Q2 Revenues up 145% YoY with record unit
sales and significant improvement to UK Retail GPU
- Record revenues of £333m in Q2, up 145% YoY
driven by substantial UK retail sales growth
- Vehicles sold up 124% YoY to 23,955 in Q2
as market share continues to grow considerably
- Retail units sold in Q2 at record 17,033,
up 94% YoY despite the tough economic backdrop
- Material improvement to UK Retail GPU in Q2
at £309, up by £185 in comparison to Q1 2022
- Considerable progress in UK reconditioning
capability resulting in record website inventory
- Realignment plan successfully implemented
and strategic review of EU business underway
- Appointment of Paul Woolf to succeed
Stephen Morana as Chief Financial Officer in Q4 2022
- Balance sheet remains strong with over
£400m of cash and £175m of self-financed inventory
- Remain focused on cash preservation and
materially reducing additional funding requirement
Cazoo Group Ltd (NYSE: CZOO) (“Cazoo” or “the Company”),
Europe’s leading online car retailer, which makes buying and
selling a car as simple as ordering any other product online, has
announced its financial results for the three months and six months
ended June 30, 2022.
Alex Chesterman OBE, Founder & CEO of Cazoo,
commented, “I am very proud of what we have accomplished so far
in 2022 as we continue to transform the car buying and selling
experience for consumers. We achieved record revenues and retail
unit sales in Q2 and grew our market share significantly, despite
the tough macroeconomic backdrop, as the consumer shift towards
online car buying continues to accelerate.
Despite having launched only two and half years ago, we have now
sold over 80,000 retail units entirely online, including over
30,000 in the first half of this year and we achieved record
revenues in H1 of £628m, up 153% YoY, as consumers continue to
embrace the selection, value, transparency and convenience of our
proposition.
Whilst our growth remains very robust, we are laser-focused on
maintaining our strong balance sheet, preserving cash and
materially reducing the need for further funding as we drive
towards profitability. We are encouraged by the positive trajectory
of our UK retail GPU in Q2, which was up by 150% vs Q1 2022 and we
are well positioned to continue this positive momentum in the
second half of the year and beyond.
I am particularly pleased that despite the weak economic
environment affecting growth in other retail businesses and
sectors, we have maintained our strong momentum into Q3 with record
retail unit sales and revenues in July, whilst also growing our UK
website inventory to record levels, highlighting the progress we
have made with our reconditioning capabilities.
Our balance sheet remains strong with over £575m of cash and
self-financed inventory at the end of June. However, given our
focus on cash preservation and achieving profitability, we have
initiated a full strategic review of our business in mainland
Europe, with a view to further reducing cash burn and aiming to
ensure that we have an executable plan which materially reduces any
further external funding requirement.”
Stephen Morana, Chief Financial Officer of Cazoo, added,
“Our Q2 performance gives me confidence in our plan to position
Cazoo for profitable growth, with a relentless focus on improving
unit economics, reducing costs and maximising liquidity. We
continued to see significant revenue growth of 145% YoY in Q2 to
£333m, driven by a 124% increase in vehicles sold and solid uptake
of our finance and ancillary products. Our revenues over the first
half of the year grew more than 150% YoY to £628m, as we sold a
record 30,386 retail units in the period.
Whilst our Q1 UK retail GPU was impacted by investments made
last year, we saw a marked improvement in Q2 of £309, compared to
£124 in Q1 2022 and we expect further considerable progress in the
second half of the year. At the same time, we have started our
process to take costs out of our business and reduce our SG&A
per unit, as we make progress towards reaching cash flow
breakeven.”
Summary Results
Six months ended June
30,
Three months ended June
30,
2022 (unaudited)
2021 (unaudited)
Change
2022 (unaudited)
2021 (unaudited)
Change
Vehicles Sold
43,668
20,454
+113%
23,955
10,692
+124%
Retail
30,386
16,557
+84%
17,033
8,772
+94%
Wholesale
13,282
3,897
+241%
6,922
1,920
+261%
Revenue (£m)1
628
248
+153%
333
136
+145%
Retail (£m)1
502
208
+141%
271
112
+142%
Wholesale (£m)
83
13
+549%
41
7
+486%
Other (£m)1
43
27
+57%
21
17
+24%
UK Retail GPU (£)2
226
315
(89)
309
467
(158)
Gross Profit (£m)
3
11
(8)
2
8
(6)
Gross Margin (%)
0.5%
4.6%
(4.1)%pts
0.5%
5.6%
(5.1)%pts
Loss for the period (£m)
(243)
(102)
(141)
Adj. EBITDA (£m)3,4
(175)
(69)
(106)
Adj. EBITDA Margin (%)5
(27.9%)
(27.9%)
+0.0%pts
1 Retail revenue’ excludes £6m of sales in H1 2022 where Cazoo sold
vehicles as an agent for third parties and only the net commission
received from those sales is recorded within ‘Retail revenue’ (H1
2021: £7m). ‘Other revenue’ includes ancillary products,
subscription, remarketing and servicing income.
2
UK Retail GPU (Gross Profit per Unit) is derived from UK retail and
ancillary product revenues, divided by UK retail units sold (net of
returns). ‘UK Retail GPU’ was previously referred to as ‘Retail
GPU’ as we did not have non-UK retail revenues prior to December
2021. H1 2022 UK Retail GPU excludes de minimis EU retail unit
sales and EU gross loss.
3
Adjusted EBITDA is defined as loss for the period, adjusted for
tax, finance income/expense, depreciation, amortization and
impairment of intangible assets, share based payment expense, fair
value movement and foreign exchange movement in warrants and
convertible notes and exceptional items.
4
For a reconciliation to the most directly comparable measure under
International Financial Reporting Standards (“IFRS”) see the
section titled “Adjusted EBITDA Reconciliation”.
5
Adjusted EBITDA margin represents the ratio of Adjusted EBITDA to
Revenue.
First Half 2022 Financial and Strategic highlights
- Record revenues of £628 million, up 153% YoY, driven by strong
retail revenue growth
- Vehicles sold up 113% YoY to 43,668 as the Company’s strong
growth trajectory continued
- UK Retail GPU of £226, impacted by H2 2021 investments in
reconditioning and car buying launch
- Continued to improve reconditioning capabilities with record UK
website inventory at June 30, 2022
- Raised $630 million from the issuance of convertible notes to
support continued investment in growth
Second Quarter 2022 Financial and Strategic
highlights
- Revenue up 145% YoY to £333 million, driven by strong retail
and wholesale revenue growth
- Vehicles sold up 124% YoY to 23,955 as demand continues to grow
despite a tough economic backdrop
- UK Retail GPU of £309 in Q2 2022, 2.5x higher than Q1 2022 as
we generate efficiencies across business
- Strong momentum from car buying channel with over 30% of retail
sales sourced directly from consumers
- Successfully implemented realignment plan to right-size the
business and position us for profitable growth
Cash flow and liquidity
- Cash position of £401m as of June 30, 2022, and over £175m of
self-financed inventory
- Capital expenditure was £33m in H1 2022 as the Company invested
further in its infrastructure
- It is anticipated that capex spend will be lower in H2 as was
weighted heavily to the first half of the year
- Net outflow of £70m to fund vehicles during H1 2022 which is
expected to be partially financed in H2
- Approximately £80m of cash-financed inventory will be realised
over next 18m from subscription inventory
Current trading and outlook
We are very pleased by our strong performance in Q2 and remain
confident in achieving the guidance for the year that we set out
with the announcement of the realignment plan on June 7, 2022.
Despite the weak macroeconomic environment affecting growth in
other retail sectors, we have maintained our strong momentum into
Q3 with record retail unit sales and revenues in July, whilst also
growing our UK website inventory to record levels.
Our business realignment plan is progressing well, and we remain
laser focused on profitability and cash generation. In that
context, we are currently conducting a strategic review of our
business in mainland Europe, with the aim of further reducing our
cash burn and ensuring that the Company has a plan which materially
reduces the requirement to raise any additional external
funding.
The UK used car market remains by far the largest in Europe,
with approximately 8m transactions annually worth over £100bn.
Digital penetration remains tiny, materially behind those levels
seen in almost every other retail sector. We continue to believe
that our market leading platform, brand, team and infrastructure
position us very well to realise our ambitions of achieving a 5% or
greater share of the sizeable UK used car market over time.
Chief Financial Officer Change
The Company today also announces the appointment of Paul Woolf
as Chief Financial Officer, who will join and succeed Stephen
Morana during Q4 of this year. Mr Morana will remain in his current
role until Mr Woolf joins to ensure a seamless transition.
Mr Woolf joins from Graphcore having previously acted as Chief
Financial Officer at UK-listed Mitie Group PLC, and a number of
international private equity backed companies including CPA Global,
Virgin Active, Birds Eye Iglo and The Automobile Association. Mr
Woolf holds a bachelor’s degree from the University of Oxford.
Alex Chesterman OBE, Founder & CEO of Cazoo, commented “I am
delighted to welcome Paul to the Cazoo team. He has a proven and
strong record as Chief Financial Officer of a number of leading
international businesses across a variety of sectors and we look
forward to benefitting from his wealth of experience as we continue
to scale our operations while remaining laser-focused on cash
preservation and our path to profitability. I would like to thank
Stephen for his notable contributions, including leading the
Company through its NYSE listing, and we wish him all the best in
his future endeavours.”
Stephen Morana added “I have really enjoyed my time at Cazoo.
The pace of growth has been incredible to see and I am highly
confident in the team’s ability to continue to build an amazing and
highly profitable company.”
Conference Call
Cazoo will host a conference call today, August 2, 2022, at 8
a.m. ET. Investors and analysts interested in participating in the
call are invited to dial 1-877-704-6255, or for international
callers, 1-215-268-9947. A webcast of the call will also be
available on the investor relations page of the Company’s website
at https://investors.cazoo.co.uk.
Continued Listing Standards
The Company received a notice on July 15, 2022 from the New York
Stock Exchange (the “NYSE”) that Cazoo is not in compliance with
the continued listing standards set forth in Rule 802.01C of the
NYSE Listed Company Manual that require listed companies to
maintain an average closing share price of at least $1.00 over a
consecutive 30 trading-day period.
On July 28, 2022, the Company notified the NYSE of its intent to
cure the deficiency, to the extent required, in line with the cure
period designated under the NYSE rules, including, if necessary,
via a share consolidation which would be subject to Board and
shareholder approval.
The Company’s Class A ordinary shares will continue to be listed
and trade on the NYSE during this period, subject to the Company’s
compliance with other NYSE continued listing standards. The
Company’s receipt of the notice does not affect the Company’s
business, operations or reporting requirements with the Securities
and Exchange Commission.
About Cazoo - www.cazoo.co.uk
Our mission is to transform the car buying and selling
experience across the UK & Europe by providing better
selection, value, transparency, convenience and peace of mind. Our
aim is to make buying or selling a car no different to ordering any
other product online, where consumers can simply and seamlessly
buy, sell or finance a car entirely online for delivery or
collection in as little as 72 hours. Cazoo was founded in 2018 by
serial entrepreneur Alex Chesterman OBE and is a publicly traded
company (NYSE: CZOO).
Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of the “safe harbour” provisions of the Private
Securities Litigation Reform Act of 1995. The expectations,
estimates, and projections of the business of Cazoo may differ from
its actual results and, consequently, you should not rely on
forward-looking statements as predictions of future events. These
forward-looking statements generally are identified by the words
“believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,”
“strategy,” “future,” “opportunity,” “plan,” “may,” “should,”
“will,” “would,” “will be,” “will continue,” “will likely result,”
and similar expressions. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Many factors could
cause actual future events to differ materially from the
forward-looking statements in this press release, including but not
limited to: (1) the implementation of and expected benefits from
our business realignment plan and cost-saving initiatives; (2)
realizing the benefits expected from the business combination (the
“Business Combination”) with Ajax I; (3) achieving the expected
revenue growth and effectively managing growth; (4) executing
Cazoo’s growth strategy in the UK and Europe; (5) achieving and
maintaining profitability in the future; (6) global inflation and
cost increases for labor, fuel, materials and services; (7)
geopolitical and macroeconomic conditions and their impact on
prices for goods and services and on consumer discretionary
spending; (8) having access to suitable and sufficient vehicle
inventory for resale to customers and reconditioning and selling
inventory expeditiously and efficiently; (9) availability of credit
for vehicle financing and the affordability of interest rates; (10)
increasing Cazoo’s service offerings and price optimization; (11)
effectively promoting Cazoo’s brand and increasing brand awareness;
(12) expanding Cazoo’s product offerings and introducing additional
products and services; (13) enhancing future operating and
financial results; (14) acquiring and integrating other companies;
(15) acquiring and protecting intellectual property; (16)
attracting, training and retaining key personnel; (17) complying
with laws and regulations applicable to Cazoo’s business; (18)
successfully deploying the proceeds from the Business Combination
and the issuance of $630 million of convertible notes to an
investor group led by Viking Global Investors; and (19) other risks
and uncertainties set forth in the sections entitled “Risk Factors”
and “Forward-Looking Statements” in the Report on Form 6-K filed
with the U.S. Securities and Exchange Commission (the “SEC”) by
Cazoo Group Ltd on June 9, 2022. The foregoing list of factors is
not exhaustive. You should carefully consider the foregoing factors
and the disclosure included in other documents filed by Cazoo from
time to time with the SEC. These filings identify and address other
important risks and uncertainties that could cause actual events
and results to differ materially from those contained in the
forward-looking statements. Forward-looking statements speak only
as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and Cazoo assumes no
obligation and does not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise. Cazoo gives no assurance that it will
achieve its expectations.
Cautionary Statement
The financial results for the three and six months ended June
30, 2022, and as of June 30, 2022, presented in this announcement
are preliminary, unaudited and represent the most recent current
information available to Cazoo’s management. Preliminary financial
results are subject to risks and uncertainties, many of which are
not within Cazoo’s control. Cazoo’s actual results may differ from
these estimated financial results, including due to the completion
of its financial closing procedures, final adjustments that may
arise between the date of this press release and the time that
financial results for the three and six months ended June 30, 2022,
and as of June 30, 2022, are finalized, and such differences may be
material. In addition, these financial results do not reflect
important limitations, qualifications and details that will be
included in the full financial statements to be included in a
Report on Form 6-K to be filed with the SEC. The preliminary
results included herein have been prepared by, and are the
responsibility of, Cazoo’s management. Cazoo’s independent
registered public accounting firm has not audited, reviewed,
compiled, or performed any procedures with respect to this
information. Accordingly, Cazoo’s independent registered public
accounting firm does not express an opinion or any other form of
assurance with respect thereto.
Non-IFRS Financial Measures
This release includes certain financial measures not based on
IFRS, including Adjusted EBITDA and Adjusted EBITDA Margin
(together, the “Non-IFRS Measures”)
In addition to Cazoo’s results determined in accordance with
IFRS, the Company believes that Adjusted EBITDA and Adjusted EBITDA
Margin provide useful information for management and investors to
assess the underlying performance of the business as they remove
the effect of certain non-cash items and certain charges that are
not indicative of Cazoo’s core operating performance or results of
operations. Cazoo believes that non-IFRS financial information,
when taken collectively with financial measures prepared in
accordance with IFRS, may be helpful to investors because it
provides an additional tool for investors to use in evaluating
Cazoo’s ongoing operating results and trends and because it
provides consistency and comparability with past financial
performance. However, Cazoo’s management does not consider non-IFRS
measures in isolation or as an alternative to financial measures
determined in accordance with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin are presented for
supplemental informational purposes only, have limitations as
analytical tools and should not be considered in isolation from, or
as a substitute for, the analysis of other IFRS financial measures,
such as loss for the period. Some of the limitations of Adjusted
EBITDA and Adjusted EBITDA Margin include that they do not reflect
the impact of working capital requirements or capital expenditures
and other companies in Cazoo’s industry may calculate Adjusted
EBITDA and Adjusted EBITDA Margin differently, or use a different
accounting standard such as U.S. GAAP, which limits their
usefulness as comparative measures. Cazoo urges investors to review
the reconciliation of Adjusted EBITDA to loss for the period
included below, and not to rely on any single financial measure to
evaluate its business.
Adjusted EBITDA is defined as loss for the period adjusted for
tax, net finance expense, depreciation, amortization and impairment
of intangible assets, share-based payment expense, fair value
movement and foreign exchange movement in warrants and convertible
notes and exceptional items.
Adjusted EBITDA margin is defined as the ratio of Adjusted
EBITDA to revenue.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME For the six months ended:
Jun-22
Jun-21
Change
£'m
£'m
£'m
Revenue1
628
248
380
Cost of sales
(625)
(237)
(388)
Gross profit
3
11
(8)
Marketing expenses
(45)
(29)
(16)
Selling and distribution expenses
(57)
(20)
(37)
Administrative expenses2
(288)
(70)
(218)
Loss from operations2
(387)
(108)
(279)
Net finance expense3
(22)
(1)
(21)
Other income and expenses4
158
-
158
Loss before tax
(251)
(109)
(142)
Tax credit
8
7
1
Loss for the period
(243)
(102)
(141)
1 Revenue excludes £6m of sales in H1 2022 where Cazoo sold
vehicles as an agent for third parties and only the net commission
received from those sales is recorded within revenue (H1 2021:
£7m). 2 Current period includes a non-cash impairment charge
of £135m largely related to actions taken in the Company's business
realignment plan 3 Current period includes £13m finance
expense on convertible notes, of which £10m is non-cash 4
Other income and expenses includes fair value movement and
foreign exchange movement in warrants and convertible notes
ADJUSTED EBITDA RECONCILIATION
Reconciliation of loss for the period to
adjusted EBITDA
Jun-22
Jun-21
£'m
£'m
Loss for the period
(243)
(102)
Adjustments:
Tax credit
(8)
(7)
Net finance expense
22
1
Depreciation, amortization and impairment
of intangible assets1
169
15
Share-based payment expense
35
13
Fair value movement and foreign exchange
movement in warrants and convertible notes
(158)
-
Exceptional items2
8
11
Total adjustments
68
33
Adjusted EBITDA
(175)
(69)
1
Current period includes a non-cash
impairment charge of £135m largely related to actions taken in the
Company's business realignment plan
2
Exceptional items include restructuring
costs of £7m with the remainder primarily related to transaction
costs incurred on the acquisition of brumbrum
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION As at:
Jun-22
Dec-21
£'m
£'m
Property, plant and equipment and
right-of-use assets1
363
273
Goodwill and intangible assets
195
262
Inventory2
374
365
Cash and cash equivalents
401
193
Other net working capital
(40)
-
Loans and borrowings (current)3
(222)
(181)
Loans and borrowings (non-current)3
(63)
(68)
Convertible notes and embedded
derivative
(360)
-
Warrants
(6)
(43)
Lease liabilities
(120)
(90)
Net assets
522
711
Equity
Share capital, share premium and merger
reserve
1,347
1,323
Retained earnings
(827)
(611)
Foreign currency translation reserve
2
(1)
Total equity
522
711
1 Property, plant and equipment and right-of-use assets includes
£168m of subscription vehicles (Dec-21: £104m)
2
Inventory consists of vehicles purchased, direct and indirect
vehicle reconditioning costs, including parts and labor and inbound
transportation costs. Inventory includes vehicles which have been
ordered but not delivered which remain in inventory until the
revenue is recognized
3
Loans and borrowings (current and non-current) for the current
period comprises entirely of stocking loans and facilities used to
finance subscription vehicles (Dec-21: £245m)
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six
months ended:
Jun-22
Jun-21
£'m
£'m
Cash flows from
operating activities:
Loss for the period
(243)
(102)
Adjustments for:
Tax credit
(8)
(7)
Net finance expense
22
1
Depreciation, amortization and impairment
of intangible assets1
169
15
Share-based payment expense
35
13
Fair value movement in warrants and
convertible notes
(158)
-
(183)
(80)
Movement in inventory
(8)
(12)
Movement in subscription vehicles
(62)
-
Other working capital movements
38
37
Net cash used in operating
activities
(215)
(55)
Cash flows from
investing activities:
Purchases of property, plant and
equipment
(18)
(35)
Purchases and development of intangible
assets
(15)
(5)
Acquisition of subsidiaries, net of cash
acquired
(34)
(80)
Other investing activities
18
-
Net cash used in investing
activities
(49)
(120)
Cash flows from
financing activities:
Net proceeds from issue of convertible
loan notes
460
-
Vehicle financing activities
29
(1)
Other financing activities
(24)
(8)
Net cash from financing
activities
465
(9)
Net increase/(decrease) in cash and
cash equivalents
201
(184)
Cash and cash equivalents at the beginning
of the period
193
244
Net foreign exchange difference
7
-
Cash and cash equivalents at the end of
the period
401
60
1
Current period includes a non-cash
impairment charge of £135m largely related to actions taken in the
Company's business realignment plan
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220802005317/en/
Investor Relations: Cazoo: Robert Berg, Director of
Investor Relations and Corporate Finance, investors@cazoo.co.uk
ICR: cazoo@icrinc.com
Media: Cazoo: Lawrence Hall, Group Communications
Director, lawrence.hall@cazoo.co.uk Brunswick: Chris
Blundell/Simone Selzer +44 20 7404 5959 /
cazoo@brunswickgroup.com
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