Carvana Co. Reports Record Q3 2024 Financial Performance

Carvana Co. (NYSE: CVNA), the online used car retailer, has reported an exceptional third quarter in 2024, achieving record financial performance and establishing itself as a leader among automotive public retailers.

The company reported a 34% year-over-year increase in retail units sold, driving a 32% revenue surge. CEO Ernie Garcia and CFO Mark Jenkins provided insights into the company’s strategic focus on operational excellence, growth drivers, and the integration of ADESA assets for enhanced efficiency.

Key Takeaways

• Net income: $148 million
• Operating income: $337 million
• Adjusted EBITDA: $429 million in Q3
• Units sold: 108,651 (34% increase year-over-year)
• Revenue: $3.655 billion
• Advertising budget increase: $5 million to $10 million in Q4
• Employee bonus: $10 million cash bonus impacting Q4 adjusted EBITDA
• Repurchase: $100 million of 2028 senior secured notes to improve leverage
• Projected adjusted EBITDA: significantly above $1.0 billion to $1.2 billion for 2024

Company Outlook

• Anticipates continued growth with projections for adjusted EBITDA significantly exceeding previous ranges.
• Expected effective cash tax rate: 22% in the near term, rising to 25% long term.
• Infrastructure supports over 1 million retail units annually; plans to efficiently integrate additional sites.

Bearish Highlights

• Non-GAAP SG&A expenses rose 10% to $406 million.
• SG&A expenses totalled $147 million, a $6 million increase from the previous year.

Bullish Highlights

• Most profitable quarter among automotive public retailers.
• Non-GAAP retail GPU was $3,617, a record increase of $740.
• GAAP operating income at $337 million, with a 9.2% margin.

Misses

• Operational expenses per unit decreased year-over-year but saw a slight sequential uptick.

Q&A Highlights

• Carvana’s marketplace sales have different revenue reporting from traditional retail sales but have consistent underlying economics.
• Aiming to scale operations to handle up to 3 million units per year, targeting about 7.5% market share.

Summary

Carvana's Q3 2024 earnings call revealed record financials and strategic efforts for sustained growth. Emphasis on operational excellence positions the company for significant market disruption.

InvestingPro Insights

Carvana's exceptional Q3 performance shows a market capitalization of $51.43 billion and robust stock performance, including a 667.81% return over the past year. Revenue for the last 12 months reached $11.67 billion, with a quarterly growth of 14.89% in Q2 2024.

The company's gross profit margin improved to 18.77%, and its operating income margin stands at 3.48%. The moderate debt level reflects effective financial management strategies.

Investors can explore additional insights through InvestingPro’s comprehensive analysis and tips for Carvana.

Full transcript – Carvana Co (CVNA) Q3 2024:

Operator: [Introduction]
Meg Kehan: Thank you for joining Carvana’s Q3 2024 earnings conference call.
Ernie Garcia: [CEO remarks]
Mark Jenkins: [CFO remarks]
Operator: [Q&A session]

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