10-QPeriod: Q2 FY2021

CARVANA CO. Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 5, 2021For Securities:CVNA

Summary

Carvana Co. (CVNA) reported significant top-line growth in its second quarter and first half of 2021, driven by a substantial increase in used vehicle sales. Total net sales and operating revenues surged by 198.4% year-over-year for the quarter and 151.9% for the half-year, reflecting strong demand and expanded market coverage. The company achieved profitability in the current quarter, a notable improvement from the net loss in the same period last year, indicating progress in scaling its operations. The growth in retail units sold, up 95.7% for the quarter and 86.3% for the half-year, underpins this revenue expansion, supported by increased population coverage and brand awareness. Despite the robust revenue growth and improved profitability, the company continues to face substantial operating expenses, particularly in SG&A, as it invests heavily in infrastructure and marketing to support future expansion. While vehicle acquisition and reconditioning costs remain significant, the company is demonstrating an ability to leverage its scale, as evidenced by the improving gross profit per unit. Investors should monitor the company's path to sustained profitability, its debt levels, and its ability to effectively manage its aggressive growth strategy.

Financial Highlights

40 data points
Beta

Revenue

$3.34B

16.5% Gross Margin

Net Income

$22.00M

0.7% Net Margin

Total Assets

$4.58B

Cash & Equivalents

$201.00M

Free Cash Flow

-$719.00M

Financial Statements
Beta
Revenue$3.34B
Cost of Revenue$2.78B
Gross Profit$552.00M
SG&A Expenses$470.00M
Interest Expense$43.00M
Net Income$22.00M
Shares Outstanding (Basic)406.99M

Key Highlights

  • 1Total net sales and operating revenues increased by 198.4% to $3.3 billion for the three months ended June 30, 2021, compared to $1.1 billion for the same period in 2020.
  • 2Used vehicle sales saw a significant jump of 152.4% year-over-year for the quarter, reaching $2.5 billion.
  • 3Retail unit sales grew by 95.7% to 107,815 units for the three months ended June 30, 2021, demonstrating strong customer demand.
  • 4The company reported a net income attributable to Carvana Co. of $22 million for the three months ended June 30, 2021, a substantial improvement from a net loss of $41 million in the prior year period.
  • 5Total gross profit increased by 268.0% to $552 million for the quarter, driven by higher volumes across all revenue segments.
  • 6Selling, general, and administrative (SG&A) expenses increased by $230 million to $470 million, reflecting continued investment in growth initiatives.
  • 7The company's population coverage expanded to 79.4% as of June 30, 2021, up from 73.2% a year prior, indicating broader market reach.

Frequently Asked Questions

Carvana's primary driver of revenue growth in this period is the significant increase in used vehicle sales, supported by a surge in retail unit sales. This growth is further bolstered by expanded market population coverage and increased brand awareness, leading to higher sales volumes across all segments, including wholesale and other revenue streams like financing and ancillary products.

Yes, Carvana reported a net income attributable to Carvana Co. of $22 million for the three months ended June 30, 2021. This marks a significant turnaround from a net loss of $41 million in the same period of the prior year, indicating improved operational performance and the benefits of scale.

Carvana's selling, general, and administrative (SG&A) expenses increased substantially, reflecting significant investments in advertising, compensation, and infrastructure to support its rapid growth and market expansion. While expenses are rising, the company's strategy focuses on leveraging its scale to achieve operating leverage and improve gross profit per unit. Investors should monitor management's ability to control the growth rate of expenses relative to revenue growth to achieve sustainable profitability.

Carvana finances its growth and operations through a combination of cash generated from sales, proceeds from the sale of finance receivables, and financing activities. This includes significant reliance on short-term revolving facilities for inventory and finance receivables, issuance of long-term debt (Senior Notes), and, to a lesser extent, equity issuances. The company also utilizes real estate and equipment financing. As of June 30, 2021, the company had substantial availability under its revolving facilities and a significant amount of long-term debt.