Carvana Reports Strong First-Quarter Results, Aims for Profitable Growth

Earnings per Share: 23 cents – Exceeding Expectations

Carvana, the leading online auto retailer, announced impressive first-quarter earnings, reporting an earnings per share of 23 cents. This figure has surpassed the analysts’ expectations, which had projected a loss of 74 cents per share. The remarkable performance indicates Carvana’s success in realizing its long-term vision of driving industry-leading profitability.

Revenue: $3.06 billion – Surpassing Expectations

Carvana’s first-quarter revenue also exceeded expectations, reaching $3.06 billion compared to a projected revenue of $2.67 billion. This represents a substantial increase in revenue and showcases Carvana’s ability to generate strong sales and maintain a stable growth trajectory.

Record Net Income and Improved Adjusted EBITDA

Carvana reported a record net income of $49 million for the first quarter, a significant turnaround from the $286 million loss during the same period the previous year. The company’s commitment to profitability was evident in the striking increase of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) – from a $24 million loss in the previous year to a remarkable $235 million in the current quarter.

The company’s gross profit per unit (GPU), an essential metric closely monitored by investors, reached $6,432, signaling a healthy profit margin for Carvana. With an adjusted profit margin of 7.7% for the quarter, Carvana showcases its strong financial performance and ability to balance growth with profitability.

Carvana’s CEO Optimistic About the Future

Carvana’s CEO and Chairman, Ernie Garcia III, expressed enthusiasm regarding the company’s outstanding results, stating, “In the first quarter, we delivered our best results in company history, validating our long-held belief that Carvana’s online retail model can drive industry-leading profitability while delivering industry-leading customer experiences.” Garcia’s positive outlook highlights Carvana’s continued commitment to customer satisfaction and financial success.

Carvana’s Restructuring Leads to Recovery

Following a major restructuring period over the past two years, Carvana refocused its efforts on profitability rather than growth. The company’s strategic shift allowed it to overcome bankruptcy concerns, which had caused a substantial drop in Carvana’s stock value in 2022. Since then, Carvana’s shares have made a significant recovery, with a year-to-date increase of approximately 67%, further building investors’ confidence in Carvana’s ability to thrive in the market.

Future Growth Goals

Looking ahead, Carvana plans to fortify its position as the largest and most profitable auto retailer and aims to buy and sell millions of cars. In a joint letter to shareholders, Carvana’s CEO and the Chief Financial Officer, Mark Jenkins, shared the company’s renewed commitment to long-term profitable growth. They expressed optimism regarding the second quarter, expecting a sequential increase in the year-over-year growth rate of retail units as well as an uptick in adjusted EBITDA.

Carvana’s consistent focus on technological innovation, enhanced customer experiences, and financial performance underpins its position as a market leader in the online auto retail industry.

Sources:

• CNBC – Carvana Restructuring
• Carvana Investors – Shareholder Letter, Q1 2024