Carvana (CVNA) Q4 2019 earnings summary

Executive summary

• FY19 revenue rose 101.5% YoY to $3.94B; retail units sold increased 88.7% to 177,549, with 61 market launches bringing year-end markets to 146.

• Sixth consecutive year of triple-digit revenue growth; retail volume grew by 83,000 units organically, and gross profit per unit improved by more than $400 for the sixth straight year.

• Net loss widened to $364.6M from $254.7M; adjusted EBITDA margin ex-Gift improved to -5.8% from -9.9%.

Financial highlights

• Net sales and operating revenues reached $3.94B, up 101.5% YoY; gross profit was $506.4M, up 157.4%.

• Net loss was $364.6M versus $254.7M in FY18; basic and diluted EPS was -$2.45 versus -$2.03.

• Q4 revenue was $1.104B, gross profit $142.5M, net loss $125.7M, and net loss attributable to common stockholders $41.1M; EPS was -$0.82.

• SG&A increased 85% to $786.7M, including $204.0M advertising expense; interest expense rose to $80.6M from $25.0M.

• Operating cash use was $757.1M; investing cash use $227.7M; financing cash provided $1.015B.

Outlook and guidance

• Retail unit sales expected to grow through deeper penetration in existing markets and continued launches; investments in technology, inventory, reconditioning, logistics and product development will support scaling.

• Operating expenses expected to increase substantially as markets, logistics infrastructure and advertising expand; returns on these investments are uncertain.

• Continued focus on acquiring more vehicles directly from customers, reducing days to sale, improving product conversion, and increasing finance-receivable monetization.

• Ongoing losses expected while investing for growth; management judged available working capital and expected inventory and capital-expenditure financing sufficient for at least one year from report issuance.