Greetings, and welcome to CarGurus Inc. Third Quarter 2019 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host Mr. Rodney Nelson, Head of Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon, and welcome to CarGurus’ third quarter 2019 earnings call. We’ll be discussing the results announced in our press release issued today after the market close and posted on our Investor Relations website. With me on the call today is Langley Steinert, CarGurus’ Founder and Chief Executive Officer; Jason Trevisan, Chief Financial Officer; and Sam Zales, President and Chief Operating Officer. During the call, we’ll make statements related to our business that may be considered forward-looking, including statements concerning our financial guidance for the fourth quarter and full-year 2019, management’s expectations for our future financial and operational performance; our business and growth strategy and our plans to execute on our growth strategy, including our ability to expand our global audience and add new paying dealers; our brand awareness and traffic acquisition efforts, including investments in growing our audience and brand building across our U.S. and international businesses as well as our ability to reduce customer acquisition costs over time; our ability to achieve our 2019 strategic initiatives; the timing for lease of new products; our investments in and ability to drive adoption of new and existing products and features and their benefits; our expectations for our consumer finance offering and peer-to-peer marketplace, including our ability to expand through additional lenders and maximize market opportunities; our expectations for our new digital marketing and social media products and the ability of these solutions to assist our dealer’s digital marketing efforts; the value proposition of our products, including the ability of new products to drive AARSD growth; the growth levers we expect to drive our business; our ability to maintain existing and acquire new customers; our expansion into international markets and our international growth strategy; our ability to successfully integrate and improve the PistonHeads website; our expected expenses; our…

Thank you, Rodney, and thanks to, everyone, for joining us today. CarGurus delivered a robust third quarter featuring strong subscription revenue growth, U.S. margin expansion and several important product developments. We grew our industry-leading U.S. audience generating nearly three times as many visitor – visits as our next closest competitor and we delivered year-over-year U.S. lead growth of 13%, providing strong value to our dealers and aiding growth in our core listings business. Our business – our brand investments are driving more traffic from direct app and owned channels, and year-to-date leads from these channels have grown 20% year-over-year. Brand remains an important investment area for us, and we launched our new My Car, My Deal campaign in Q3. In our emerging products business, we added a second lender to our consumer finance marketplace, expanding our dealer and consumer credit spectrum coverage. Our international business delivered rapid growth evidenced by our highest total international net dealer additions and triple-digit audience growth. Finally, in October, we held our first-ever user conference, Navigate, where we hosted hundreds of dealers unveiled new products and features. Our core U.S. business is taking share as we earn more of the $14 billion dealers spend annually on digital marketing. The share gains start with our U.S. listings business, where we continue to see a long runway for growth. Our commitment to transparency allows us to track the largest audience in our industry, generating nearly three times the number of visits as our next closest competitor according to Comscore. In the third quarter, over 38 million average monthly unique visitors logged over 103 million average monthly unique sessions on our U.S. site, representing a two-year compounded annual growth rate of 24% and 21%, respectively. Yet we have substantial opportunity to continue increasing our total audience and growing…

Thank you, Langley. I’ll provide a detailed overview of our third quarter performance, followed by our guidance for the fourth quarter and updated outlook for the full-year 2019. Total third quarter revenue was $150.5 million, up 26% year-over-year and roughly $2 million ahead of the high-end of our guidance range. Our marketplace subscription revenue grew 28% versus the year-ago period to $135.5 million, and advertising and other revenue grew 13% year-over-year to $14.9 million. Parsing performance by geography, the U.S. accounted for 94% of total revenue in the third quarter. U.S. revenue rose 24% versus the year-ago period to $141.6 million, while international revenue grew 98% year-over-year to $8.8 million. Turning to paying dealer count. We eclipsed 35,000 total paying dealers in the third quarter. We ended Q3 with 35,199 total paying dealers, representing an increase of 932 from Q2. In the U.S., we finished the quarter with 28,692 paying dealers, up 6% year-over-year and an increase of 261 from the end of the second quarter. This compares to 370 U.S. net dealer additions in the second quarter of this year and 257 net dealer additions in the year-ago quarter. As we stated often, quarter-to-quarter net dealer ads will be variable, but over the long-term, U.S. net dealer ads will likely remain gradual as our paid dealer market share increases. In our international business, we added 671 net new paying dealers in the third quarter. We generated strong performances across each of our commercialized international markets, Canada, the UK and Italy, contributing to this quarter’s net dealer addition total. We finished the third quarter with 6,507 international paying dealers, up 88% versus the year-ago period. As Langley mentioned, U.S. AARSD growth exceeded 20% for the fifth consecutive quarter, driven primarily by increased connection and lead volumes to dealers. U.S. AARSD…

At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Tom White with D.A. Davidson. Please proceed with your question.

Great. Thanks for taking my question. Good evening, guys. Just two on international, if I could. I was hoping maybe, Langley, just help us understand your latest thinking about adding more international markets over the next, say, two to three years versus focusing your international investments on kind of scaling your existing countries more quickly and maybe accelerating their path to profitability? And then just sort of secondarily, can you maybe give us a sense of how UK is doing in terms of their sort of timeline or ramped profitability versus what you saw in the U.S.? Thanks.

So, yes, so let me take the first question, and actually I’ll have Sam handle that second one about UK. I mean, generally, it’s hard for us to predict where we may or may not go in the future internationally. But I think globally, it’s probably safe to say that, our focus will be more on taking the investments we have in the existing markets and trying to push them towards both scale and profitable So, that’s probably the best place to leave it.

And Tom, I’ll pick it up, it’s Sam Zales, on the UK specifically. I think, comparing it to the U.S. businesses, it’s hard to do. The U.S. business is sort of simmered for many years with a different business model. And we aggressively went into these models knowing that in the UK in this market and others, the pain point exists that consumers do not have a transparent experience and dealers are anxiously awaiting a high ROI connection – consumer connection growth partner to work with. I think you heard from Langley’s prepared remarks that we’re growing lead volume in the UK by north of 100%. We’ve done that for quarters consecutively. I think, when you look at the business, we mentioned in our Investor Day that unit economics are moving all in the right direction, which means how we look at the revenue per connection versus the cost per connection, all moving us on that path toward profitability. The lead growth, the visitor growth has been tremendous. And I think most importantly, dealer ads and AARSD all moving in the right direction. So the markers are all moving in the process we wanted them to, you just can’t compare it to the US. I hope that’s a fair answer.

Okay. Thank you.

Our next question comes from the line of Naved Khan with SunTrust. Please proceed with your question.

Yes, thanks a lot. Just a couple of questions. So lead growth of 13% that was quite strong relative to the growth in unique visitors. Can you just maybe call out some of the contributors to how lead volume is exceeding visitation? And then I have a follow-up question after that.

Sure, Naved. Hey, it’s Jason Trevisan. We – a couple of ways. Number one is, we’re always trying to attract a more down funnel customer in both the brand efforts that we do, as well as our, what we call ATA, Algorithmic Traffic Acquisition. And so I think that first point is that, we’re attracting people who are more likely to convert, so we’re getting smarter about that. And as a result, higher percentage of our users are converting. The second is, we’re putting resources against conversion optimization and putting features and design in our site, that is conveying more information to users. So that they’re more informed and more ready to convert – or to connect rather with dealers. So it’s both the intelligence in our spend and acquisition, as well as the experience optimization on our site.

Understood. Okay, that’s helpful. And then on the advertising revenue, I know this is a small line for you. But in terms of the OEM spending, anything that you might be hearing that – about their propensity to spend on advertising? Are they holding back more? Are they taking longer to commit? What are you seeing there?

Hi, Naved, it’s Sam Zales. We’re working with all the OEMs and we’re proud of that. I think we bring a unique value proposition in advertising, which is the largest audience in the marketplace and we’re performing well. For the OEMs, I do think the macro environment of some issues with union activity and other OEM trends in the marketplace are challenging. But we have seen growth year-over-year. We said it would be slower growth in advertising. I think the key thing for our business, as Jason just said, we are prioritizing our business and Langley said it well, we met even forego some ad revenue in the preference for leads and connections to our dealers. Our core business will always be a priority for us. And I think, as we continue to serve every one of the OEMs in the market, we hope that, that our audience and the differentiated value proposition will drive continued growth.

Thank you.

Our next question comes from the line of Daniel Powell with Goldman Sachs. Please proceed with your question.

Great. Thanks. Just two, if I may. The first question is kind of focused on sort of growth versus margin tradeoff. You guys have seen your marketing spend decelerate here, the last couple of quarters and obviously shown a lot of strong margin expansion. Just curious as you look at your opportunities to invest, particularly with that cost per lead coming down year-over-year, what’s your sort of willingness or philosophy around driving growth through putting more dollars to work in those channels? And then secondly, on some of the new products, just curious if you could give us a sense in the quarter for what were some of the strongest contributors in that bucket that you highlighted as being most pronounced this quarter than any other in the past? Thanks.

Yes. Daniel, it’s Langley. So, growth versus margin, obviously, we have really two main businesses, domestic and international. We kind of look at marketing differently in the light of those two markets. Obviously, U.S. is probably a – certainly a little bit more of a – we’re a little farther along. And so, we certainly take seriously our responsibility there to be effective with our marketing. As Jason alluded to it earlier that it’s really not just about driving unique, it’s about driving visitors that convert. And so we spent a lot of time with our different channels to think about how we can drive the lowest funnel customers possible and try to drive converting traffic. So it really isn’t – in really in all our markets, it’s not just about traffic, it’s about traffic that converts and that really turns into leads, that’s what our dealer partners are looking for. Obviously international, we’re probably in a different phase. But even within international, I mean, I think Sam alluded to it that, we take each market individually and we look at our responsibility in a – certainly not in a one year horizon, but in a multi-year horizon to try to bring those two at least break-even and grow them in that fashion. So, you’ll see across all our markets. We take marketing responsibly and kind of try to focus on the best return on investment we can find.

And Daniel, I’ll take part two, it’s Sam Zales, to your question on new products. As mentioned in the remarks, AARSD had a nice impact of new products growing that AARSD number significantly. The two that I’d say would stand out our delivery product that we mentioned a few quarters ago giving dealers an opportunity to display their inventory in a broader segment of the national market. So for consumers who have a limited search set, getting the ability to see a vehicle from another part of the country that can be shipped at either no price or a price point according to the dealers’ requirements and giving them that opportunity to expand their addressable universe has been a great success for our dealer partners. Audience retargeting is a second offering that’s had real nice uptake. Remember, you’re giving them the opportunity – dealers an opportunity to put their inventory in front of the largest automotive audience, purchasing audience in the marketplace, and retarget those consumers back to the dealer website, where they’re looking at only that dealer’s inventory. So that’s had strong uptake as well.

Great. Thank you.

Our next question comes from the line of Mark Mahaney with RBC Capital Markets. Please proceed with your question.

Two please. There – a couple of comments about how you saw the lowest CAC or you’re seeing the lowest now that you’ve seen in – it sounds like a year or two. Any color just to peel back that onion a little bit why do you think that is and do you think that’s sustainable? And then, Langley, I know you talked about this RPM product. Could you just briefly summarize that again? I’m sorry, I jumped over. I heard the very end of it and it sounded intriguing, but I didn’t get the details, if you could please re-spin it? Thank you.

Hey, Mark. So on CAC, I – two broad reactions or comments. One is, yes, it – it’s improving, which we are pleased with, particularly in light of some spend growth. And it’s improving, because we – it’s all done internally. We have a lot of engineering resources and data science resources against it. And we think we are one of the most sophisticated acquirers of consumers out there and we are always improving our capabilities there. And we think, particularly in light of spend growth, that is an accomplishment that a lot of companies aren’t able to do. The second thing I would say is a comment that touches on some Langley just said, which is that it’s not just simply about finding the cheapest connection or the cheapest lead. I mean, that’s certainly a metric that we look at, and we believe we’re getting more efficient and the data would support that. But it’s really about getting high-quality leads that – and connections that we also measure based on how well they convert at the dealer. And so while we’re proud of that and we highlighted it for everyone. We also want to make sure everybody knows that the quality is an important metric that doesn’t always come through in the efficiency data itself.

Yes, Mark, it’s Langley. So RPM, just to summarize, again. Basically, we take a – a set of customers that have been on our site and may have looked at, for instance, Ford F-150 and the Boston zip code and then we can compare that against a dealer that subscribe for our RPM product and retarget that customer offsite. So they may be either on the New York Times or ESPN or on Facebook. And allow that dealer to in real-time with a very targeted ad that we serve up on their behalf, which shows a piece of inventory from their lot. So we think their inventory with that cookie and deliver an ad for that dealers inventory, which deep links into their website. So it’s highly segmented deep links to that inventory and we believe has certainly, the initial results have shown great click-through behavior and great ROI for the dealer. I think, the – obviously, there are many other people that can offer retargeting to a dealer, but I think what’s unique about us is, in fact, our scale, not just the scale, but the segmentation that we can apply to that data. No one in the industry has the scale and the segmentation that we can apply to the dealer with regards to kind of offsite retargeting.

Okay. Thank you, Langley. Thank you, Jason.

Our next question comes from the line of Dan Kurnos with Benchmark Company. Please proceed with your question.

Great, thanks. Good evening. Just, Langley, thanks for the additional color on lead growth and sort of your high-level runway expectations. Not to be greedy, but just can we push for a little more granularity around sort of the sustainability? And since you guys have been really harping on the whole quality conversation here, if we can just sort of think about how you view the runway in terms of, let’s say, higher conversion leads versus generic audience growth. Like once we get past sort of the tougher audience comps, did things rebound more significantly, or they stayed kind of the same level just simply due to the playground that you guys are focusing on?

Yes. I mean, it’s hard for me to predict the future and the lawyers will tell me, I’m not allowed to, so I won’t. But I mean, suffice to say that, I go back to what we said earlier, which is that, I think too many people focus on unique growth. Uniques are uniques. We want people that convert. So our marketing efforts are really focused on traffic that converts via TV or search engine marketing we may do or retargeting. We’re all – we’re really focused on making sure we drive traffic that can generate a lead for a dealer. Now, it’s hard for me to predict. But I think we’ve shown that at least in the last nine months that we’re really focused on that goal, which in turn speaks to, I guess, to your audience or to profitability. And in the U.S. market, trying to show leverage to our business and expanded margins by being even more efficient with our marketing spend.

Got it. And then maybe just one for Sam, just on international. I know, you talked about just sort of improving metrics across the Board. But to an earlier question, just about maybe the traction you’re seeing with it, the AM100, we know that, obviously, I think you guys pointed out the U.S. simmered for a long time. But in the UK, they’re still kind of a sort of testing weight mode. Are you seeing some of those guys start to increase their spend at a more rapid clip, or is there any kind of movements on that front that’s notable, call it, at this point?

Yes. Thanks, Dan. A couple of comments. First, I think in the mature markets like the UK, for international, we’re in that phase that I’ve outlined before. First, we start with expanding inventory and acquiring that to make a consumer experience that has breadth of inventory choice. We then grow in audience. We then sell dealers and then we continue to up-sell them either at higher price points or add more products there. That market obviously is in that phase three to four range. We’ve seen, I think, as you see the success of our paying dealer base grow substantially, that may give you a hint at AM100 and the broad base of dealers in the UK that are finding that when you have a 100%-plus lead growth year-over-year and in audience growth, it’s growing faster than any in the market. They’re subscribing at greater length to the paid subscriptions. And then you’re closing business for them. And over time, we’re doing the same thing we did here in the U.S., which is, when we see that kind of growth, we kindly request the renewal, because we’ve invested in that connection, growth of consumers, the dealers should pay more for those programs. Those are all working to our satisfaction and they’re doing so because we’re driving that really efficient lead in connection growth. And as evidence, you heard about the navigate conference we had here a week and a half ago. We had a significant attendance rate for those AM100 participants, who are excited about what we’re doing. They’re here in person and coming across the pond to participate, says a lot to us about our significance now in a market that we only started three years ago or so. I hope that provides some clarity.

Okay, great. Thank you, Langley. Thanks, Sam.

Our next question comes from the line of Ralph Schackart with William Blair. Please proceed with your question.

Good evening. Sam, maybe just staying with the navigate comments that you had in the previous question. Just curious how the conference perform relative to your expectations, perhaps a sense of how large the conference was purpose. Any customer feedback you could share just overall global platform products be really helpful? Thank you.

Yep. Thanks, Ralph. It performed better than expectations, but it’s our first year doing it. And I think we’re learning a lot talking to other market leaders, online marketplaces, SaaS companies that have a industry conference. The goals and objectives were one to provide thought leadership to executives and dealer management principles to provide both in-market industry knowledge, but also topics of general management, digital marketing, innovation, operations, excellence. So that it was general and industry specific. And then the second goal was networking and allowing the broadest base of senior executives and internet digital marketing principles that dealerships to share best practices with one another and we latched that on top of our dealer executive councils, where we hear from some of the most influential people in the industry. So our attendance was in the hundreds. And that’s more than we might have expected in the first year of trying this. Remember, you’re taking dealers out of an operations environment for a couple of days to come across country and in many cases, we had dealers, actually from Canada, the UK and Italy all join us as well in internationally. And I think the feedback we got was 100% interest in coming back again, which is rare for a survey to come back that way. But most importantly, we fulfilled on that vision of having a single industry conference that they felt was the most unique in terms of thought leadership, not just around industry activity, but broader general management and digital marketing concepts to help them run their business. And that’s opposed to an industry that has other conferences that usually a vendor is selling their wares. We weren’t doing that for that, but we think we accomplished the networking and the brand responsiveness to CarGurus that we would hope for. So thank you for asking about it.

That’s really helpful, Sam. Thanks a lot.

Our next question comes from the line of Ron Josey with JMP Securities. Please proceed with your question.

Great. Thanks for taking the question. Two please. Just on the addition of Westlake and the consumer finance, can you just talk about how many dealers now offer financing on the platform? I think in the past, you talked about Capital One covered 10,000 dealers. And now you have two different providers, just talk about how both providers can work with each other or otherwise? And then as a follow-up, Jason and Langley talking about the efficiencies in CAC and whatnot. When you think longer-term and if these CAC trends hold, how do you think about your longer-term view on sales and marketing that I think your longer-term guidance calls about 45% of revenue. So if CAC trends continue to come down, longer-term, you’re seeing sales and marketing 45% of revenue, do you think that could go lower? Thank you.

Sure. Hey, Ron. So on Westlake. Yes, with Westlake, we now have coverage of about 85% of our used inventory. And that covers tens of thousands of dealers or – yes. And so – and furthermore, though, and I think equally as important as it gives us much better credit – consumer credit spectrum coverage. And so there’s – those are the two key dimensions. And then where there’s overlap, we’re also giving consumers choice, which is sort of the third dimension of consumer value prop. So, while Westlake may not be as prominent a name as Cap One from a consumer perspective, they have really compelling coverage and have been a great partner to us so far. So it’s that second ad is a really important one for our consumer financing business. In terms of CAC and if I heard you, it was sort of sustainability of it and how that leads to long-term sales and marketing leverage. Yes, I would say, there’s another dimension to which we haven’t raised yet, but which is going to be ongoing contributor to this, which is features and products that we can build, which help retain the consumer for longer than just the period when they’re shopping with us, and will allow us to develop a longer-term relationship with them and not have to require them when they go to buy their next car few years down the road. So between ongoing efficiency of our ATA, onsite conversion and consumer attention, we think it’s sustainable. And I would say furthermore, if you look at Comscore data, right now, we have about 40% of deduped consumers that are using auto sites. And so we think there’s runway from a scale perspective as well, in addition to efficiency. What all that means is, that is maybe a somewhat mundane punch line, but it’s that we still believe in our long-term margin targets that we’ve given. And that puts us South of where we are now in the – puts us down in the 40s, so it’s a long way to go. But we want to keep delivering to the consumer. And so we’re not trying to get greedy long-term and not deliver products and messaging to them, that’s going to continue to build brand equity.

Makes a lot of sense. Thank you.

Our next question comes from the line of Nick Jones with Citi. Please proceed with your question.

Hi, thanks for taking my question. I guess, if you could maybe touch on kind of the unaided brand awareness versus the amount of traffic you’re able to get in the U.S.? It’s kind of piggybacking. I know you guys are winning kind of the lion’s share of traffic compared to competitors. Why is that not connecting maybe the unaided or aided awareness when I look back at kind of the Analyst Day slide deck, what some of the competitors are doing, and I guess, how do we think about that opportunity as far as where does the benefit come, is it more traffic? Is it lower CAC? I guess, if you could just add some color there?

Sure. We think of brand building as a marathon, not a sprint, and you got to build it up over time. And I think what we’ve come to appreciate is, it’s not necessarily how much a company is spending in year, but it’s the cumulative effect of how much they’ve spent over time. And to state the obvious, we’re the newest entrant among the large players in this in the U.S.. And so, others had a lot more cumulative spend than we did and we’re building ours now. And we’ve seen a lot of progress in the 2.5 now years, two years that we’ve been doing it. And what does it result in? I mean, it results in all the things you said. It results in traffic, it results in brand affinity, it results in we think trust with our site, which leads to higher quality and more trusting leads to dealers. And so it’s goodness to our dealers as well. And so it’s – we firmly believe in the value that it’s driving us right now and the value that it’s accumulating over time.

Thank you.

Our next question comes from the line of Brad Erickson with Needham & Company. Please proceed with your question.

Thanks. I just had a couple of follow-ups. First, when you’re talking about driving stronger conversion, which you’ve mentioned several times on the call, I guess, in the context of attribution, can you talk about what’s your renewal discussions are sounding like with dealer customers? And specifically, I guess, what are the tools that you’re using to sort of highlight that conversion to those customers as you look to get paid for this lead growth you’re talking about? And then second, can you just remind us what the portion of your traffic comes from either indirect channels overall or just SEO, would be great? Thanks.

Sure. We’ll start with the second one. And we have not broken down specific channels in the Investor Day deck. You see a breakout of, I want to say, 12 to 15 discrete channels that are primary sources of consumers. We did give some data on this call. As you heard that our lead growth from owned channels of app and direct outpaced our overall growth. So that gained – continues to gain more share, which, as you would expect, that certainly leads to increased efficiency. And – but I would say, there are a couple of slides in the Investor Day deck that you can sort of use the ruler go to the y-axis and estimate kind of different channel percentages.

And, Brad, I’ll – it’s Sam Zales I’ll take the second one, which is about renewals. How is that going for us? I think, in the AARSD numbers, you can see the continued growth and get the sense that we’re having success. The renewal calls, I think, I mentioned on this call before, they’re not easy for any dealer to say your price is increasing. And by that, it’s an emotional reaction no matter what it is. I think the two things we’ve talked about on the call, when leads and connections grow, it’s not a price increase. We’re increasing AARSD based on the volume of consumer connections that we’re driving. Number two is, we’re pretty certain that we provide the highest return on investment, marketing and customer acquisition program in our market. And we’re doing that, as you said, through attribution and doing that in a number of ways. One is, we partner with a number of CRM companies, so that dealers have an opportunity to see our connection volume comparative to our competitors. When we’re the largest audience and we believe we’re driving the largest connection volume, it’s pretty easy to see a comparative and make a decision for where I want to spend my marketing dollars. Number two is, we’re doing significant attribution testing with DMS data. So we’ll pull data from back ends to look in aggregate at what close rates we’re seeing, not just on our leads, which are phone calls, e-mails and text chat conversions, but it is clicks to dealer websites, clicks on mapping directions, and in many cases, it’s looking at walk-in traffic. So we’re now looking at DMV data, third-party cookie data to provide information in an aggregate level on our close rates, which demonstrate this return on investment. And we’ll be even looking at third-party research studies to understand, where we compare to the market. So for all those reasons, we’re seeing that AARSD growth and we’re seeing the success of the renewal process.

That’s great. Thanks.

Our next question comes from the line of Marvin Fong with BTIG. Please proceed with your question.

Good evening. Thanks for taking my question. Just one for me. I think everything else has been answered. Just on the social ad product, could you perhaps elaborate a little more on how you view the size of that market? And how the product your go-to-market strategy there, how the product might be priced or structured? Thanks.

Yes. Marvin, it’s Langley. So you had two questions. The size of market, you should do your own research, but I don’t think there’s a dealer you could talk to that isn’t top of mind. I mean, I think dealers, listen, we all get that fundamentally, there’s probably three places for a dealer to get customers. One is – one, in marketplaces like ourselves. The other one, to give a plug for Google, as they certainly can go run their AdWords programs, which most of them do. And then lastly, it’s it’s social. It’s Facebook. I mean, that’s the biggest – second biggest, probably second biggest platform for these – for them to be exploring outside of marketplaces. I think what we find as a compelling value proposition for a dealer is, with all due respect to Facebook, Facebook is a great platform for reach. It’s not particularly segmented, unlike Google. So for Facebook to be truly effective, you need to be able to segment that audience against make, model, ZIP, trim. And for a dealer to be able to do that effectively, they need to get their hands on data and we’re the biggest data source in the industry by close to a factor of three. So not only do we have the biggest data set, but I would – with all due respect to our competitors, I believe we have probably the most sophisticated data analytics and segmentation capabilities. So we have the biggest audience. We have the most sophisticated segmentation. And in the end of all, we can drive a lot of – and deep linking. I mean, these ads are highly relevant to what the customer had previously been looking for and they deep link straight into the dealer’s inventory. So I think it’s a very effective product. And again, you should do your own research. But there’s probably not a dealer you could talk to that says that – of the things they’re excited and interested about, social is absolutely top of their list. Oh, the other thing you said – you asked about how it’s going to be – it’s going to be a subscription product. So again, kind of in line with our are thinking about revenue streams that we like subscription businesses, because they’re – typically, if you do your job well, they’re evergreen revenue sources. So it’s going to be a subscription product.

Great. Thanks, guys, and congrats on the quarter.

Our final question comes from the line of Derek Glynn with Consumer Edge Research. Please proceed with your question.

Hey, guys, thanks for taking our questions. Just a follow-up on the new brand advertising. Can you give us a sense of the size and scope of that campaign and how it compares to prior campaigns you’ve done just in terms of dollars invested?

Hey, Derek, it’s Jason. No, we don’t break out our spend by discrete channels like that or discrete campaigns. I would say, the – what little color I would give on it is that, we’re increasingly emphasizing to consumers how we’re different. And we think that we’re quite different, as hopefully everyone on this call understands from a business model perspective and a consumer experience and dealer experience perspective, but we also recognize that that’s not always obvious to people who haven’t shopped for car in the last few years. And so we’re increasing the – we’re putting that more into relief in our latest campaign.

Okay, got it. And then can you shed any more light on the free cash flow performance during the quarter? It just looked like that was a nice step-up from prior quarters. I’m wondering if there’s any puts and takes there, if that’s a good run rate to think about going forward? Thanks, guys.

I would say rarely is a single quarter, especially from a cash flow perspective, good to use for run rate purposes. A fair amount of it is timing with some of our larger accounts payable. So I would look at it over a number of quarters. And yes, I would look at margins – U.S. segment margins as the better barometer for run rate. And even that can be tough on a quarterly basis because of the timing of some of our marketing spend given shopping patterns. You can expect consistency with the share – net share settling that we’re doing, and our CapEx is pretty predictable. So I’d stop there.

All right. Great, guys. Thanks for all come through.

We have reached the end of our question-and-answer session. And I would like to turn the call over back to Langley Steinert for any closing remarks.

So thanks, everyone, for dialing in this evening. I appreciate your questions, and thanks for your continued interest in CarGurus. Good evening.

This concludes today’s teleconference. You may now disconnect your lines at this time. Thank you for your participation, and have a wonderful day.