Reports Record Revenue of $209 million, an
increase of 142%
Carvana Co. (NYSE: CVNA), a leading eCommerce platform for
buying used cars, today announced financial results for its second
quarter ended June 30, 2017. Carvana’s complete second 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.
“Carvana accelerated its growth in retail unit sales and
revenues to 145% and 142%, respectively, during a very strong
second quarter. We are seeing tremendous growth in both our
existing and new markets as we continue our rapid expansion
nationwide. We also increased our gross profit per unit, both
sequentially and as compared to last year,” said Ernie Garcia,
Carvana co-founder and CEO. “Our mission is to change the way
people buy cars. More and more consumers are turning to Carvana for
a seamless, hassle-free car buying experience. We are scaling our
business to meet the growing demand, and with the recent
announcement of our launch in Phoenix we are excited to introduce
the simplicity of online car buying to the Southwest.”
Second Quarter 2017 Financial Summary
Carvana achieved significant unit and revenue growth in Q2 2017,
coupled with increased total gross profit per unit. All financial
comparisons are versus Q2 2016, unless otherwise noted.
- Retail units sold totaled 10,682, an
increase of 145%
- Revenue totaled $209.4 million, an
increase of 142%
- Total gross profit was $16.0 million,
an increase of 166%
- Total gross profit per unit was $1,501,
an increase of $332 per unit compared to Q1 2017
- Net loss was $38.9 million, an increase
of 115%
- EBITDA margin was (16.1%), an
improvement from (21.6%) in Q1 2017
- GAAP basic and diluted net loss per
Class A share was $0.28 based on 15 million shares of Class A
common stock outstanding
- Adjusted net loss per Class A share, a
non-GAAP measure, was $0.28, based on 136.7 million adjusted shares
of Class A common stock outstanding assuming the exchange of all
outstanding LLC Units for shares of Class A common stock
- We opened 7 new markets, bringing our
end-of-quarter total to 30
- We acquired fellow automotive tech
disruptor Carlypso
- On Aug. 4, 2017, we upsized our
inventory facility with Ally Bank to $275 million through Dec. 31,
2017 and then $350 million through Dec. 31, 2018
Q3 and Fiscal 2017 Outlook
We anticipate further unit and revenue growth, as well as total
gross profit per unit and EBITDA margin improvement. For Q3 2017,
we expect:
- Retail unit sales of 11,500 – 13,000,
an increase of 129% – 159% year-over-year
- Total revenue of $225 million – $255
million, an increase of 128% – 158% year-over-year
- Total gross profit per unit of $1,625 –
$1,725
- EBITDA margin of (14%) – (16%)
We are reiterating our FY 2017 guidance as follows:
- Retail unit sales of 44,000 – 46,000,
an increase of 135% – 145% year-over-year
- Revenue of $850 million – $910 million,
an increase of 133% – 149% year-over-year
- Total gross profit per unit of $1,475–
$1,575
- EBITDA margin of (14%) – (16%)
- 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 Q3 2017 and FY
2017.
Conference Call Details
Carvana will host a conference call today, Aug. 8, 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
(877) 270-2148 or (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,
Aug. 15, 2017, by dialing (877) 344-7529 or (412)
317-0088 and entering passcode 10109151#.
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
Car Vending Machines.
For further information on Carvana, please visit
www.carvana.com, or connect with us on Facebook, Instagram or
Twitter.
CARVANA CO. AND
SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES(Unaudited)(In thousands, except per share
amounts)
Adjusted Net Loss and 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 and relative to our competitors. A
reconciliation of adjusted net loss to net loss attributable to
Carvana Co., the most directly comparable GAAP measure, and the
computation of adjusted net loss per share are as follows:
Three MonthsEnded June 30,
2017
Numerator: Net loss attributable to Carvana Co. $ (14,542 ) Add:
Net loss attributable to non-controlling interests (1) (24,328 )
Adjusted net loss attributable to Carvana Co. $ (38,870 )
Denominator: Weighted-average shares of Class A common stock
outstanding 15,026 Adjustments:(2) Assumed exchange of LLC Units
for shares of Class A common stock (1) 121,666 Adjusted
shares of Class A common stock outstanding 136,692 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 each period presented under the terms
of the exchange agreement.(2) Excludes approximately 0.5 million
restricted stock awards and 0.5 million stock options outstanding
at June 30, 2017, because they were determined to be
anti-dilutive.
EBITDA and EBITDA Margin
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 June 30, 2017
March 31, 2017 Net loss $ (38,870 ) $ (38,439 ) Depreciation
and amortization expense 2,584 2,061 Interest expense 2,507
2,059 EBITDA $ (33,779 ) $ (34,319 ) Total revenues $
209,365 $ 159,073
EBITDA Margin (16.1 )% (21.6
)%
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Investor Relations:The Blueshirt
Groupinvestors@carvana.comorMedia Contact:Olson EngageKate
Carvercarvana@olson.com
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