Adjusted EBITDA Margin: Achieved record 7.7%, becoming the most profitable public automotive retailer in the U.S. for the first time.
Retail Units Growth: Returned to growth with a 16% year-over-year increase.
Marketing Efficiency: Decreased marketing spending by 4% amidst growth and inventory constraints.
Capital Expenditures and Interest Expense: Completed the first quarter with adjusted EBITDA exceeding CapEx and interest expense by a significant margin.
GAAP Gross Profit Margin: Reached 19.3%, above the high-end of their long-term financial model.
Operational Efficiency: Leveraged marketing, operations, and overhead expenses; overhead expenses remained flat in absolute dollars despite 21% sequential growth.
Revenue Increase: Posted a 17% year-over-year and 26% sequential increase in revenue.
Future Guidance
Adjusted EBITDA Growth: Expecting a sequential increase in adjusted EBITDA for Q2 2024.
Retail Units Sold: Anticipation of a sequential increase in the year-over-year growth rate for retail units sold.
Profitability Initiatives: Continuation of focus on unit economics and profitability initiatives to further improve margins with scale and efficiency gains over time.
Capital Expenditures and Interest Expenses: Plans to pay cash interest on specific senior secured notes in 2025, reducing long-term cash interest expense and supporting a plan to deleverage over time.
Trends, Market Conditions, Sentiment
Inventory Constraints: Faced challenges with constrained inventory affecting sales volumes. Average car listed was visible for only 13 days before purchase, underscoring the demand and inventory turnover speed.
Significant Market Share Gains: Retail unit sales and revenue growth reflect significant market share gains on both a year-over-year and sequential basis, indicating strong consumer demand.
Reconditioning and Efficiency: Achieved significant improvements in reconditioning efficiency, enabled by proprietary technology such as Carli, and conversion of ADESA sites for additional capacity.
Competitive Positioning: Acknowledged the difficulty of replicating Carvana’s business model, emphasizing this complexity as a competitive moat.
Economic Environment: Achieved notable success in a challenging automotive environment, contrasting with industry counterpart struggles.
Notable Quotes
Regarding Growth and Profitability: “Q1 was an incredible quarter for Carvana and one that is worthy of reflection…we not only set new all-time company records but we also became the most profitable public automotive retailer in the U.S.”
On Operational Improvements: “In combining our GPU and expense leverage, we also validated our long-term financial model that we put out 6 years ago and clearly [with a] path to significant additional financial gains from here.”
About Market Position and Future: “Our addressable market remains an enormous opportunity…That differentiated model just delivered approximately $1 billion in annualized adjusted EBITDA, and we are still a long way from the full financial potential of our business model and its scale.”
Looking Ahead: “We are now focused on our long-term phase of driving profitable growth and pursuing our goal of becoming the largest and most profitable auto retailer and selling and buying millions of cars.”
