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Acquisitions (Tables) | 9 Months Ended
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Sep. 30, 2021
Business Combinations [Abstract] |
Summary of Total Consideration Transferred | The following table presents the total consideration transferred.
|  | Consideration Transferred |
Cash paid, net of cash acquired |  | $ | 64,273 |
Cash acquired |  |  | 5,237 |
Cash consideration |  |  | 69,510 |
Stock consideration |  |  | 103,645 |
Total consideration transferred |  | $ | 173,155 |
Summary of Preliminary Purchase Price Allocation | The Company’s 51% interest in CarOffer represents a controlling financial interest in the entity as the minority interest holders only have protective rights such that CarOffer is consolidated as of the date of Closing. The following table presents the preliminary purchase price allocation recorded in the Company’s Unaudited Condensed Consolidated Balance Sheet as of the date of Closing, which is subject to finalization for estimates of the fair value of assets acquired and liabilities assumed as of the date of Closing, including, but not limited to tangible assets, intangible assets and tax-related items, and the related tax effects of any changes made:
|  | Adjusted Fair Value at Date of Acquisition |
Cash and cash equivalents |  | $ | 5,237 |
Accounts receivable |  |  | 16,119 |
Inventory |  |  | 2,338 |
Prepaid expenses, prepaid income taxes and other current assets |  |  | 95 |
Property and equipment, net |  |  | 198 |
Intangible assets (1) |  |  | 104,100 |
Goodwill (2) |  |  | 127,500 |
Operating lease right-of-use assets |  |  | 709 |
Accounts payable |  |  | (8,888 | )
Accrued expenses, accrued income taxes, and other current liabilities |  |  | (15,513 | )
Operating lease liabilities - current |  |  | (230 | )
Operating lease liabilities - non-current |  |  | (479 | )
Redeemable noncontrolling interest (3) |  |  | (58,031 | )
Total consideration transferred |  | $ | 173,155 |
(1) Identifiable definite-lived intangible assets were comprised of developed technology, brand, and customer relationships of $63,000, $23,100, and $18,000, respectively, with estimated useful lives of 3 years, 11 years, and 3 years, respectively, which will be amortized on a straight-line basis over their estimated useful lives. The fair value of the developed technology has been estimated using the multi-period excess earnings method which is a variation of the income approach. The fair value of the brand and customer relationships has been estimated using the relief from royalty method and the with/without approach, respectively. (2) Goodwill represents the excess value of the purchase price over net assets acquired, primarily attributable to adding wholesale vehicle acquisition and selling capabilities to CarGurus’ portfolio of dealer offerings. All goodwill is assigned to the United States reporting segment. For tax purposes, $28,991 of the goodwill is deductible under IRC Section 197 upon finalization of the transaction cost study. In connection with the transaction, the Company accelerated certain stock options deemed to be outside of consideration transferred. Therefore, the Company recognized an additional $1,229 of stock-based compensation expense during the nine months ended September 30, 2021. (3) The fair value of the redeemable noncontrolling interest has been estimated using the Least Square Monte Carlo Simulation approach. Significant inputs include market price of risk, volatility, correlation and risk-free rate.
Unaudited Pro Forma Consolidated Financial Information | The following unaudited pro forma consolidated financial information combines the unaudited results of the Company for the three and nine months ended September 30, 2021 and 2020 and the unaudited results of CarOffer for the three and nine months ended September 30, 2021 and 2020, and assumes that the CarOffer Acquisition, which closed on January 14, 2021, was completed on January 1, 2020 (the first day of fiscal year 2020). The pro forma consolidated financial information has been calculated after applying the Company’s accounting policies and includes adjustments for amortization expense of acquired intangible assets, transaction-related costs, and compensation expense for ongoing share-based compensation arrangements replaced, together with the consequential tax effects. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the CarOffer Acquisition actually taken place on January 1, 2020. In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after September 30, 2021, including, but not limited to revenue enhancements, cost savings or operating synergies that the combined Company may achieve as a result of the CarOffer Acquisition.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Revenue |  | $ | 222,915 |  |  | $ | 147,472 |  |  | $ | 614,970 |  |  | $ | 409,007 |
Consolidated net income (1) |  | $ | 29,267 |  |  | $ | 26,487 |  |  | $ | 75,897 |  |  | $ | 20,965 |
(1) For the three months ended September 30, 2021, pro forma consolidated net income includes $7,286 and $1,083 related to intangibles amortization and stock-based compensation for CarOffer, respectively. For the three months ended September 30, 2020, pro forma consolidated net income includes $7,275 and $1,083 related to intangibles amortization and stock-based compensation for CarOffer, respectively. For the nine months ended September 30, 2021, pro forma consolidated net income includes $21,836 and $9,813 related to intangibles amortization and stock-based compensation for CarOffer, respectively. For the nine months ended September 30, 2020, pro forma consolidated net income includes $21,825 and $9,628 related to intangibles amortization and stock-based compensation for CarOffer, respectively.

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- Definition Tabular disclosure of pro forma results of operations for a material business acquisition or series of individually immaterial business acquisitions that are material in the aggregate. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2) -URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1392-128463 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(3) -URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1392-128463 + Details
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- Definition Tabular disclosure of a material business combination completed during the period, including background, timing, and recognized assets and liabilities. This table does not include leveraged buyouts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1486-128463 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1392-128463 + Details
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- Definition Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=123413009&loc=d3e4845-128472 + Details
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