CVNA Q2 2022 Earnings

Call Details

• Call Title: Carvana Q2 2022 Earnings Call
• Date: August 4, 2022 at 9:30 PM UTC
• Management Team:
  • Mike Levin (Vice President of Investor Relations)
  • Ernie Garcia (Chief Executive Officer)
  • Mark Jenkins (Chief Financial Officer)

Call Summary

Financial Performance

• Retail units sold totaled 117,564 in Q2 and were reported as up 9% year-over-year.
• Total revenue in Q2 was $3.884B, which the company said was an increase of 16% year-over-year.
• Cash SG&A per unit was reported at $5,400 in Q2 after being reduced by $850 sequentially during the quarter.
• Retail GPU improved sequentially and was reported excluding specific impacts as $1,216 in Q2 compared to $884 in Q1.
• Wholesale GPU increased to $383 in Q2 from $219 in Q1, and other GPU was reported at $1,854 in Q2 versus $1,806 in Q1.
• Adjusted EBITDA margin improved to minus 6.2% in Q2 from minus 10.2% in Q1, an improvement of four percentage points.
• Total gross profit per unit was described as lower year-over-year and higher sequentially, and Mark Jenkins disclosed specific per-unit impacts including a $51 per unit employee gift and a $34 per unit impact from the May reduction in force.
• Company reported approximately $4.7B of total liquidity on June 30, including $2.7B of cash and revolver availability and $2.1B of unpledged real estate and other assets.

Guidance

• The company stated it will maintain a near-term priority on efficiency and cash flow, which management said will slow unit and revenue growth relative to prior plans.
• Carvana set a stretch target to achieve $4,000 cash SG&A per unit in the fourth quarter, excluding impacts from ADESA, and reiterated a midterm goal of $3,000 per unit.
• Management did not provide traditional top-line or unit guidance for upcoming quarters and declined to specify near-term unit growth estimates.
• The company said it expects to sell loans in a whole loan sales format in Q3 but will maintain flexibility to optimize channel mix as the quarter progresses.
• Management said time buffers on title and registration are expected to be temporary and will be pulled back over time, but no specific timing was provided.
• Management communicated targets and process KPIs internally and emphasized sequential efficiency targets rather than issuing formal financial guidance for revenue or EPS.