10-KPeriod: FY2021

CARVANA CO. Annual Report, Year Ended Dec 31, 2021

Filed February 24, 2022For Securities:CVNA

Summary

Carvana Co. (CVNA) in its 2021 10-K filing reported significant revenue growth driven by a substantial increase in used vehicle unit sales, up 74.2% year-over-year. The company expanded its market coverage to 81.0% of the U.S. population across 311 markets, reflecting its aggressive growth strategy. Despite robust top-line performance and a notable increase in gross profit per unit to $4,537, Carvana continued to operate at a net loss, reporting a net loss attributable to Class A common stockholders of $135 million for the year, an improvement from $171 million in the prior year. The company's strategy remains focused on scaling retail unit sales, enhancing its e-commerce platform, and expanding market reach, supported by significant investments in technology and infrastructure. However, investors should be mindful of the company's substantial indebtedness and ongoing investments, which contribute to its continued net losses and cash burn, alongside the inherent risks in the competitive automotive retail market.

Financial Highlights

43 data points
Beta

Revenue

$12.81B

15.1% Gross Margin

Net Income

-$135.00M

-1.1% Net Margin

EPS (Diluted)

$-0.33

Total Assets

$7.01B

Cash & Equivalents

$403.00M

Free Cash Flow

-$3.15B

Financial Statements
Beta
Revenue$12.81B
Cost of Revenue$10.88B
Gross Profit$1.93B
SG&A Expenses$2.03B
Interest Expense$176.00M
Net Income-$135.00M
EPS (Basic)$-0.33
EPS (Diluted)$-0.33
Shares Outstanding (Basic)414.02M
Shares Outstanding (Diluted)414.02M

Key Highlights

  • 1Revenue surged by 129.4% year-over-year to $12.8 billion, primarily driven by a 74.2% increase in used vehicle unit sales to 425,237 units.
  • 2Gross profit increased significantly by 142.9% to $1.9 billion, with total gross profit per unit rising to $4,537.
  • 3Market population coverage expanded to 81.0% of the U.S. population across 311 markets, indicating strong geographic expansion.
  • 4The company reported a net loss attributable to Class A common stockholders of $135 million, a slight improvement from $171 million in the previous year, reflecting continued investment in growth.
  • 5Total debt increased substantially to $5.4 billion, primarily due to increased asset-based financing and senior note issuances, highlighting a significant leverage component.
  • 6Selling, general, and administrative expenses more than doubled to $2.0 billion, reflecting increased investments in advertising, compensation, and operational scaling.
  • 7Carvana announced a significant agreement to acquire the U.S. physical auction business of ADESA, Inc. for approximately $2.2 billion, signaling a major strategic expansion.

Frequently Asked Questions

In 2021, Carvana experienced strong revenue growth of 129.4% to $12.8 billion, largely driven by a 74.2% increase in used vehicle unit sales. Gross profit also saw significant growth, rising by 142.9% to $1.9 billion. However, the company continued to report a net loss, with a net loss attributable to Class A common stockholders of $135 million, though this was an improvement from the $171 million net loss in 2020.

Carvana is aggressively expanding its reach and operational capacity. This includes increasing its market population coverage to 81.0% of the U.S. population across 311 markets. Additionally, the company is investing heavily in its infrastructure, such as inspection and reconditioning centers (IRCs), and has a stated strategy to continue entering new geographic markets. A major strategic move announced was the proposed acquisition of ADESA's U.S. auction business for $2.2 billion.

Carvana's strategy prioritizes rapid growth and market penetration, leading to significant investments in technology, marketing, and infrastructure, which contribute to ongoing net losses. While gross profit per unit has improved, the company's operating expenses, particularly SG&A, have also risen considerably. Carvana's debt levels have increased significantly, with total debt reaching $5.4 billion by year-end 2021, largely due to increased asset-based financing and senior note issuances. Investors should monitor the company's ability to manage this debt and eventually achieve sustainable profitability.

Carvana's growth is primarily driven by increasing its retail unit sales. This is achieved through expanding its market penetration in existing markets, entering new geographic markets, enhancing its online platform and customer experience, increasing brand awareness through marketing efforts, and optimizing its inventory acquisition and reconditioning processes. The company also aims to leverage its existing infrastructure to offer new products and services.