10-QPeriod: Q2 FY2024

CARVANA CO. Quarterly Report for Q2 Ended Jun 30, 2024

Filed July 31, 2024For Securities:CVNA

Summary

Carvana Co. (CVNA) reported a significant improvement in its financial performance for the second quarter and first half of 2024, demonstrating a substantial increase in profitability driven by higher retail unit sales and improved gross profit per unit. Total net sales and operating revenues rose by 14.9% year-over-year to $3.41 billion for the quarter and 16.1% to $6.47 billion for the first half. Gross profit saw a substantial increase of 43.3% to $715 million for the quarter and 55.5% to $1.31 billion for the first half, largely due to a significant rise in retail vehicle gross profit. The company reported a net income attributable to Carvana Co. of $18 million ($0.14 per diluted share) for the second quarter, a notable turnaround from a net loss of $58 million ($0.55 per diluted share) in the prior year. For the first half of the year, net income attributable to Carvana Co. was $46 million ($0.36 per diluted share), a significant improvement from a net loss of $218 million ($2.05 per diluted share) in the first half of 2023. This turnaround is attributed to strong execution on operational efficiency and profitability initiatives, including reduced vehicle acquisition costs and faster inventory turn times. Carvana's liquidity position has also strengthened, with total liquidity resources increasing to $4.11 billion from $3.13 billion. The company repurchased $250 million of its 2028 Senior Secured Notes and successfully raised $347 million in net proceeds from its at-the-market equity offering program. Management believes current working capital and expected financing arrangements are sufficient to fund operations for at least the next year. The company continues to focus on scaling its operations, improving unit economics, and driving towards sustained profitability.

Financial Highlights

38 data points
Beta

Revenue

$3.41B

21.0% Gross Margin

Net Income

$18.00M

0.5% Net Margin

Total Assets

$7.17B

Cash & Equivalents

$542.00M

Free Cash Flow

$332.00M

Financial Statements
Beta
Revenue$3.41B
Cost of Revenue$2.69B
Gross Profit$715.00M
SG&A Expenses$455.00M
Operating Income$259.00M
Net Income$18.00M

Key Highlights

  • 1Carvana reported a significant turnaround to profitability, with net income of $18 million in Q2 2024 compared to a net loss of $58 million in Q2 2023.
  • 2Total net sales and operating revenues increased by 14.9% to $3.41 billion in Q2 2024, driven by a 32.5% increase in retail unit sales.
  • 3Total gross profit surged by 43.3% to $715 million in Q2 2024, with retail vehicle gross profit increasing by 70.1%.
  • 4Retail vehicle gross profit per unit improved significantly to $3,421 in Q2 2024 from $2,666 in Q2 2023.
  • 5The company's liquidity position strengthened, with total liquidity resources increasing to $4.11 billion as of June 30, 2024.
  • 6Carvana repurchased $250 million of its 2028 Senior Secured Notes during the quarter.
  • 7The company successfully raised $347 million in net proceeds from its at-the-market equity offering program.

Frequently Asked Questions

Carvana demonstrated a significant turnaround in its financial performance, achieving profitability in Q2 2024 with a net income of $18 million, a substantial improvement from a net loss of $58 million in Q2 2023. This was driven by a 14.9% increase in net sales and operating revenues to $3.41 billion and a 43.3% surge in total gross profit to $715 million, largely due to strong growth in retail unit sales and improved profitability per unit.

Carvana's liquidity position improved, with total liquidity resources reaching $4.11 billion. The company actively managed its debt by repurchasing $250 million of its 2028 Senior Secured Notes. Additionally, Carvana raised $347 million in net proceeds through its at-the-market equity offering program, strengthening its financial flexibility. Management believes its current resources are sufficient for at least the next 12 months.

The improvement in gross profit per unit is primarily attributed to operational efficiency initiatives. These include lower average days to sale, reduced vehicle acquisition costs relative to sales prices, and decreased reconditioning and inbound transport costs for retail vehicles sold. The growth in retail unit sales also enables Carvana to better leverage its infrastructure.

Yes, Carvana reported a loss on debt extinguishment of $2 million related to the repurchase of its 2028 Senior Secured Notes. Additionally, the company recognized an expense of $19 million related to its Tax Receivable Agreement (TRA) liability. The fair value of Root Warrants also saw a decrease of $22 million during the quarter.