revenue and cash flows already have caused us to implement certain cost-savings measures across our business, which have disrupted, and may continue to disrupt, our business and operations. For example, we initiated a reduction in our workforce of approximately 13%, restricted future hiring, and limited discretionary spend across our business, including by eliminating, reducing or pausing certain vendor relationships. We also reduced consumer marketing spend across both algorithmic traffic acquisition and brand during the three months ended June 30, 2020 as a result of the suppression in consumer demand in the automotive industry. Despite these measures, we may not achieve the costs savings at the levels we expect and may be required to make additional cash expenditures, which would adversely impact our cash flows and financial condition. If our cash flows continue to decrease as a result of the effects from the COVID-19 pandemic or our revenues fail to increase, we may also decide that additional disruptive measures are necessary to reduce our operating expenses.

The global nature of the COVID-19 pandemic has also had, and will continue to have, a significant impact on our international businesses. The crisis has halted our growth in existing markets and our expansion into additional markets. In particular, we ceased marketplace operations in Germany, Italy, and Spain, and halted any new international expansion efforts, which we believe will allow us to focus our financial and human capital resources on our more established international markets in Canada and the United Kingdom. Failure by us to succeed in these two marketplaces, however, would materially and adversely affect our business and potential growth.

We continue to monitor and assess the effects of the COVID-19 pandemic on our commercial operations, including the impact on our revenue in 2020. However, we cannot at this time accurately predict what effects these conditions will ultimately have on our operations due to uncertainties relating to the ultimate spread of the virus, the severity of the disease, the duration of the pandemic, and the length or severity of the travel and commerce restrictions imposed on federal and state levels, as well as by the governments of impacted countries. Nor can we predict the adverse impact on the global economies and financial markets in which we operate, which may have a significant negative impact on our business, financial condition and results of operations.

Our business is substantially dependent on our relationships with dealers, and our subscription agreements with these dealers do not contain long-term contractual commitments. If a significant number of dealers terminate their subscription agreements with us, our business and financial results would be materially and adversely affected.

Our primary source of revenue consists of subscription fees paid to us by dealers for access to enhanced features on our automotive marketplace. Our subscription agreements with dealers generally may be terminated by us with 30 days’ notice and by dealers with 30 days’ notice ~~after~~at the ~~initial~~end of the committed term. While we have been working to transition many of these dealers to contracts with one-year committed terms (which effort has been slowed since the beginning of the COVID-19 pandemic), the majority of our contracts with dealers currently ~~includes~~provide for one-month ~~initial terms, we are in the process of transitioning many of these dealers to contracts with one-year initial~~committed terms. The contracts do not contain contractual obligations requiring a dealer to maintain its relationship with us beyond the ~~initial~~committed term. Accordingly, these dealers may cancel their

subscriptions with us in accordance with the terms of their subscription agreements. If a significant number of our paying dealers terminate their subscriptions with us, our ~~revenue~~business and financial results would be materially and adversely affected.

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 ~~harmed.~~materially and adversely affected.

As a result of the COVID-19 pandemic, many paying dealers cancelled their subscriptions with us (including, in some cases, with our permission prior to the end of the applicable contract term and notice period), which has caused a material adverse impact on our revenues, and it is possible that additional dealers will cancel their subscriptions as they continue to experience the effects of the COVID-19 pandemic. If paying dealers do not experience the volume of consumer connections that they expect during their ~~monthly or annual~~ subscription period, or do not experience the level of car sales they expect from those connections, or fail to attribute any increases in consumer connections or sales to our platform, they may terminate their subscriptions at the conclusion of the committed term or may ~~insist on renewing~~only be willing to renew their subscriptions at a lower level of fees. ~~Even if dealers do experience increased consumer connections or sales, they may not attribute such increases to our marketplace.~~ If we fail to maintain or expand our base of paying dealers or fail to maintain or increase the level of fees that we receive from them, our business and financial results would be materially and adversely affected.

We allow dealers to list their inventory in ~~our~~the CarGurus marketplace for free; however, we impose certain limitations on such free listings, such as capping the number of leads U.S. non-paying dealers receive within a 30-day period, excluding dealer identity and contact information, ~~is not permitted in such free listings~~ and these dealers do not receive access to the paid features of our marketplace. ~~Many~~As a result of the COVID-19 pandemic, we temporarily suspended our free listings product, Restricted Listings, in the U.S. and Canada and put certain non-paying dealers ~~start~~into a suspended activity program. During this temporary program, which concluded in the U.S. during the second quarter of 2020 and is continuing in Canada, we continued (or continue, as applicable) to collect leads from consumers but did not (or do not, as applicable) provide these leads to non-paying dealers. This program included (or includes, as applicable) formerly paying dealers who terminated their paid subscription with us due to the COVID-19 pandemic. We have since forwarded (or continue to forward, as applicable) leads collected under this suspended activity program to dealers once they restored (or restore, as applicable) their paid subscription or on aan anonymized basis once we reinstated (or reinstate, as applicable) Restricted Listings. In the future, we may decide to impose additional restrictions on free listings or modify the services available to non-paying ~~basis and then become paid customers in order to take advantage of the features of our Enhanced or Featured Listing products.~~dealers. If dealers ~~using our platform~~ do not ~~convert~~subscribe to our paid offerings at the rates we expect, or if a greater than expected number of ~~our~~ paying dealers elect to terminate their subscriptions or reduce their fees, our business and financial results would be ~~harmed.~~materially and adversely affected.

If dealers or other advertisers reduce their advertising ~~spend~~spending with us and we are unable to attract new advertisers, our business would be harmed.

A significant amount of our revenue is derived from advertising revenues generated primarily through advertising sales, including display advertising and audience targeting services, to dealers, auto manufacturers, and other auto-related brand advertisers. We compete for this advertising revenue with other online automotive marketplaces and with television, print media, and other traditional advertising channels. Our ability to attract and retain advertisers, and to generate advertising revenue, depends on a number of factors, including:

Our agreements with dealers for display advertising generally include ~~initial~~ terms ranging from one month to one year and may be terminated by us with 30 days’ notice and by dealers with 30 days’ notice ~~after~~at the ~~initial~~end of the committed term. The contracts do not contain contractual obligations requiring an advertiser to maintain its relationship with us beyond the ~~initial~~committed term. ~~Our~~As a result of the COVID-19 pandemic, many paying dealers cancelled their subscriptions with us (including, in some cases, with our permission prior to the end of the applicable contract term and notice period), which has caused a material adverse impact on our revenues, and it is possible that additional paying dealers will cancel their subscriptions or decrease their advertising with us as they continue to experience the effects of the COVID-19 pandemic. Certain of our other advertising contracts, including those with auto manufacturers, ~~are~~ typically ~~for a defined period of time and~~ do not have ongoing commitments to advertise in our marketplace beyond a committed term. As a result of the COVID-19 pandemic, some advertisers have cancelled or reduced their advertising with us, which has caused a material adverse impact on our ~~site beyond~~revenues, and it is possible that advertising customers will continue to cancel or reduce their advertising with us as they continue to experience the ~~initial time period.~~effects of the COVID-19 pandemic. In addition, a reduction in consumer visits to our sites during the COVID-19 pandemic resulted in the delivery of fewer impressions for our advertising customers in the second quarter of 2020, which has caused, and may continue to cause, an adverse impact on our advertising revenues. We may not succeed in capturing a greater share of our advertisers’ spending if we are unable to convince advertisers of the effectiveness or superiority of our ~~marketplace~~advertising services as compared to alternative channels. If current advertisers reduce or end their advertising spending with us and we are unable to attract new advertisers, our advertising revenue and business and financial results would be harmed.

If we are unable to provide a compelling vehicle search experience to consumers through our platform, the number of connections between consumers and dealers using our marketplace may decline and our business and financial results would be materially and adversely affected.

If we fail to continue to provide a compelling vehicle search experience to consumers, the number of connections between consumers and dealers ~~facilitated~~ through our marketplace could decline, which in turn could lead dealers to ~~stop~~pause listing their inventory in our marketplace, cancel their subscriptions, or reduce their advertising spend with us. If dealers ~~stop~~pause or cancel listing their inventory in our marketplace, we may not be able to ~~maintain and grow our~~attract a large consumer ~~traffic,~~audience, which may cause other dealers to ~~stop using~~pause or cancel their use of our marketplace. This reduction in the number of dealers using our marketplace would likely materially and adversely affect our marketplace and our business and financial results. As consumers increasingly use their mobile devices to access the ~~Internet~~internet and our marketplace, our success ~~will depend,~~depends, in part, on our ability to provide consumers with a robust and user-friendly experience through their mobile devices. We believe that our ability to provide a compelling vehicle search experience, both on the web and through mobile devices, is subject to a number of factors, including:

~~If use of our marketplace, particularly on mobile devices, does not continue to grow, our business and operating results would be harmed.~~

We rely on ~~Internet~~internet search engines to drive traffic to our ~~website,~~websites, and if we fail to appear prominently in the search results, our traffic would decline and our business would be adversely affected.

We depend, in part, on ~~Internet~~internet search engines such as Google, Bing, and Yahoo! to drive traffic to our ~~website.~~websites. The number of consumers we attract to our marketplace from search engines is due in part to how and where our websites rank in unpaid search results. These rankings can be affected by a number of factors, many of which are not under our direct control and may change frequently. For example, when a consumer searches for a vehicle in an ~~Internet~~internet search engine, we rely on a high organic search ranking of our webpages to refer the consumer to our ~~website.~~websites. Our competitors’ ~~Internet~~internet search engine optimization efforts may result in their websites receiving higher search result rankings than ours, or ~~Internet~~internet search engines could change their methodologies in a way that would adversely affect our search result rankings. If ~~Internet~~internet search engines modify their ~~search algorithms~~methodologies in ways that are detrimental to us, or if our competitors’ internet search engine optimization efforts are more successful than ours, ~~overall growth in~~ our ~~traffic~~ability to attract a large consumer audience could ~~slow or~~diminish and our traffic could decline. In addition, ~~Internet~~internet search engine providers could provide dealer and pricing information directly in search results, align with our competitors, or choose to develop competing products. ~~Search engines may also adopt a~~Reductions in our own search advertising spend or more aggressive ~~auction-pricing system for keywords that would~~spending by our competitors could also cause us to incur higher advertising costs and/or reduce our market visibility to prospective users. Our ~~website has~~websites have experienced fluctuations in organic and paid search result rankings in the past, and we anticipate ~~similar~~ fluctuations in the future. Any reduction in the number of consumers directed to our ~~website~~websites through ~~Internet~~internet search engines could harm our business and operating results.

Any inability by us to develop new products, or achieve widespread consumer and dealer adoption of those products, could negatively impact our business and financial results.

Our success depends on our continued innovation to provide products and services that make our marketplace, ~~website,~~websites, and mobile ~~application~~applications useful for ~~consumers.~~consumers and dealers or that otherwise provide value to consumers and dealers. These new products must be widely adopted by consumers and dealers in order for us to continue to attract consumers to our marketplace and dealers to our ~~subscription~~ products and services. Accordingly, we must continually invest resources in product, technology, and development in order to improve the attractiveness and comprehensiveness of our marketplace and its related products and effectively incorporate new ~~Internet~~internet and mobile technologies into ~~them.~~them and our ability to engage in these activities may decline as a result of the impact of the COVID-19 pandemic on our business. These product, technology, and development expenses may include costs of hiring additional personnel, ~~and of~~ engaging third-party service providers and other research and development ~~costs.~~activities. In addition, revenue relating to new products is typically unpredictable and our new products may have lower gross margins, lower retention rates, and higher marketing and sales costs than our existing products. We ~~may also change~~are likely to continue to modify our pricing models for both existing and new products so that our prices for our offerings reflect the value those offerings are providing to consumers and dealers. Our pricing models may not effectively reflect the value of products to consumers and dealers, and, if we are unable to provide a marketplace and products that consumers and dealers want to use, they may become dissatisfied and instead use our competitors’ websites and mobile applications. Without an innovative marketplace and related products, we may be unable to attract additional, unique consumers or retain current consumers, which could affect the number of dealers that become paying dealers and the number of advertisers that want to advertise in our marketplace, which could, in turn, ~~harm~~negatively impact our business and financial results.

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.

We obtain data ~~regarding available cars~~ from many third-party data providers, including inventory management systems, automotive ~~websites,~~website providers, customer relationship management systems, dealer management systems, governmental entities, and third-party data licensors. Our business relies on our ability to obtain data for the benefit of consumers and dealers using our marketplace. For example, our success in ~~International~~international markets is dependent in part upon our ability to obtain and maintain inventory data and other vehicle information for those markets. The large amount of inventory and vehicle information available in our marketplace is critical to the value we provide for consumers. The loss or interruption of such inventory data ~~and~~or other vehicle information ~~such as vehicle history,~~ could decrease the number of consumers using our marketplace. We could experience interruptions in our data access for a number of reasons, including difficulties in renewing our agreements with data providers, changes to the software used by data providers, efforts by industry participants to restrict access to data, ~~and~~ increased fees we may be charged by data ~~providers. While we believe we have identified other~~ providers inand the ~~event~~effects of the COVID-19 pandemic. Our marketplace could be negatively affected if any ~~of our~~ current ~~providers terminate their relationships~~provider terminates its relationship with us or our service from any provider is interrupted, ~~there may be~~whether as a ~~delay while we transition to new providers, which could disrupt our marketplace.~~result of the COVID-19 pandemic or otherwise. If there is a material disruption in the data provided to us, the information that we provide to consumers and dealers using our marketplace may be limited. In addition, the quality, accuracy, and timeliness of this information may suffer, which may lead to a less valuable and less transparent shopping experience for consumers using our marketplace and could ~~materially and adversely~~negatively affect our business and ~~financial~~operating results.

The failure to build, maintain and ~~maintain~~protect our brand would harm our ability to ~~grow our~~attract a large consumer audience and to expand the use of our marketplace by consumers and dealers.

While we are focused on building our brand recognition, maintaining and enhancing our brand will depend largely on the success of our efforts to maintain the trust of consumers and dealers and to deliver value to each consumer and dealer using our marketplace. Our ability to protect our brand is also impacted by the success of our efforts to optimize our significant brand spend and overcome the intense competition in brand marketing across our industry, including competitors that may imitate our messaging in response to our success. In addition, as a result of the suppression in consumer interest in the automotive industry during the beginning of the COVID-19 pandemic, we reduced our brand spend and we may decide to continue to suppress our brand spend in the future depending on the continued impact of the COVID-19 pandemic. If consumers were to believe that we are not focused on providing them with a better automobile shopping experience, or if we fail to overcome brand marketing competition and maintain a differentiated value proposition in consumers’ minds, our reputation and the strength of our brand may be adversely affected.

Complaints or negative publicity about our business practices, our management team and employees, our marketing and advertising campaigns, our compliance with applicable laws and regulations, the integrity of the data that we provide to consumers, data privacy and security issues, and other aspects of our business, irrespective of their validity, could diminish consumers’ and dealers’ confidence and participation in our marketplace and could adversely affect our brand. There can be no assurance that we will be able to maintain or enhance our brand, and failure to do so would harm our business growth prospects and operating results.

~~The “Questions” section~~Portions of our ~~website enables~~platform enable consumers and dealers using our ~~site~~sites to communicate with one another and other persons seeking information or advice on the ~~Internet. Although all such information or feedback is generated by users and not by us, claims~~internet. Claims of defamation or other injury could be made against us for content posted on our ~~website.~~websites. In addition, negative publicity and user sentiment generated as a result of fraudulent or deceptive conduct by users of our marketplace could damage our reputation, reduce our ability to attract new users or retain our current users, and diminish the value of our brand.

~~While we have historically focused our marketing efforts on Internet and mobile channels, we have begun brand-focused campaigns using television and radio and these efforts may not be successful.~~

As a consumer brand, it is important for us to increase the visibility of our brand with potential users of our marketplace. While we have historically focused our marketing efforts on Internet and mobile channels, we have begun to advertise through television, radio, and other channels we have not used previously, with the goal of driving greater brand recognition, trust, and loyalty from a broader consumer audience. If our brand-focused campaigns are not successful and we are unable to recover our marketing costs through increases in user traffic and increased subscription and advertising revenue, or if we discontinue our brand marketing campaigns, it could have a material adverse effect on our business and financial results.

Our ~~recent, rapid~~past growth is not indicative of our future growth, and our ability to grow our revenue ~~growth rate will decline~~ in the ~~future.~~future is uncertain due to the impact of the COVID-19 pandemic.

Our revenue increased to $588.9 million for the year ended December 31, 2019 from ~~$137.4~~$454.1 million infor the ~~nine months~~year ended ~~September 30, 2016 to $226.3 million in the nine months ended September 30, 2017,~~December 31, 2018, representing a ~~65%~~30% increase between such ~~periods. In~~periods, and decreased to $252.4 million for the six months ended June 30, 2020 from $280.3 million for the six months ended June 30, 2019, representing a 10% decrease between such periods, primarily due to COVID-19-related effects. We expect further revenue declines in 2020 as a result of the COVID-19 pandemic, and the continued impact of the COVID-19 pandemic also makes our future ~~our~~ revenue ~~growth rates will inevitably decline as we achieve higher market penetration rates, as~~beyond 2020 uncertain. If our revenue ~~increases~~declines further or fails to ~~higher levels, and as we experience increased competition. As our revenue growth rates decline,~~grow, investors’ perceptions of our business may be adversely affected and the market price of our Class A common stock could decline. In addition, we will not be able to grow as expected, or at all, if we do not accomplish the following:

If we fail to ~~expand~~grow effectively ~~into new~~in our existing domestic and international markets ~~both domestically and abroad,~~ our revenue, business, and financial results will be harmed.

~~We intend to~~While we ceased operations of our marketplaces in Germany, Italy and Spain and stopped development of emerging marketplaces, we continue to ~~expand our operations to target new markets, both domestically~~operate marketplaces in the United Kingdom and ~~abroad, and there can be no assurance our expansion into these new markets will be successful. Our expansion into new markets places us in unfamiliar~~Canada, which are less familiar competitive environments and ~~involves~~involve various risks, including the need to invest significant resources and the likelihood that returns on such investments will not be achieved for several years, or possibly at all. ~~In attempting to establish a presence in new markets, we~~We expect, as we have in the past, to incur significant losses in ~~those markets~~the United Kingdom and Canada, and face various other challenges, such as obtaining and maintaining access to ~~inventory~~ data, competition for consumers and dealers using our ~~marketplace,~~products, new and different competitors, monetizing dealers ~~new~~and other customers, other regulatory environments and laws, different consumer ~~shopping habits~~behavior than ~~those~~ we are familiar with, ~~in the United States,~~ and our ability to ~~expand our number of~~maintain the account managers to cover those ~~new~~ markets. Our ~~current and any future expansion plans will require~~operation of several marketplaces requires significant resources and management attention. Furthermore, ~~expansion into~~operations in international markets may not yield results similar to those we have achieved in the United States.

Our international operations involve risks that are different from, or in addition to, the risks we may experience as a result of our domestic ~~operations, and our exposure to these risks will increase as we expand internationally.~~operations.

~~We have started to expand our operations internationally. We recently launched marketplaces in Canada,~~In the United Kingdom and ~~Germany and plan to enter additional markets in~~Canada, we were not the next twelve months. We expect to expand our international operations significantly by continuing to enter new markets abroad and expanding our offerings in new languages. In most international markets, we would not be the first market entrant, and our competitors may be more established or otherwise better positioned than we are to succeed. Our competitors may offer services to dealers that make dealers dependent on them, such as hosting dealers’ ~~webpages~~websites and providing inventory feeds for dealers, which would make it difficult to attract dealers to our marketplace. Dealers may also be parties to agreements with other dealers and syndicates that prevent them from being able to access our marketplace. ~~In addition, we may also face litigation from competitors in new markets.~~ Any of these barriers could impede our ~~expansion into~~operations in international markets, which could affect our business and potential growth.

In addition to English, we have made portions of our platform available in ~~English,~~ French ~~German,~~ and ~~Spanish, and we will need to make our platform available in additional languages as we expand into new countries.~~Spanish. We may have difficulty modifying our technology and content for use in ~~non-English speaking markets~~non-English-speaking market segments or ~~fostering new communities~~gaining acceptance by users in ~~non-English speaking markets.~~non-English-speaking market segments. Our ability to manage our business and conduct our operations internationally requires considerable management attention and resources, and is subject to the particular challenges of supporting a ~~rapidly growing~~ business in an environment of multiple languages, cultures,

customs, legal and regulatory systems, alternative dispute resolution systems, ~~regulatory systems,~~ and commercial infrastructures. ~~Expanding~~Operating internationally may subject us to ~~new~~different risks or increase our exposure in connection with current risks, including risks associated with:

We participate in a highly competitive market, and pressure from existing and new companies may adversely affect our business and operating results.

We face significant competition from companies that provide listings, information, lead generation, marketing, and car-buying services designed to help consumers shop for cars and to enable dealers to reach these consumers. Our competitors offer various marketplaces, products, and services that compete with us. Some of these competitors include:

We compete with these and other companies for a share of dealers’ overall marketing budget for online and offline media marketing ~~spend.~~spend and we compete with these and other companies in attracting consumers to our websites. To the extent that dealers view alternative marketing and media strategies to be superior to our marketplace, we may not be able to maintain or grow the number of dealers subscribing to, and advertising on, our marketplace, and our business and financial results may be ~~harmed.~~adversely affected.

We also expect that new competitors will continue to enter the online automotive retail industry with competing marketplaces, products, and services, or that existing competitors will expand to offer competing products or services, which could have an adverse effect on our business and financial results.

Our competitors could significantly impede our ability to expand the number of dealers using our ~~marketplace.~~marketplace or could offer discounts that could significantly impede our ability to maintain our pricing structure. Our competitors may also develop and market new technologies that render our existing or future ~~marketplace~~platform and associated products less competitive, unmarketable, or obsolete. In addition, if our competitors develop ~~marketplaces~~platforms with similar or superior functionality to ours, and our web traffic declines, we may need to decrease our subscription and advertising fees. If we are unable to maintain our current pricing structure due to competitive pressures, our revenue would likely be reduced and our financial results would be negatively affected.

Our existing and potential competitors may have significantly more financial, technical, marketing, and other resources than we have, which may allow them to offer more competitive pricing and the ability to devote greater resources to the development, promotion, and support of their marketplaces, products, and services. ~~Additionally, they~~They may also have more extensive automotive industry relationships than we have, longer operating histories, and greater name recognition. As a result, these competitors may be able to respond more quickly with new technologies and to undertake more extensive marketing or promotional campaigns than we can. ~~In addition,~~Additionally, to the extent that any ~~of our competitors have~~competitor has existing relationships with dealers or auto manufacturers for marketing or data analytics solutions, those dealers and auto manufacturers may be unwilling to partner with us. If we are unable to compete with these competitors, the demand for our marketplace and related products and services could substantially decline.

In addition, if one or more of our competitors were to merge or partner with another of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively. Our competitors may also establish or strengthen cooperative relationships with our existing or future data providers, technology partners, or other parties with whom we have relationships, thereby limiting our ability to develop, improve, and promote our solutions. We may not be able to compete successfully against current or future competitors, and competitive pressures may harm our business and financial results.

Our business could be adversely affected if dealer associations or auto manufacturers were to discourage or otherwise deter dealers from subscribing to our marketplace.

Although the dealership industry is highly fragmented, a small number of interested parties have significant influence over the industry. These parties include ~~state~~national and ~~national~~regional dealership associations, ~~state~~national and local regulators, ~~car~~automotive manufacturers, consumer groups, independent dealers, and consolidated dealer groups. If and to the extent these parties believe that dealerships should not enter into or maintain subscription agreements with us, this belief could become shared by dealerships and we may lose a number of our paying dealers.

Furthermore, auto manufacturers may provide their franchise dealers with financial or other marketing support conditioned upon such dealers’ ~~adhering~~adherence to certain marketing ~~guidelines.~~guidelines, which guidelines may evolve as a result of the COVID-19 pandemic. Auto manufacturers may determine that the manner in which certain of their franchise dealers use our ~~marketplace~~platform is inconsistent with the terms of such marketing guidelines, which determination could result in potential or actual loss of the manufacturers’ financial or other marketing support to the dealers whose use of our ~~marketplace~~platform is deemed objectionable. The potential or actual loss of such marketing support may cause such dealers to cease paying for our paid features, which may adversely affect our ability to maintain or grow the number of our paying dealers.

Dealer closures or consolidations could reduce demand for our products, which may decrease our revenue.

In the past, the number of ~~U.S.~~United States dealers has declined due to dealership closures and consolidations as a result of factors such as global economic ~~downturns.~~downturns and we expect this will occur as a result of the COVID-19 pandemic. When dealers consolidate, the services they previously purchased separately are often purchased by the combined entity in a lesser quantity or for a lower aggregate price than before, leading to volume compression and loss of revenue. Further dealership consolidations or closures could reduce the aggregate demand for our products and services. If dealership closures and consolidations occur in the future, our business, financial position and results of operations could be materially and adversely affected.

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.

Our success ~~will depend~~depends upon our relationships with third parties, including ~~those with~~ our payment processor, ~~and~~our data center ~~host,~~hosts, our ~~security~~information technology providers, our data providers for ~~dealer~~ inventory and vehicle information, our human resources information system provider, our billing subscription software provider, our customer relationship management software provider, our financial planning and analysis software provider, our information integration platform providers, our marketing platform providers, our business intelligence and data analytics providers, our search engine and social media advertising providers, our invoice and expense provider, our equity administration provider, and our general ledger ~~provider.~~provider, as well as our strategic partners, including consumer lenders. If these third parties experience difficulty meeting our requirements or standards, have adverse audit results, violate the terms of our relationship or applicable law, fail to obtain or maintain applicable licenses, or if the ~~license agreements~~relationships we have ~~entered into~~established with such third parties ~~are terminated~~expire or ~~not renewed,~~otherwise terminate, it could make it difficult for us to operate some aspects of our business, which could damage our business and reputation. In addition, if such third-party service providers or strategic partners were to cease operations, temporarily or permanently, whether as a result of the COVID-19 pandemic or otherwise, face financial distress or other business disruptions, increase their fees, or if our relationships with these providers or partners deteriorate or terminate, we could suffer increased costs and ~~delays in our ability~~we may be unable to provide consumers with content or provide similar services until an equivalent provider could be found or we could develop replacement technology or operations. In addition, if we are unsuccessful in identifying or finding high-quality partners, if we fail to negotiate cost-effective relationships with them, or if we ineffectively manage these relationships, it could have an adverse impact on our business and financial results.

IfOur enterprise systems require that we ~~continue~~integrate the platforms hosted by certain third-party service providers. We are responsible for integrating these platforms and updating them to ~~grow rapidly, we may not be able~~maintain proper functionality. Issues with these integrations, our failure to ~~manage~~properly update third-party platforms or any interruptions to our ~~growth effectively.~~

We have experienced rapid growth in our headcount and operations, which places substantial demand on management and our operational infrastructure. As we continue to grow, we must effectively integrate, develop, and motivate a large number of new

employees, while maintaining the beneficial aspects of our company culture. If we do not manage the growth of our business and operations effectively, the quality of our services and efficiency of our operations could suffer, whichinternal enterprise systems could harm our ~~brand, results of operations,~~business by causing delays in our ability to quote, activate service and ~~overall business.~~bill new and existing customers on our platform.

We depend on key personnel to operate our business, and if we are unable to retain, attract and integrate qualified personnel, our ability to develop and successfully grow our business could be ~~harmed.~~materially and adversely affected.

We believe our success has depended, and continues to depend, on the efforts and talents of our executives and employees. Our future success depends on our continuing ability to attract, develop, motivate, and retain highly qualified and skilled employees. Qualified individuals are in high demand, and we may incur significant costs to attract and retain ~~them.~~them, and we may become less competitive in attracting and retaining employees as a result of our recent expense reduction efforts and temporary freeze in hiring due to the COVID-19 pandemic. In addition, the loss of any of our executive officers or key employees, or the reduction in their involvement in the management of our business, could materially adversely affect our ability to execute our business plan and strategy, and we may not be able to find adequate replacements on a timely basis, or at all. Our executive officers and other employees are at-will employees, which means they may terminate their employment relationships with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If we do not succeed in attracting well-qualified employees or retaining and motivating existing employees, our business could be materially and adversely affected.

If we are unable to successfully respond to changes in the market, our business could be harmed.

While our business has grown rapidly as consumers and dealers have increasingly accessed our marketplace, we expect that our business will evolve in ways which may be difficult to ~~predict.~~predict, including as a result of the COVID-19 pandemic. For example, we anticipate that over time we may reach a point when investments in new user traffic are less productive and the ~~continued~~ growth of our revenue will require more focus on developing new products for ~~consumers and dealers, expanding our marketplaces into new international markets to attract new~~ consumers and dealers, and increasing our fees for our products. It is also possible that consumers and dealers could broadly determine that they no longer believe in the value of our marketplace. Our ~~continued~~ success will depend on our ability to successfully adjust our strategy to meet the changing market dynamics. If we are unable to do so, our business could be harmed and our results of operations and financial condition could be materially and adversely affected.

We may be subject to disputes regarding the accuracy of Instant Market ~~Value,~~Values, Deal ~~Rating,~~Ratings, Dealer ~~Rating,~~Ratings, New Car Price Guidance and other features of our marketplace.

We provide consumers using our marketplace with our proprietary ~~Instant Market Value, or~~ IMV, Deal ~~Rating,~~Ratings, and Dealer ~~Rating, and~~Ratings, as well as other features to help them evaluate vehicle ~~listings.~~listings, including price guidance for new car listings, or New Car Price Guidance. Our valuation models depend on the inventory listed on our sites as well as public information regarding automotive sales. If the inventory on our site declines significantly, or if the number of automotive sales declines significantly or used car sales prices become volatile, whether as a result of the COVID-19 pandemic or otherwise, our valuation models many not perform as expected. Revisions to or errors in our automated valuation models, or the algorithms that underlie them, may cause the IMV, the Deal Rating, New Car Price Guidance, or other features to vary from our expectations regarding the accuracy of these tools. In addition, from time to time, regulators, consumers, dealers and ~~regulators~~other industry participants may question or disagree with our IMV, Deal Rating, Dealer Rating or ~~Dealer Rating.~~New Car Price Guidance. Any such questions or disagreements could result in distraction from our business or potentially harm our reputation, could result in a decline in consumers’ use of our marketplace orand could result in legal disputes.

As we acquire other companies or technologies, such activities could divert our management’s attention, result in additional dilution to our stockholders, and otherwise disrupt our operations and harm our operating results.

Our success depends, in part, on our ability to grow our business in response to the demands of consumers, dealers, and other constituents within the automotive industry as well as competitive pressures. In some circumstances, we have and will continue to do so through the acquisition of complementary businesses and technologies rather than through internal development. The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to successfully complete identified acquisitions, including as a result of the COVID-19 pandemic. The risks we face in connection with acquisitions include:

Our failure to address these risks or other problems encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, cause us to be reluctant to engage in future transactions, and harm our business generally. Acquisitions could result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expense, and impairment charges associated with acquired intangible assets or goodwill, any of which could harm our financial condition. Also, the anticipated benefits of any acquisitions may not materialize.

We are subject to a complex framework of federal, state, and foreign 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.

Various aspects of our business are, may become, or may be viewed by regulators from time to time as subject, directly or indirectly, to United States federal, state and ~~state~~local laws and regulations, and to foreign laws and regulations. Failure to comply with such laws or regulations may result in the suspension or termination of our ability to do business in affected jurisdictions, the imposition of significant civil and criminal penalties, including fines or the award of significant damages against us and dealers in class action or other civil litigation, or orders or settlements requiring us to make adjustments to our marketplace and related products and services.

~~State~~Local Motor Vehicle Sales, Advertising and Brokering, and Consumer Protection Laws

The advertising and sale of new orand used motor vehicles is highly regulated by the ~~states~~jurisdictions in which we do business. Although we do not sell motor vehicles, and although we believe that vehicle listings on our site are not themselves advertisements, ~~state~~ regulatory authorities or third parties could take the position that some of the laws or regulations applicable to dealers or to the manner in which motor vehicles are advertised and sold generally are directly applicable to our business. These ~~state~~ advertising laws and regulations are frequently subject to multiple interpretations and are not uniform from ~~state~~jurisdiction to ~~state,~~jurisdiction, sometimes imposing inconsistent requirements with respect to new or used motor vehicles. If our marketplace and related products are determined to not comply with relevant regulatory requirements, we or dealers could be subject to significant civil and criminal penalties, including fines, or the award of significant damages in class actions or other civil litigation, as well as orders interfering with our ability to continue providing our marketplace and related products and services in certain states. In addition, even absent such a determination, to the

extent dealers are uncertain about the applicability of such laws and regulations to our business, we may lose, or have difficulty increasing the number of paying dealers, which would affect our future growth. For example, in April 2015 the Texas Department of Motor Vehicles, or the TX DMV, notified us that it believed the Price History and IMV information on our website violated the prohibition on advertising savings clauses on used vehicles. The TX DMV informed us that if we failed to address the issue within 30 days, it would potentially subject dealers it considered to be advertising on our website to fines. After discussions with the TX DMV, we modified our website to remove the Price History and certain references and comparisons to IMV for used vehicles listed on our website that are for sale in Texas.

If ~~state~~ regulators or other third parties take the position in the future that our marketplace or related products violate applicable brokering, bird-dog, consumer protection, consumer finance or advertising laws or regulations, responding to such allegations could be costly, could require us to pay significant sums in settlements, could require us to pay civil and criminal penalties, including fines, could interfere with our ability to continue providing our marketplace and related products in certain ~~states,~~jurisdictions, or could require us to make adjustments to our marketplace and related products or the manner in which we derive revenue from dealers using our ~~marketplace,~~platform, any or all of which could result in substantial adverse publicity, termination of subscriptions by dealers, decreased revenues, distraction for our employees, increased expenses, and decreased profitability.

The United States Federal Trade Commission, or the FTC, has the authority to take actions to remedy or prevent acts or practices that it considers to be unfair or deceptive and that affect commerce in the United States. If the FTC takes the position in the future that any aspect of our business, including our advertising and privacy practices, constitutes an unfair or deceptive act or practice, responding to such allegations could require us to defend our practices and pay significant damages, settlements, and civil penalties, or could require us to make adjustments to our marketplace and related products and services, any or all of which could result in substantial adverse publicity, distraction for our employees, loss of participating dealers, lost revenues, increased expenses, and decreased profitability.

Our platform enables us, dealers, and users to send and receive text messages and other mobile phone ~~communications in certain circumstances.~~communications. The Telephone Consumer Protection Act, or the TCPA, as interpreted and implemented by the Federal Communications Commission, or the FCC, and federal and state courts, imposes significant restrictions on utilization of telephone calls and text messages to residential and mobile telephone numbers as a means of communication, particularly if the prior express consent of the person being contacted has not been obtained. Violations of the TCPA may be enforced by the FCC, by state attorneys general, or by others through litigation, including class actions. Statutory penalties for TCPA violations range from $500 to $1,500 per violation, which is often interpreted to mean per phone call or text message. Furthermore, several provisions of the TCPA, as well as applicable rules and orders, are open to multiple interpretations, and compliance may involve fact-specific analyses.

Any failure by us, or the third parties on which we rely, to adhere to, or successfully implement, appropriate processes and procedures in response to existing or future laws and regulations could result in legal and monetary liability, fines and penalties, or damage to our reputation in the marketplace, any of which could have a material adverse effect on our business, financial condition, and results of operations. Even if the claims are meritless, we may be required to expend resources and pay costs to defend against regulatory actions or third-party claims. Additionally, any change to the TCPA or its interpretation that further restricts the way ~~users~~consumers and dealers interact through our platform, or any governmental or private enforcement actions related thereto, could adversely affect our ability to attract customers and could harm our business, financial condition, results of operations, and cash flows.

~~The antitrust~~Antitrust and competition laws prohibit, among other things, any joint conduct among competitors that would lessen competition in the marketplace. We believe that we are in compliance with the legal requirements imposed by ~~the~~such antitrust laws. However, a governmental or private civil action alleging the improper exchange of information, or unlawful participation in price maintenance or other unlawful or anticompetitive activity, even if unfounded, could be costly to defend and could harm our business, results of operations, financial condition, orand cash flows.

Claims could be made against us under both United States and foreign laws, including claims for defamation, libel, invasion of privacy, ~~copyright or trademark~~false advertising, intellectual property infringement, or claims based on other theories related to the nature and content of the materials disseminated by users of our marketplace and ~~the “Questions” section~~portions of our websites. In addition, domestic and foreign legislation has been proposed that could prohibit or impose liability for the transmission over the ~~Internet~~internet of certain types of information. Our defense against any of these actions could be costly and involve significant time and attention of our management and other resources. If we become liable for information provided by our users and transmitted in our marketplace in any jurisdiction in which we operate, we could be directly harmed and we may be forced to implement new measures to reduce our exposure to this liability.

The foregoing description of laws and regulations to which we are or may be subject is not exhaustive, and the regulatory framework governing our operations is subject to continuous change. As we ~~expand~~seek to grow our operations internationally, we are, and we will continue to be, exposed to legal and regulatory risks including with respect to privacy, tax, law enforcement, content, intellectual property, competition, and other matters. The enactment of new laws and regulations or the interpretation of existing laws and regulations, both domestically and internationally, in an unfavorable way may affect the operation of our business, directly or indirectly, which could result in substantial regulatory compliance costs, civil or criminal penalties, including fines, adverse publicity, loss of participating dealers, lost revenues, increased expenses, and decreased profitability. Further, investigations by governmental agencies, including the FTC, into allegedly anticompetitive, unfair, deceptive or other business practices by us or dealers using our marketplace, could cause us to incur additional expenses and, if adversely concluded, could result in substantial civil or criminal penalties and significant legal liability, or orders requiring us to make adjustments to our marketplace and related products and services.

Our business is subject to risks related to the larger automotive industry ecosystem, including consumer demand, global supply chain challenges, trade relations between the United States and China and other macroeconomic ~~issues.~~issues, including the ongoing effects of the COVID-19 pandemic, which could have a material adverse effect on our business, revenue, results of operations, and financial condition.

Decreases in consumer demand could adversely affect the market for automobile purchases and, as a result, reduce the number of consumers using our platform. Consumer purchases of new and used automobiles generally decline during recessionary periods and other periods in which disposable income is adversely ~~affected.~~affected and we expect that we are entering such a period as a result of the COVID-19 pandemic. Purchases of new and used automobiles are typically discretionary for consumers and have been, and may continue to be, affected by negative trends in the economy, ~~including~~including: the effects of the COVID-19 pandemic, the cost of energy and ~~gasoline,~~gasoline; the availability and cost of credit; rising interest rates, which may reduce the demand for consumer credit due to the higher cost of borrowing; reductions in business and consumer ~~confidence,~~confidence; stock market ~~volatility,~~volatility; increased unemployment; and changing trade barriers, including increased ~~unemployment.~~ tariff rates or custom duties.

Further, in recent years the market for motor vehicles has experienced rapid changes in technology and consumer demands. Self-driving technology, ride sharing, transportation networks, and other fundamental changes in transportation could impact consumer demand for the purchase of automobiles. A reduction in the number of automobiles purchased by consumers could adversely affect dealers and car manufacturers and lead to a reduction in other spending by these groups, including targeted incentive programs.

In addition, our business may be negatively affected by challenges to the larger automotive industry ecosystem, including global supply chain challenges, changes to trade policies, trade relations between the United States and China and other macroeconomic issues. These factors could have a material adverse effect on our business, revenue, results of operations, and financial condition.

The consequences we may face from the exit of the United Kingdom from the European Union could have a material adverse effect on our business, revenue, results of operations, and financial condition.

~~Our dedication~~The United Kingdom’s exit from the European Union, or the EU, commonly referred to ~~making~~as “Brexit”, could adversely affect European and global economic or market conditions, contribute to instability in global financial markets, create uncertainty in the wider commercial, legal, and regulatory environment, and cause disruptions to our business and operations in the United Kingdom, including with respect to our customers, suppliers, and consumers in the United Kingdom. As a result of this economic uncertainty, our dealer customers in particular may be unwilling to subscribe to our websites or renew or increase their existing subscriptions, as applicable. We may also face new regulatory costs and challenges that could have an adverse effect on our operations. Brexit has created economic uncertainty and its consequences could have a material adverse effect on our business, revenue, results of operations, and financial condition.

Making decisions ~~based primarily on~~that we believe are in the best interests of our marketplace may cause us to forgo short-term gains in pursuit of potential but uncertain long-term growth.

Our guiding principle is to build our business by making decisions based primarily upon the best interests of our entire marketplace, including consumers, dealers, and other participants, which we believe has been essential to our success in increasing our user growth rate and engagement and has served the long-term interests of our company and our stockholders. In the past, we have forgone, and we will in the future continue to forgo, certain expansion or short-term revenue opportunities that we do not believe are in the long-term best interests of our marketplace, ~~and its users,~~ even if such decisions negatively impact our results of operations in the short term. For example, we ~~have begun to~~ manage the text-chat feature of our ~~website~~websites where consumers can message paying dealers. Our management of this feature has helped improve dealer response times to consumers, which in turn improves the consumer experience. While our management of this feature provides value to both consumers and paying dealers and could be a potential source of short-term revenue for us, we are not currently charging for this feature and are instead focusing on the potential long-term value of this feature to our marketplace and its users. In addition, we recently provided paying dealers with reduced marketplace subscriptions for the April, May and June 2020 service periods in an effort to help our paying dealers maintain their business health during the COVID-19 pandemic. However, ~~this strategy~~these strategies may not result in the long-term benefits that we expect, in which case our user traffic and engagement, business, and financial results could be harmed.

A significant disruption in service on our ~~website~~websites or ~~our~~ mobile ~~application~~applications could damage our reputation and result in a loss of consumers, which could harm our business, brand, operating results, and financial condition.

Our brand, reputation, and ability to attract consumers, dealers, and advertisers depend on the reliable performance of our technology infrastructure and content delivery. We have experienced, and we may in the future experience, ~~significant~~ interruptions with our ~~systems in the future.~~systems. Interruptions in these systems, whether due to system failures, computer viruses, ransomware, or physical or electronic break-ins, could affect the security or availability of our marketplace on our ~~website~~websites and mobile ~~application,~~applications, and prevent or inhibit the ability of dealers and consumers to access our marketplace. For example, past disruptions have impacted our ability to activate customer accounts and manage our billing activities in a timely manner. Such interruptions could also result in third parties accessing our confidential and proprietary information, including our intellectual property. Problems with the reliability or security of our systems could harm our reputation, harm our ability to protect our confidential and proprietary information, result in a loss of consumers and dealers, and result in additional costs.

Substantially all of the communications, network, and computer hardware used to operate our platform is located in the United States innear Boston, Massachusetts, and ~~Dallas, Texas, and in Europe in~~internationally near London, ~~United Kingdom.~~England. Although we have two locations in the United States and we believe our systems are ~~fully~~ redundant, there may be exceptions for certain ~~hardware.~~hardware or software. In addition, we do not own or control the operation of these facilities. We also use ~~Amazon Web Services and Google Cloud Storage~~third-party hosting services to back up some data but do not maintain redundant systems or facilities for some of the services. A disruption to one or more of these systems may cause us to experience an extended period of system unavailability, which could negatively impact our ~~data.~~

relationship with consumers, customers and advertisers. Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, computer viruses, earthquakes, and similar events. The occurrence of any of these events could result in damage to our systems and hardware or could cause them to fail. In addition, we may not have sufficient protection or recovery plans in certain circumstances.

Problems faced by our third-party web hosting providers could adversely affect the experience of consumers have while using our marketplace. Our third-party web hosting providers could close their facilities without adequate notice. Any financial difficulties, up to and including bankruptcy, faced by our third-party web hosting providers or any of the service providers ~~with whom~~whose services they ~~contract~~use, which may be exacerbated as a result of the COVID-19 pandemic, may have negative effects on our business, the nature and extent of which are difficult to predict. If our third-party web hosting providers are unable to keep up with our ~~growing~~ capacity needs, our business could be harmed.

Any errors, defects, disruptions, or other performance or reliability problems with our network operations could cause interruptions in access to our marketplace as well as delays and additional expense in arranging new facilities and services and could harm our reputation, business, operating results, and financial condition.

Although we carry ~~business interruption~~ insurance, it may not be sufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business, that may result from interruptions in our service as a result of system failures.

We collect, process, store, transfer, share, disclose, and use consumer information and other data, and our actual or perceived failure to protect such information and data or respect users’ privacy could damage our reputation and brand and harm our business and operating results.

~~Use of some~~Some functions of our marketplace ~~involves~~involve the storage and transmission of consumers’ information, ~~some~~such as IP addresses, contact information of ~~which~~users who connect with dealers and profile information of users who create accounts on our marketplace, as well as dealers’ information. We also process and store personal and confidential information of our vendors, partners, and employees. Some of this information may be private, and security breaches could expose us to a risk of loss or exposure of this information, which could result in potential liability, litigation, and remediation costs. For example, hackers could steal our users’ profile passwords, names, email addresses, phone numbers, and zip codes. We ~~also~~ rely on encryption and authentication technology licensed from third parties to effect secure transmission of such information. Like all information systems and technology, our ~~website,~~websites, mobile ~~application,~~applications, and information systems ~~may be~~are subject to computer viruses, break-ins, phishing attacks, attempts to overload ~~our servers~~the systems with denial-of-service or other attacks, ransomware, and similar incidents or disruptions from unauthorized use of our computer systems, any of which could lead to interruptions, delays, or website shutdowns, orand could cause loss of critical data orand the unauthorized disclosure, access, acquisition, alteration, orand use of personal or other confidential information. If we experience compromises to our security that result in website or mobile application performance or availability problems, the complete shutdown of our ~~website~~websites or mobile ~~application,~~applications, or the loss or unauthorized disclosure, access, acquisition, alteration, or use of confidential information, consumers, customers, advertisers, partners, vendors, and ~~advertisers~~employees may lose trust and confidence in us, and consumers may decrease the use of our ~~website~~websites or stop using our ~~website~~websites entirely, dealers may stop or decrease their subscriptions with us, and advertisers may decrease or stop advertising on our ~~website.~~ websites.

Further, outside parties ~~may~~have attempted and will continue to attempt to fraudulently induce employees, consumers, or advertisers to disclose sensitive information in order to gain access to our information or our consumers’ or, dealers’, advertisers’, and employees’ information. ~~Because~~As cyber-attacks increase in frequency and sophistication, our cyber-security and business continuity plans may not be effective in anticipating, preventing and effectively responding to all potential cyber-risk exposures. In addition, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, often are not recognized until after being launched against a target, and may originate from less regulated and remote areas around the world, we may be unable to proactively address these techniques or to implement adequate preventative measures.

Any or all of the issues above could adversely affect our brand reputation, negatively impact our ability to attract new consumers and increase engagement by existing consumers, cause existing consumers to curtail or stop use of our marketplace or close their accounts, cause existing dealers and advertisers to cancel their contracts, cause employees to terminate their employment, cause employment candidates to be unwilling to pursue employment opportunities or accept employment offers, and or subject us to governmental or third-party lawsuits, investigations, regulatory fines, or other actions or liability, thereby harming our business, results of operations, and financial condition.

There are numerous federal, national, state, and local laws and regulations in the United States and around the world regarding privacy and the collection, processing, ~~storing,~~storage, sharing, ~~disclosing, using,~~disclosure, use, cross-border transfer, and ~~protecting~~protection of personal information and other ~~data, the scope of which~~data. These laws and regulations are ~~changing,~~evolving, are subject to differing interpretations, ~~and which~~ may be costly to comply with, may result in regulatory fines or penalties, ~~and~~may subject us to third-party lawsuits, may be inconsistent between countries and jurisdictions, orand may conflict with other ~~rules.~~requirements.

We seek to comply with industry standards and are subject to the terms of our privacy policies and privacy-related obligations to third ~~parties. We strive to comply with~~parties, as well as all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy and data ~~protection, to the extent possible.~~protection. However, it is possible that these obligations may be interpreted and applied in new ways or in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices orand that new regulations could be enacted. Several proposals have recently become effective or are pending, as applicable, before federal, state, local, and foreign legislative and regulatory bodies that could significantly affect our business, including the General Data Protection Regulation in the EU, or the GDPR, which went into effect on May 25, 2018, and the California Consumer Privacy Act, or the CCPA, which went into effect on January 1, 2020. The CCPA, among other things, contains new disclosure obligations for businesses that collect personal information about California residents and provides California residents with additional rights relating to their personal information. The GDPR and CCPA in particular have already required, and may further require, us to change our policies and procedures and may in the future require us to make changes to our marketplace and other products. These and other requirements could reduce demand for our marketplace and other offerings, require us to take on more onerous obligations in our contracts and restrict our ability to store, transfer, and process data, which may seriously harm our business. Similarly, Brexit may require us to change our policies and procedures and, if we are not in compliance, may also seriously harm our business. We may not be entirely successful in our efforts to comply with the evolving regulations to which we are subject due to various factors within our control, such as limited internal resource allocation, or outside our control, such as a lack of vendor cooperation, new regulatory interpretations, or lack of regulatory guidance in respect of certain GDPR or CCPA requirements.

Any failure or perceived failure by us to comply with United States and international data protection laws and regulations, our privacy policies, or our privacy-related obligations to consumers, orcustomers, employees and other third parties, ~~or our privacy-related legal obligations,~~ or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include ~~personally identifiable~~personal information or other user data, may result in governmental investigations, enforcement actions, regulatory fines, litigation, criminal penalties, or public statements against us by

consumer advocacy groups or others, and could cause consumers and dealers to lose trust in us, which could significantly impact our brand reputation and have an adverse effect on our business. Additionally, if any third ~~parties~~party that we ~~work~~share information with ~~violate applicable laws~~experiences a security breach or ~~our policies,~~fails to comply with its privacy-related legal obligations or commitments to us, such ~~violations~~matters may ~~also~~ put employee, consumer or dealer information at risk and could in turn expose us to claims for damages or regulatory fines or penalties and harm our reputation, business, and operating results.

Our ability to attract consumers to our own websites and for our advertising clients depends on the collection of consumer data from various sources, which may be restricted by consumer choice, privacy restrictions imposed by advertising partners, web browsers or other software, and developments in laws, regulations and industry standards.

The success of our consumer marketing and the delivery of internet advertisements for our clients depends on our ability to leverage data, including data that we collect from our clients, data we receive from our publisher partners and third parties, and data from our operations. Using cookies and non-cookie-based technologies, such as mobile advertising identifiers, we collect information about the interactions of users with our clients’ and publishers’ digital properties (including, for example, information about the placement of advertisements and users’ shopping or other interactions with our clients’ websites or advertisements). Our ability to successfully leverage such data depends on our continued ability to access and use such data, which could be restricted by a number of factors, including:

Each of these developments could materially impact our ability to collect consumer data and deliver relevant internet advertisements to attract consumers to our websites or to deliver targeted advertising for our advertising clients. If we are unsuccessful in evolving our advertising and marketing strategies to adapt to and mitigate these evolving consumer data limitations, our business results could be materially impacted.

We have been, and may ~~in the future~~again be, subject to intellectual property disputes, which are costly to defend and could harm our business and operating results.

We ~~may from time~~are subject to ~~time~~claims and litigation by third parties that we infringe their intellectual property rights, and we may face allegations in the future that we have infringed the trademarks, copyrights, patents, and other intellectual property rights of third parties, including from our competitors or non-practicing ~~entities, or~~entities. We may also learn of possible infringement to our trademarks, copyrights, patents, and other intellectual property. WeIn addition, we could ~~also~~ be subject to lawsuits where consumers and dealers posting content on ~~the “Questions” section of~~ our ~~website~~websites disseminate materials that infringe the intellectual property rights of third parties. We have encountered lawsuits in the past containing allegations of intellectual property infringement. For example, in December 2015, Trader Corporation, or Trader, alleged that we infringed its copyright in 196,740 photos of cars that were uploaded onto our Canadian website. Trader sought statutory and punitive damages of approximately CAD$ 99 million along with a permanent injunction prohibiting us from reproducing any other photos in which Trader owns copyright without Trader’s consent. On April 6, 2017, the Commercial List of the Ontario Superior Court, or the Commercial List, granted an order declaring that we infringed Trader’s copyright in 152,532 photos and awarded Trader statutory damages of CAD$ 305,064 in the aggregate, but dismissed Trader’s claim for punitive damages and a permanent injunction. Following release of the decision, the parties agreed that there would be no legal fees or interest payable. In addition, the parties agreed that neither would appeal the decision of the Commercial List.such allegations.

Patent and other intellectual property litigation may be protracted and expensive, and the results are difficult to predict and may ~~require~~result in significant settlement costs or payment of substantial damages. Many potential litigants, including patent holding companies, have the ability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. Furthermore, a successful claimant could secure a judgment that requires us to stop offering some features ~~purchase licenses,~~ or prevents us from conducting our business as we have historically done or may desire to do in the future. We might also be required to seek a license and pay royalties for the use of such intellectual property, which may not be available on commercially acceptable terms, or at all. Alternatively, we may be required to modify our marketplace and features while we develop non-infringing substitutes, orwhich could require significant effort and expense and may ~~result in significant settlement costs.~~ultimately not be successful.

In addition, we use open source software in our platform and will use open source software in the future. From time to time, we may face claims from companies that incorporate open source software into their products, claiming ownership of, or demanding release of, the source code, the open source software, or derivative works that were developed using such software, or otherwise seeking to enforce the terms of the applicable open source license. These claims could also result in litigation, require us to purchase a costly license or require us to devote additional product, technology, and development resources to change our platform or services, any of which would have a negative effect on our business and operating results.

Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, our operating results, and our reputation.

Failure to adequately protect our intellectual property could harm our business and operating results.

Our business depends on our intellectual property, the protection of which is crucial to the success of our business. We rely on a combination of patent, trademark, trade secret, and copyright law and contractual restrictions to protect our intellectual property. In addition, we attempt to protect our intellectual property, technology, and confidential information by requiring our employees and consultants to enter into confidentiality and assignment of inventions agreements and third parties to enter into nondisclosure agreements as we deem appropriate. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our ~~website~~platform’s features, software, and functionality or obtain and use information that we consider proprietary.

Competitors may adopt ~~service~~trademarks or trade names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks, or trademarks that incorporate variations of the term “CarGurus.” IfWhile we ~~are restricted in any way in registering our~~have registered the CARGURUS ~~mark~~and CG logos in the ~~European Union or in other international markets, it would impact our ability to establish~~ U.S. Canada, the EUand ~~grow our business in Europe and other countries. For example, O2 Holdings Limited (now O2 Worldwide Limited, which we refer to as O2 Worldwide), based in~~ the United Kingdom, ~~previously opposed our UK application to register~~as well as the ~~mark~~word-mark CARGURUS ~~based on its prior registered rights for the mark GURU~~ in the ~~United Kingdom. We have reached an agreement with O2 Worldwide that provides that we are permitted to continue to use our CARGURUS mark in~~U.S., Canada, Italy, France, Spain, the United Kingdom and, for a subset of services, Ireland, we were not able to register the ~~European Union for our services~~word-mark CARGURUS in the ~~automotive field in~~EU and Germany as the ~~manner we have~~mark was deemed to ~~date,~~be non-distinctive, and ~~to register such mark in the United Kingdom and the European Union for such services.~~thus not registerable.

We currently hold the “CarGurus.com” ~~Internet~~internet domain name and various other related domain names. The regulation of domain names is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars, or modify the requirements for holding domain names. As a result, we may not be able to acquire or maintain all domain names that use the name CarGurus.

We In addition, third parties have created and may ~~acquire other companies~~in the future create copycat or ~~technologies, which could divert our management’s attention, result in additional dilution~~squatter domains to ~~our stockholders, and otherwise disrupt our operations and harm our operating results.~~

~~Our success will depend, in part, on our ability to grow our business in response to the demands of~~deceive consumers, dealers, and other constituents within the automotive industry as well as competitive pressures. In some circumstances, we may determine to do so through the acquisition of complementary businesses and technologies rather than through internal development. The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to successfully complete identified acquisitions. The risks we face in connection with acquisitions include:

Our failure to address these risks or other problems encountered in connection with future acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expense, or impairment charges associated with acquired intangible assets or goodwill, any of which could harm our ~~financial condition. Also, the anticipated benefits of any acquisitions may not materialize.~~brand, interfere with our ability to register domain names, and result in additional costs.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect our technologies and processes, we rely in part on confidentiality agreements with our employees, independent contractors, and other advisors. These agreements may not effectively prevent disclosure of confidential information, including trade secrets, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. ~~In addition, others~~Others may also independently discover our trade secrets and proprietary information, and in such cases, we may not be able to assert our trade secret rights against such parties. To the extent that our employees, contractors, or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights to related or resulting know-how and inventions. The loss of confidential information or intellectual property rights, including trade secret protection, could make it easier for third parties to compete with our products. In addition, any changes in, or unexpected interpretations of, intellectual property laws may compromise our ability to enforce our trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection of our trade secrets or other proprietary information could harm our business, results of operations, reputation, and competitive position.

We may be unable to halt the operations of websites that aggregate or misappropriate our data.

From time to time, third parties may misappropriate our data through website scraping, robots, or other means and aggregate this data on their websites with data from other companies. In addition, copycat websites may misappropriate data in our marketplace and attempt to imitate our brand or the functionality of our ~~website.~~websites. If we become aware of such activities, we intend to employ technological or legal measures in an attempt to halt their operations. However, we may be unable to detect all such activities in a timely manner and, even if we could, technological and legal measures may be insufficient to halt their operations. In some cases,

particularly in the case of entities operating outside of the United States, our available remedies may not be adequate to protect us against the impact of the operation of such websites. Regardless of whether we can successfully enforce our rights against the operators of these websites, any measures that we may take could require us to expend significant financial or other resources, which could harm our business, results of operations, orand financial condition. In addition, to the extent that such activity creates confusion among consumers or advertisers, our brand and business could be harmed.

We ~~have incurred operating~~may incur losses in the ~~past and~~future if we ~~may generate losses in the future.~~fail to sufficiently manage our costs effectively.

We ~~have incurred net operating losses in the past. Although we did not experience such losses in 2016 and have not experienced such losses in 2017 and we have experienced significant growth in revenue,~~expect our annual revenue growth rate ~~may~~to halt or decline this year due to the COVID-19 pandemic and it is likely to continue to decline in the future as a result of a variety of factors. ~~Our international expansion may~~In addition, our new product launches will cause our costs to increase in future periods as we continue to expend substantial financial resources to ~~enter into those markets. Our costs may also increase due to our continued~~promote such new ~~product development and general administrative expenses, such as legal and accounting expenses related to being a public company.~~products. If we fail to ~~increase our revenue or~~ manage these additional costs as our annual revenue growth rate declines, we may incur losses in the future.

~~Complying with~~We must maintain proper and effective internal controls over financial reporting and any failure to maintain the ~~laws~~adequacy of these internal controls may adversely affect investor confidence in our company and, ~~regulations affecting public companies has increased and will continue~~as a result, the value of our Class A common stock could decline.

We are required, pursuant to ~~increase our costs~~Section 404 and the ~~demands on management and could harm our operating results.~~

Now that we are a public company, we expect to incur significant legal, accounting, and other expenses that we did not incur as a private company and these expenses will increase after we cease to be an “emerging growth company.” In addition, the Sarbanes-Oxley Act andrelated rules ~~subsequently implemented~~adopted by the ~~Securities and Exchange Commission, or the~~ SEC, ~~and NASDAQ impose various requirements~~to furnish a report by management on, public companies, including requiring changes in corporate governance practices. Our management and other personnel expect to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continue to increase our legal, accounting, and financial compliance costs and have made and will continue to make some activities more time consuming and costly. For example, these rules and regulations have made it more difficult and more expensive for us to obtain director and officer liability insurance. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or our board committees or as executive officers.

~~In addition, the Sarbanes-Oxley Act requires,~~ among other things, ~~that we assess~~ the effectiveness of our internal control over financial reporting ~~annually and~~on an annual basis. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. During the ~~effectiveness of our disclosure controls and procedures quarterly. In particular, beginning with the year ending December 31, 2018, we will need to perform system and process~~ evaluation and testing ofprocess, if we identify and fail to remediate one or more material weaknesses in our internal control over financial reporting, we will be unable to ~~allow management to report on, and~~assert that our internal controls are effective.

In addition, our independent registered public accounting firm potentially to attest to, the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, or Section 404. As an “emerging growth company” we may elect to avail ourselves of the exemption from the requirement that our independent registered public accounting firmmust attest to the effectiveness of our internal control over financial reporting under Section 404. However, we may no longer avail ourselves of this exemption when we cease to be an “emerging growth company” and, when our independent registered public accounting firm is required to undertake an assessment of our internal control over financial reporting, the cost of our compliance with Section 404 will correspondingly increase. Our compliance with applicable provisions of Section 404 will require that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements.

Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes‑Oxley Act could have a material adverse effect on our stated operating results and harm our reputation.

We are not currently required to comply with the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a newly public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes‑Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Though we are required to disclose changes made in our internal controls and procedures on a quarterly basis, we are not required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC. As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse to us in the event it is not satisfied with the level at which our controls are documented, designed or operating.

To comply with the requirements of being a public company, we have undertaken various actions, and may need to take additional actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff.

Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. Additionally, when evaluating our internal control over financial reporting, we may identify material weaknesses that we We may not be able to remediate any future material weaknesses, or to complete our evaluation, testing and any required remediation in ~~time~~a timely fashion. We are also required to ~~meet the applicable deadline imposed upon us for~~disclose significant changes made to our internal control procedures on a quarterly basis. Our compliance with ~~the requirements of~~ Section ~~404. If~~404 requires that we ~~identify any material weaknesses in our~~incur substantial accounting expense and expend significant management efforts.

Any failure to maintain internal control over financial reporting ifcould severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable ~~to comply with the requirements of Section 404 in a timely manner or~~ to assert that our internal control over financial reporting is effective or if our independent registered public accounting firm is unable to express an opinion ~~as to~~on the effectiveness of our internal control over financial reporting ~~once~~when it is required to issue such opinion, we ~~are no longer an emerging growth company, investors may~~could lose investor confidence in the accuracy and completeness of our financial reports, ~~and~~ the market price of our Class A common stock could ~~be materially adversely affected,~~decline, and we could ~~become~~be subject to sanctions or investigations by ~~the stock exchange on which our securities are listed,~~Nasdaq, the SEC or other regulatory ~~authorities, which could require additional financial and management resources.~~authorities.

Across the retail automotive industry, consumer purchases are typically ~~increase through~~greatest in the first three quarters of each year, due in part to the introduction of new vehicle models from manufacturers, and our consumer-marketing spend ~~grows~~generally fluctuates accordingly. As consumer automotive purchases slow in the fourth quarter, our rate of marketing spend ~~growth~~typically also slows. This seasonality has not been immediately apparent historically due to the overall growth of other operating expenses. As our growth rates begin to moderate or cease, the impact of these seasonality trends on our results of operations could become more pronounced. Redistribution of our marketing spend in response to COVID-19-related expense management and shifts in demand from dealers and consumers could impact the efficiency of our marketing spend. For example, a larger portion of our advertising may run during peak holiday seasonality for retail advertisers, inflating our media costs.

We expect our results of operations to fluctuate on a quarterly and annual basis.

Our revenue and results of operations could vary significantly from period to period and may fail to match expectations as a result of a variety of factors, some of which are outside of our ~~control.~~control, including the effects of the COVID-19 pandemic. Our results may vary as a result of fluctuations in the number of dealers subscribing to our marketplace and the size and seasonal variability of our advertisers’ marketing budgets. As a result of the potential variations in our revenue and results of operations, period-to-period comparisons may not be meaningful and the results of any one period should not be relied on as an indication of future performance. In addition, our results of operations may not meet the expectations of investors or public market analysts who follow us, which may adversely affect ~~our stock price.~~

We may require additional capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances. If capital is not available to us, our business, operating results, and financial condition may be harmed.

~~Although we have not needed to raise substantial equity in~~ the past to support the growth of our business, we intend to continue to make investments to support our growth and may require additional capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances, including to increase our marketing expenditures to improve our brand awareness, develop new products, further improve our marketplace and existing products, enhance our operating infrastructure, and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. However, additional funds may not be available when we need them, on terms that are acceptable to us, or at all. Volatility in the credit markets may also have an adverse effect on our ability to obtain debt financing.

If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holderstrading price of our Class A common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances

We could be ~~significantly limited,~~subject to adverse changes in applicable tax laws, regulations and interpretations, as well as challenges to our ~~business, operating~~tax positions.

We are subject to taxation in the United States and certain other jurisdictions in which we operate. Changes in applicable tax laws or regulations may be proposed or enacted that could materially and adversely affect our effective tax rate, tax payments, results of operations, financial condition and cash flows.

In addition, tax laws and regulations are complex and subject to varying interpretations. For instance, on June 21, 2018, the United States Supreme Court issued its decision in South Dakota v. Wayfair, Inc., or the Wayfair Decision, which overturned prior case law that held that out-of-state merchants were not required to collect sales taxes unless they had a physical presence in the buyer’s state. The Wayfair Decision has created uncertainty over sales tax liability, and could precipitate reactions by legislators, regulators and courts that could adversely increase our tax administrative costs and tax risk, and negatively affect our overall business, results of operations, financial condition and cash flows.

We are also regularly subject to audits by tax authorities. For example, we are currently under audit by the Internal Revenue Service with respect to our 2016, 2017 and 2018 federal employment taxes.Any adverse development or outcome in connection with these tax audits, and any other audits or litigation, could materially and adversely impact our effective tax rate, tax payments, results of operations, financial condition and cash flows.

Failure to deal effectively with fraud or other illegal activity could lead to potential legal liability, harm our business, cause us to lose paying dealer customers and adversely affect our reputation, financial performance and prospects for growth.

Based on the nature of our business we are exposed to potential fraudulent and illegal activity in our marketplace, including:

The measures we have in place to detect and limit the occurrence of such fraudulent and illegal activity in our marketplace may not always be effective or account for all types of fraudulent or other illegal activity. Further, the measures that we use to detect and limit the occurrence of fraudulent and illegal activity must be dynamic, as technologies and ways to commit fraud and illegal activity are continually evolving. Failure to limit the impact of fraudulent and illegal activity on our websites could belead to potential legal liability, harm our business, cause us to lose paying dealer customers and adversely ~~affected.~~affect our reputation, financial performance and prospects for growth.

Our 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.

Primarily by virtue of his holdings in shares of our Class B common stock, which has a ten-to-one voting ratio compared to our Class A common stock, Langley Steinert, our founder, Chief Executive Officer ~~President,~~ and Chairman, is able to exercise voting rights with respect to a majority of the voting power of our outstanding capital stock and therefore has the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely this concentrated control could result in the consummation of such a transaction that our other stockholders do not support. This concentrated control could also discourage a potential investor from acquiring our Class A common stock, which has limited voting power relative to the Class B common stock and might harm the trading price of our Class A common stock. In addition, Mr. Steinert has the ability to control the management and

major strategic investments of our company as a result of his positions as our Chief Executive Officer ~~President,~~ and Chairman, and his ability to control the election or replacement of our directors. As a board member and officer, Mr. Steinert owes a fiduciary duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders. If ~~Langley~~Mr. Steinert’s status as an officer and director is terminated, his fiduciary duties to our stockholders will also terminate, but his voting power as a stockholder will not be reduced as a result of such termination unless such termination is either made voluntarily by Mr. Steinert, due to Mr. Steinert’s death, or if the sum of the number of shares of our capital stock held by ~~Langley~~Mr. Steinert, by any Family Member of ~~Langley~~Mr. Steinert, and by any Permitted Entity of ~~Langley~~Mr. Steinert (as such terms are defined in our amended and restated certificate of incorporation), assuming the exercise and settlement in full of all outstanding options and convertible securities and calculated on an as-converted to Class A common stock basis, is less than 9,091,484 shares. As a stockholder, even a controlling stockholder, Mr. Steinert is entitled to vote his shares in his own interests, which may not always be aligned with the interests of our other stockholders.

We believe that Mr. Steinert’s continued control of a majority of the voting power of our outstanding capital stock is beneficial to us and is in the best interests of our stockholders. In the event that Mr. Steinert no longer controls a majority of the voting power, whether as a result of the disposition of some or all his shares of Class A or Class B common stock, the conversion of the Class B common stock into Class A common stock in accordance with its terms, or otherwise, our business or the trading price of our Class A common stock may be adversely affected.

The 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 ~~your~~the ability of our stockholders to influence corporate matters.

Our Class B common stock has ten votes per share and our Class A common stock has one vote per share. ~~Stockholders who~~Our founder and certain of his affiliates hold a substantial number of the outstanding shares of our Class B common stock ~~including certain of our executive officers, employees,~~ and ~~directors and their affiliates, together~~therefore hold a substantial majority of the voting power of our outstanding capital stock. Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively control a majority of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock represent at least 9.1% of all outstanding shares of our Class A and Class B common stock. This concentrated control will limit or preclude ~~your~~the ability of our stockholders to influence corporate matters for the foreseeable future.

Transfers by holders of Class B common stock will generally result in those shares converting into Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes. The conversion of Class B common stock into Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term. If, for example, Mr. Steinert retains a significant portion of his holdings of Class B common stock for an extended period of time, he could, in the future, continue to control a majority of the combined voting power of our outstanding capital stock.

The trading price of our Class A common stock has been and may continue to be volatile and the value of ~~your~~our stockholders’ investment in our stock could decline.

The trading price of our Class A common stock has been and may continue to be volatile and fluctuate substantially. The trading price of our Class A common stock depends on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. Factors that could cause fluctuations in the trading price of our Class A common stock include the following:

In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our Class A common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action ~~litigations have~~litigation has often been instituted against these companies. Litigation of this type, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

~~Sales of substantial amounts of our Class A common stock in the public markets, or the perception that such sales might occur,~~Our business could ~~depress the market price of our Class A common stock.~~

~~The market price for our Class A common stock could decline~~be negatively affected as a result of actions of activist stockholders, which could be disruptive and potentially costly, and such activism could impact the ~~sale of substantial amounts~~trading value of our ~~Class A~~ common stock ~~particularly sales~~and cause uncertainty about the strategic direction of our business.

Even though we are a controlled company, the actions of activist stockholders could nevertheless adversely affect our business. Activist stockholders may from time to time attempt to effect changes in our strategic direction, and in furtherance thereof, may seek changes in how our company is governed. Responding to strategic proposals by activist stockholders related to our business, strategy, management or operations, or the composition of our board of directors, could disrupt our operations, be costly and time-consuming, or divert the attention of our board of directors and senior management from the pursuit of business strategies. In addition, perceived uncertainties as to the future strategic direction of our business in relation to the actions of an activist stockholder may be exploited by our ~~directors, executive officers, and significant stockholders, a large number of shares of our Class A common stock becoming available for sale,~~competitors, cause concern to current or ~~the perception~~potential customers, result in the ~~market that holders~~loss of a large number of shares intend to sell their shares. Based on shares outstanding at October 31, 2017, we had outstanding approximately 77,877,494 shares of Class A common stock. Of these shares, the 10,810,000 shares of our Class A common stock sold in our initial public offering, or IPO, are freely tradable, and the balance of the outstanding shares will be available for sale in the public market beginning following the expiration of lock-up agreements entered into in connection with our IPO, which is expected to occur on April 10, 2018. The representatives of the underwriters in our IPO may release these stockholders from their lock-up agreements at any time and without notice, which would allow for earlier sales of shares in the public market. Sales of a substantial number of such shares upon expiration of the lock-up, the perception that such sales may occur, or early release of these agreements, could cause our market price to fall orpotential business opportunities, make it more difficult ~~for you~~ to ~~sell your Class A common stock at a time~~attract and ~~price that you deem appropriate.~~

~~On April 10, 2018, the holders~~retain qualified personnel and/or affect our relationships with vendors, customers and other third parties. Actions of 54,998,789 shares of our Class A common stock will have rights, subject to some conditions, to require us to file registration statements covering their shares of Class A common stock or to include their sharesan activist stockholder may also cause fluctuations in ~~registration statements that we may file for ourselves or our stockholders.~~

In addition, the shares of Class A common stock subject to outstanding options and restricted stock units for Class A common stock under our equity incentive plans and the shares reserved for future issuance under our equity incentive plans, which we registered on a registration statement on Form S-8 which we filed with the SEC on October 24, 2017, will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations.

~~If a substantial number of shares are sold, or if it is perceived that they will be sold, in the public market, before or after the expiration of the contractual lock-up period,~~ the trading price of our Class A common stock ~~could decline substantially.~~based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

The exclusion of our Class A common stock from major stock indexes could adversely affect the trading market and price of our Class A common stock.

Several major stock index providers have announced they will begin to exclude, or are considering plans to exclude, from their indexes the securities of companies with unequal voting rights such as ours. Exclusion from stock indexes could make it more difficult, or impossible, for some fund managers to buy the excluded securities, particularly in the case of index tracking mutual funds and exchange traded funds. The exclusion of our Class A common stock from major stock indexes could adversely affect the trading market and price of our Class A common stock.

Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

The provisions of our amended and restated certificate of incorporation and amended and restated bylaws, and provisions of Delaware law, may have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which ~~prevents~~prevent some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.

Any provision of our amended and restated certificate of incorporation, amended and restated bylaws, or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.

Our amended and restated certificate of incorporation includes a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for any stockholder to bring: (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees or agents to us or to our stockholders; (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or amended and restated bylaws; (iv) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; or (v) any action asserting a claim against us or any of our directors, officers, or other employees or agents governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and have consented to the foregoing provisions. This forum selection provision in our amended and restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us. It is also possible that, notwithstanding the forum selection clause included in our amended and restated certificate of incorporation, a court could rule that such a provision is inapplicable or unenforceable.

If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, ~~our stock~~the trading price and trading volume of our Class A common stock could decline.

The trading market for our Class A common stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, orand our competitors. If any of the analysts ~~who may cover~~that covers us ~~change their~~changes its recommendation regarding our stock adversely, or ~~provide~~provides more favorable relative recommendations about our competitors, our stock

price would likely decline. If any analyst that covers us were to cease coverage of ourcompany or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our management team and could divert their attention away from the day‑to‑~~day management of our business, which could materially adversely affect our business, financial condition and operating results.~~

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any cash dividends in the foreseeable future. As a result, ~~you~~our stockholders may only receive a return on ~~your~~their investment in our Class A common stock if the trading price of ~~your~~their shares increases.

Our 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 ~~stock price.~~Class A common stock.

More than 50% of our voting power is held by ~~Langley~~Mr. Steinert. As a result, we are a “controlled company” under the corporate governance rules for ~~NASDAQ-listed~~Nasdaq-listed companies. Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a ~~“controlled company”~~controlled company and may elect not to comply with certain ~~NASDAQ~~Nasdaq corporate governance requirements, including:

We rely and have relied on certain or all of these exemptions. Accordingly, should the interests of our controlling stockholder differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for ~~NASDAQ-listed~~Nasdaq-listed companies. Our status as a controlled company could make our Class A common stock less attractive to some investors or otherwise harm our stock price.

~~We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.~~

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company until the last day of our fiscal year following the fifth anniversary of our IPO, subject to specified conditions. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from some disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

We have taken advantage of reduced reporting burdens in this Quarterly Report on Form 10-Q. We cannot predict whether investors will find our Class A common stock less attractive because we rely on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, while we are an emerging growth company we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies.

From July 1, 2017 through September 30, 2017, we issued and sold to employees, consultants and other service providers an aggregate of 79,244 shares of common stock upon the exercise of options granted under our Amended and Restated 2006 Equity Incentive Plan and Amended and Restated 2015 Equity Incentive Plan exercise prices ranging from $0.09 to $6.78 per share, for an aggregate exercise price of approximately $120,000.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and we believe that each such transaction was exempt from the registration requirements of the Securities Act of 1933, as amended, or the Securities Act, in reliance on either Section 3(a)(9) of the Securities Act, Rule 701 promulgated under the Securities Act, as transactions pursuant to a compensatory benefit plan approved by our board of directors, Section 4(a)(2) of the Securities Act, as transactions by an issuer not involving a public offering, or transactions which did not constitute sales of securities under the Securities Act. Each recipient of securities issued in the transactions that were deemed to be exempt in reliance upon Section 4(a)(2) of the Securities Act acquired the securities for investment only and not with a view to, or for resale in connection with, any distribution thereof, and appropriate legends were affixed to the share certificates issued in each such transaction. In each case, the recipient received adequate information regarding us or had adequate access, through his or her relationship with us, to information about us.

On October 11, 2017, our registration statement on Form S-1, as amended (File No. 333-220495), filed in connection with our IPO, was declared effective by the SEC and, on October 16 2017, we closed our IPO consisting of 10,810,000 shares of Class A common stock, which included the full exercise by the underwriters of their option to purchase 1,410,000 additional shares of Class A common stock, at a public offering price of $16.00 per share, before underwriting discounts. We issued and sold 3,205,000 shares of Class A common stock and the selling stockholders sold an additional 7,605,000 shares of Class A common stock. The aggregate offering price for shares sold in our IPO was approximately $173.0 million. Following the sale of the shares in connection with the closing of our IPO, the offering was concluded. We received approximately $43.0 million in net proceeds, after deducting underwriting discounts and commissions of $3.6 million and approximately $4.7 million of other offering expenses. The selling stockholders received, in the aggregate, approximately $113.2 million in net proceeds, after deducting underwriting discounts and commissions of $8.5 million. Certain of the underwriting discounts and commissions paid in our IPO were paid to Allen & Company LLC, an entity that beneficially owned more than 10% of our preferred stock prior to our IPO and that is affiliated with Ian Smith, a member of our board of directors.

There has been no material change in the planned use of proceeds from our initial public offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on October 12, 2017. Goldman Sachs & Co. LLC and Allen & Company LLC acted as joint lead book-running managers. RBC Capital Markets, LLC also acted as a joint-book running manager. JMP Securities LLC, Raymond James, and William Blair & Company, L.L.C. acted as co-managers.

The exhibits listed below are filed or incorporated by reference into this Quarterly ~~Report on Form 10-Q.~~Report.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware	04-3843478
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2 Canal Park, 4th Floor Cambridge, Massachusetts	02141
(Address of principal executive offices)	(Zip Code)

Large accelerated filer	☐☒	Accelerated filer	☐
Non-accelerated filer	☒ ~~(Do not check if a small reporting company)~~☐	Small reporting company	☐
		Emerging growth company	☒☐

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets	1
	Unaudited Condensed Consolidated Income Statements	2
	Unaudited Condensed Consolidated Statements of Comprehensive Income	3
	Unaudited Condensed Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity	4
	Unaudited Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1720
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3138
Item 4.	Controls and Procedures	3239

PART II.	OTHER INFORMATION	40
Item 1.	Legal Proceedings	3340
Item 1A.	Risk Factors	33
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	5140
Item 6.	Exhibits	5263
Signatures		5364

	Estimated Fair Value at Date of Acquisition
Cash and cash equivalents	$	50
Restricted cash		220
Accounts receivable		2,034
Intangible assets ⁽¹⁾		7,600
Goodwill ⁽²⁾		12,409
Operating lease right-of-use assets		2,169
Other assets, net		162
Accounts payable and accrued expenses		(358	)
Operating lease liabilities - current		(446	)
Operating lease liabilities - non-current		(1,723	)
Deferred tax liabilities ⁽³⁾		(843	)
Total purchase price	$	21,274


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2017
Cash and cash equivalents due in 90 days or less	$	25,636	$	—	$	—	$	25,636
Investments:
Certificates of deposit due in one year or less		60,000					$	60,000
Total cash, cash equivalents, and investments	$	85,636	$	—	$	—	$	85,636

	At September 30, 2017			At December 31, 2016
Assets
Current assets
Cash and cash equivalents	$	25,636		$	29,476
Investments		60,000			44,774
Accounts receivable, net of allowance for doubtful accounts of $141 and $164, respectively		10,123			6,653
Prepaid income taxes		—			1,815
Prepaid expenses and other current assets		3,485			2,789
Total current assets		99,244			85,507
Property and equipment, net (Note 4)		16,100			12,780
Restricted cash		1,783			2,044
Deferred tax assets		371			—
Other long-term assets (Note 5)		4,158			—
Total assets	$	121,656		$	100,331
Liabilities, convertible preferred stock, and stockholders’ deficit
Current liabilities
Accounts payable	$	22,737		$	16,426
Accrued expenses (Note 6)		9,953			8,384
Deferred revenue		4,598			3,330
Accrued income taxes		156			—
Deferred rent		1,144			910
Total current liabilities		38,588			29,050
Deferred rent, net of current portion		5,701			5,673
Deferred tax liabilities		—			292
Other non-current liabilities		969			590
Total liabilities		45,258			35,605
Commitments and contingencies (Note 7)
Convertible preferred stock (Note 8)		132,698			132,698
Stockholders’ deficit:
Class A common stock, $0.001 par value per share; 120,020,700 shares authorized, 14,107,816 and 14,022,132 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively.		14			14
Class B common stock, $0.001 par value per share; 80,013,800 shares authorized, 28,213,276 and 28,044,264 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively.		28			28
Additional paid-in capital		4,225			3,714
Accumulated deficit		(60,766	)		(71,698	)
Accumulated other comprehensive income (loss)		199			(30	)
Total stockholders’ deficit		(56,300	)		(67,972	)
Total liabilities, convertible preferred stock, and stockholders’ deficit	$	121,656		$	100,331

	At September 30, 2017								At June 30, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)		Significant Other Observable Inputs (Level 2 Inputs)		Significant Unobservable Inputs (Level 3 Inputs)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)		Significant Other Observable Inputs (Level 2 Inputs)		Significant Unobservable Inputs (Level 3 Inputs)		Total
Assets:
Cash equivalents:
Money market funds	$	10,627	$	—	$	—	$	10,627	$	98,921	$	—	$	—	$	98,921
Investments:
Certificates of deposit		—		60,000		—		60,000		—		43,000		—		43,000
Total	$	10,627	$	60,000	$	—	$	70,627	$	98,921	$	43,000	$	—	$	141,921

	At December 31, 2016								At December 31, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)		Significant Other Observable Inputs (Level 2 Inputs)		Significant Unobservable Inputs (Level 3 Inputs)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs)		Significant Other Observable Inputs (Level 2 Inputs)		Significant Unobservable Inputs (Level 3 Inputs)		Total
Assets:
Cash equivalents:
Money market funds									$	29,196	$	—	$	—	$	29,196
Investments:
Certificates of deposit	$	—	$	44,774	$	—	$	44,774		—		111,692		—		111,692
Total	$	—	$	44,774	$	—	$	44,774	$	29,196	$	111,692	$	—	$	140,888

	At June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments:
Certificates of deposit due in one year or less	$	43,000	$	—	$	—	$	43,000
Total investments	$	43,000	$	—	$	—	$	43,000

Balance at December 31, 2019	$	15,207
Autolist acquisition		12,409
Foreign currency translation adjustment		7
Balance at June 30, 2020	$	27,623

	At September 30, 2017		At December 31, 2016
Deferred IPO issuance costs	$	4,142	$	—
Other long-term assets		16		—
	$	4,158	$	—

	At June 30, 2020
	Weighted Average Remaining Useful Life (years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Brand		8.9	$	9,123	$	756	$	8,367
Customer relationships		2.1		1,842		626		1,216
Developed technology		2.5		1,200		184		1,016
Total			$	12,165	$	1,566	$	10,599

	At December 31, 2019
	Weighted Average Remaining Useful Life (years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Brand		10.0	$	3,524	$	313	$	3,211
Customer relationships		2.0		1,045		336		709
Total			$	4,569	$	649	$	3,920

Year Ending December 31,	Amortization Expense
Remainder of 2020	$	959
2021		1,918
2022		1,683
2023		958
2024		939
2025		939
Thereafter		3,203
Total	$	10,599

	At September 30, 2017		At December 31, 2016
Accrued bonuses	$	5,086	$	4,662
Accrued commissions		1,520		1,305
Other accrued expenses		3,347		2,417
	$	9,953	$	8,384

	At June 30, 2020		At December 31, 2019
Accrued bonus	$	4,104	$	8,637
Other accrued expenses, accrued income taxes and other current liabilities		8,887		9,625
Total	$	12,991	$	18,262

	Employee Severance and Related Benefits
Balance, April 1, 2020	$	—
Charges		3,248
Cash disbursements		(2,387	)
Noncash settlements		(667	)
Balance, June 30, 2020	$	194

	Original Issue Price Per Share		Shares Authorized		Issued and Outstanding		Liquidation Amount		Carrying Value
Series A Preferred Stock	$	0.525053		3,333,000		2,824,703	$	1,483	$	1,483
Series B Preferred Stock	$	0.780899		3,329,497		2,938,486		2,295		2,295
Series C Preferred Stock	$	0.849012		1,648,978		1,550,612		1,316		1,316
Series D Preferred Stock	$	40.642989		1,673,105		1,673,105		68,000		67,872
Series E Preferred Stock	$	54.190650		1,107,202		1,107,202		60,000		59,732
				11,091,782		10,094,108	$	133,094	$	132,698

	Three Months Ended September 30,				Three Months Ended June 30,
Average Monthly Unique Users	2017		2016		2020			2019
					(in thousands)
United States		25,951		20,903		34,048	⁽¹⁾		36,861
International		2,607		1,681		7,753			9,750
Total						41,801			46,611

	Three Months Ended September 30,				Three Months Ended June 30,
Average Monthly Sessions	2017		2016		2020			2019
					(in thousands)
United States		67,359		48,903		85,901	⁽¹⁾		101,420
International		5,548		3,213		17,416			24,055
Total						103,317			125,475

	At September 30,
Number of Paying Dealers	2017		2016
United States		24,313		18,777
International		2,240		626

	At June 30,
Number of Paying Dealers	2020		2019⁽¹⁾
United States		23,806	n/a
International		6,452	n/a
Total		30,258	n/a

	At September 30,				At June 30,
Average Annual Revenue per Subscribing Dealer (AARSD)	2017		2016
Quarterly Average Revenue per Subscribing Dealer (QARSD)					2020		2019⁽¹⁾
United States	$	11,526	$	9,939	$	3,047	n/a
International	$	4,711	n/a*		$	643	n/a
Consolidated					$	2,517	n/a

	Nine Months Ended September 30,						Change
	2017			2016			Amount		%
				(dollars in thousands)
Revenue
Marketplace subscription	$	201,889		$	118,115			83,774		71	%
Advertising and other		24,375			19,262			5,113		27
Total	$	226,264		$	137,377		$	88,887		65	%
Percentage of total revenue:
Marketplace subscription		89	%		86	%
Advertising and other		11			14
Total		100	%		100	%

	CarGurus, Inc.

Date: ~~November 14, 2017~~August 6, 2020	By:	/s/ Langley Steinert
		Langley Steinert
		Chief Executive Officer (Principal Executive Officer)

Date: ~~November 14, 2017~~August 6, 2020	By:	/s/ Jason Trevisan
		Jason Trevisan
		Chief Financial Officer and President, International (Principal Financial Officer and Principal Accounting Officer)