Reports Record Revenue of $159 million, an increase of 118%
Carvana Co. (NYSE: CVNA), a leading eCommerce platform for
buying used cars, today announced financial results for its first
quarter ended March 31, 2017. Carvana’s complete first quarter 2017
financial results and management commentary can be found by
accessing the Company’s shareholder letter at:
https://investors.carvana.com/financial-reports/sec-filings.
Beginning with today’s financial report, the Company intends to use
its investor relations website, investors.carvana.com, as a
disclosure method.
“We are excited to announce record revenue in our first earnings
report as a newly public company. Our strong performance this
quarter reflects a significant increase in retail units, as well as
expansion into new markets. During the quarter we made important
enhancements to the customer experience through new product
development, resulting in ongoing optimization from website through
vehicle delivery,” said Ernie Garcia, Carvana founder and CEO. “We
continue to see increased consumer adoption of online car buying
across our markets, charting a clear path to consistent growth
within the $710 billion U.S. used auto market. Carvana’s unique
business model includes proprietary technology and assets, like the
vending machines, that deliver customer experiences that position
us to execute against our aggressive growth plans.”
First Quarter 2017 Financial Summary
We achieved significant unit and revenue growth in Q1 2017,
coupled with increased total gross profit per unit. All financial
comparisons are versus Q1 2016, unless otherwise noted.
- Retail units sold totaled 8,334, an
increase of 120%
- Revenue totaled $159.1 million, an
increase of 118%
- Total gross profit was $9.7 million, an
increase of 146%
- Total gross profit per unit was $1,169,
an increase of $123 per unit
- Net loss was $38.4 million, an increase
of 122%
- EBITDA margin was (21.6%), an
improvement from (30.6%) in Q4 2016 and flat versus Q1 2016
- GAAP basic and diluted net loss per
Class A unit was $0.44, based on 103.3 million Class A units
outstanding
- Adjusted net loss per Class A share, a
non-GAAP measure, was $0.28, based on 136.8 million shares of Class
A common stock outstanding assuming the exchange of all outstanding
LLC Units for shares of Class A common stock and the issuance of
15.0 million shares of Class A common stock pursuant to our initial
public offering
- We opened 2 new markets, bringing our
end-of-quarter total to 23
Q2 and Fiscal 2017 Outlook
We anticipate further unit and revenue growth, as well as total
gross profit per unit improvement. For Q2 2017, we expect:
- Retail unit sales of 10,000 –
10,500
- Total revenue of $193 million - $203
million
- Total gross profit per unit of $1,375 –
$1,425
- EBITDA margin of (18%) - (18.5%)
For fiscal year 2017, we expect:
- Retail unit sales of 44,000 – 46,000,
an increase from 18,761 in 2016
- Revenue of $850 million – $910 million,
an increase from $365 million in 2016
- Total gross profit per unit of $1,475 -
$1,575, an increase from $1,023 in 2016
- EBITDA margin of (14%) - (16%), an
improvement from (23.2%) in 2016
- 16 – 18 new market openings, bringing
our end-of-year total to 37 – 39
For more information regarding the non-GAAP financial measures,
please see the reconciliations of our non-GAAP measurements to
their most directly comparable GAAP-based financial measurements
included at the end of this press release. Guidance for EBITDA
margin excludes depreciation and amortization expense and interest
expense. We have not reconciled EBITDA guidance to GAAP net loss as
a result of the uncertainty regarding, and the potential
variability of, interest expense. Accordingly, a reconciliation of
the non-GAAP financial measure guidance to the corresponding GAAP
measure is not available without unreasonable
effort. Depreciation and amortization expense, which is a
component of the reconciliation between EBITDA and GAAP net loss,
is expected to be between 1.0% and 1.5% of total revenues for both
Q2 2017 and FY 2017.
Conference Call Details
Carvana will host a conference call today, June 6, 2017, at
2 p.m. PDT (5 p.m. EDT) to discuss financial results. To
participate in the live call, analysts and investors should dial
(412) 902-6510. A live audio webcast of the conference call along
with supplemental financial information will also be accessible on
the company's website at investors.carvana.com. Following the
webcast, an archived version will be available on the website for
one year. A telephonic replay of the conference call will be
available until Tuesday, June 13, 2017, by dialing (877)
344-7529 or (412) 317-0088 and entering passcode
10107789#.
Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements reflect Carvana’s current
expectations and projections with respect to, among other things,
its financial condition, results of operations, plans, objectives,
future performance, and business. These statements may be preceded
by, followed by or include the words "aim," "anticipate,"
"believe," "estimate," "expect," "forecast," "intend," "likely,"
"outlook," "plan," "potential," "project," "projection," "seek,"
"can," "could," "may," "should," "would," "will," the negatives
thereof and other words and terms of similar meaning.
Forward-looking statements include all statements that are not
historical facts. Such forward-looking statements are subject to
various risks and uncertainties. Accordingly, there are or will be
important factors that could cause actual outcomes or results to
differ materially from those indicated in these
statements. Among these factors are risks related to: (1) our
history of losses and ability to maintain profitability in the
future, (2) our ability to effectively manage our rapid growth, (3)
our limited operating history, (4) the seasonal and other
fluctuations in our quarterly operating results, (5) our
relationship with DriveTime Automotive Group, Inc.,(6) our
management’s accounting judgments and estimates, as well as changes
to accounting policies, (7) our ability to compete in the highly
competitive industry in which we participate, (8) the changes in
prices of new and used vehicles, (9) our ability to acquire
desirable inventory, (10) our ability to sell our inventory
expeditiously, (11) our ability to sell and generate gains on the
sale of automotive finance receivables, (12) our dependence on the
sale of automotive finance receivables for a substantial portion of
our gross profits, (13) our reliance on potentially fraudulent
credit data for the automotive finance receivables we sell, (14)
our ability to successfully market and brand our business; (15) our
reliance on Internet searches to drive traffic to our website, (16)
our ability to comply with the laws and regulations to which we are
subject, (17) the changes in the laws and regulations to which we
are subject, (18) our ability to comply with the Telephone Consumer
Protection Act of 1991;(19) the evolution of regulation of the
Internet and eCommerce, (20) our ability to maintain reputational
integrity and enhance our brand, (21) our ability to grow
complementary product and service offerings, (22) our ability to
address the shift to mobile device technology by our customers,
(23) risks related to the larger automotive ecosystem, (24) the
geographic concentration where we provide services, (25) our
ability to raise additional capital, (26) our ability to maintain
adequate relationships with the third parties that finance our
vehicle inventory purchases, (27) the representations we make in
our finance receivables we sell, (28) our reliance on our
proprietary credit scoring model in the forecasting of loss rates,
(29) our reliance on internal and external logistics to transport
our vehicle inventory, (30) the risks associated with the
construction and operation of our inspection and reconditioning
centers, fulfillment centers and vending machines, including our
dependence on one supplier for construction and maintenance for our
vending machines, (31) our ability to protect the personal
information and other data that we collect, process and store, (32)
disruptions in availability and functionality of our website, (33)
our ability to protect our intellectual property, technology and
confidential information, (34) our ability to defend against claims
that our employees, consultants or advisors have wrongfully used or
disclosed trade secrets or intellectual property, (35) our ability
to defend against intellectual property disputes, (36) our ability
to comply with the terms of open source licenses, (37) conditions
affecting automotive manufacturers, including manufacturer recalls,
(38) our reliance on third party technology to complete critical
business functions, (39) our dependence on key personnel to operate
our business, (40) the costs associated with becoming a public
company, (41) the diversion of management’s attention and other
disruptions associated with potential future acquisitions, (42) the
legal proceedings to which we may be subject in the ordinary course
of business, (43) potential errors in our retail installment
contracts with our customers that could render them unenforceable
and (44) risks relating to our corporate structure and tax
receivable agreements.
There is no assurance that any forward-looking statements will
materialize. You are cautioned not to place undue reliance on
forward-looking statements, which reflect expectations only as of
this date. Carvana does not undertake any obligation to
publicly update or review any forward-looking statement, whether as
a result of new information, future developments, or otherwise.
Use of Non-GAAP Financial
Measures
As appropriate, we supplement our results of operations
determined in accordance with U.S. generally accepted accounting
principles (“GAAP”) with certain non-GAAP financial measurements
that are used by management, and which we believe are useful to
investors, as supplemental operational measurements to evaluate our
financial performance. These measurements should not be considered
in isolation or as a substitute for reported GAAP results because
they may include or exclude certain items as compared to similar
GAAP-based measurements, and such measurements may not be
comparable to similarly-titled measurements reported by other
companies. Rather, these measurements should be considered as an
additional way of viewing aspects of our operations that provide a
more complete understanding of our business. We strongly encourage
investors to review our consolidated financial statements included
in publicly filed reports in their entirety and not rely solely on
any one, single financial measurement or communication.
Reconciliations of our non-GAAP measurements to their most
directly comparable GAAP-based financial measurements are included
at the end of this press release.
About Carvana Co.
Founded in 2012 and based in Phoenix, Carvana’s (NYSE: CVNA)
mission is to change the way people buy cars. By removing the
traditional dealership infrastructure and replacing it with
technology and exceptional customer service, Carvana offers
consumers an intuitive and convenient online automotive retail
platform, with a fully transactional website that enables consumers
to quickly and easily buy a car online, including finding their
preferred vehicle, qualifying for financing, completing the
purchase and loan with signed contracts, and receiving delivery or
pickup of the vehicle from one of Carvana’s proprietary automated
vending machines.
For further information on Carvana, please visit
www.carvana.com, or connect with us on Facebook, Instagram or
Twitter.
CARVANA GROUP, LLC AND
SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES(Unaudited)(In thousands, except per share
amounts)
Adjusted Net Loss to Net Loss and Computation of Adjusted Net
Loss per Share
Adjusted net loss and adjusted net loss per share are
supplemental measures of operating performance that do not
represent and should not be considered alternatives to net loss and
net loss per share, as determined under GAAP. We believe that
adjusted net loss and adjusted net loss per share supplement GAAP
measures and enable us to more effectively evaluate our performance
period-over-period. A reconciliation of adjusted net loss to net
loss, the most directly comparable GAAP measure, and the
computation of adjusted net loss per share are as follows:
Three MonthsEnded March
31,
(in thousands, except per share amounts)
2017 Numerator: Net
loss $ (38,439 ) Add: Net loss attributable to non-controlling
interests (1) — Adjusted net loss attributable to Carvana
Co. $ (38,439 ) Denominator: Weighted-average shares of
Class A common stock outstanding - basic — Adjustments: Assumed
exchange of LLC Units for shares of Class A common stock (1)
121,760 Assumed issuance of Class A common stock in connection with
the initial public offering (2) 15,000 Adjusted shares of
Class A common stock outstanding
136,760
Adjusted net loss per share $ (0.28 ) (1) Assumes exchange
of all outstanding LLC Units for shares of Class A common stock
retroactively applied as if the exchanges had occurred at the
beginning of the period presented under the terms of the exchange
agreement. (2) Adjustment to give effect to 15,000,000 shares
issued in connection with the initial public offering retroactively
applied as if the shares had been issued at the beginning of the
period.
Net Loss to EBITDA
EBITDA is a non-GAAP supplemental measure of operating
performance that does not represent and should not be considered an
alternative to net loss or cash flow from operations, as determined
by GAAP. EBITDA is defined as net loss before interest expense,
income tax expense and depreciation and amortization expense. We
use EBITDA to measure the operating performance of our business,
excluding specifically identified items that we do not believe
directly reflect our core operations and may not be indicative of
our recurring operations. EBITDA may not be comparable to similarly
titled measures provided by other companies due to potential
differences in methods of calculations. A reconciliation of EBITDA
to net loss, the most directly comparable GAAP measure, is as
follows:
Three Months Ended
Year Ended December 31,
March 31,2017
December 31,2016
March 31,2016
2016 2015 2014 Net loss $
(38,439 ) $ (35,694 ) $ (17,325 ) $ (93,112 ) $ (36,780 ) $
(15,238 ) Depreciation and amortization expense 2,061 1,638 866
4,658 2,800 1,706 Interest expense 2,059 1,356
710 3,587 1,412 108 EBITDA $ (34,319 )
$ (32,700 ) $ (15,749 ) $ (84,867 ) $ (32,568 ) $ (13,424 )
Total revenues $ 159,073 $ 106,827 $ 72,951 $
365,148 $ 130,392 $ 41,679 EBITDA Margin (21.6
%) (30.6 %) (21.6 %) (23.2 %) (25.0 %) (32.2 %)
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Investor Relations:The Blueshirt
Groupinvestors@carvana.comorMedia Contact:Olson EngageKate
Carvercarvana@olson.com
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