Carvana (CVNA) Q4 2021 earnings summary

Executive summary

• FY 2021 retail unit sales rose 74.2% to 425,237; revenue increased 129.4% to $12.814B as market coverage expanded to 81.0% of the U.S. population.

• Growth delivered higher gross profit and gross profit per unit, while the business remained unprofitable, with a $287M net loss and $5M negative EBITDA.

• Priorities remain retail sales growth, market expansion, customer experience and infrastructure investment; a $2.2B ADESA U.S. auction acquisition was announced on February 24, 2022.

Financial highlights

• Total revenue reached $12.814B, up 129.4% YoY; used vehicle sales were $9.851B, wholesale sales $1.920B and other sales and revenues $1.043B.

• Gross profit was $1.929B, up 142.9% YoY; cost of sales was $10.885B and SG&A was $2.033B, up from $1.126B in 2020.

• Net loss was $287M versus $462M in 2020; net loss attributable to Class A stockholders was $135M, or $(1.63) per share, versus $171M, or $(2.63), in 2020.

• Adjusted basis not presented; EBITDA was negative $5M with a (0.0)% margin, versus negative $257M and (4.6)% in 2020.

• Operating cash use was $2.594B; investing cash use was $627M, financing cash inflow $3.528B, and cash, cash equivalents and restricted cash ended at $636M.

Outlook and guidance

• Retail unit sales are expected to grow through deeper penetration in existing markets and expansion into new markets.

• Growth investment is expected to continue, with operating expenses anticipated to rise as logistics capacity, advertising and population coverage expand; returns on investment are not assured.

• Management expects used vehicle sales to become more seasonal as markets mature; vehicle depreciation typically accelerates in H2, which has historically reduced gross profit per unit versus H1.

• Current working capital and financing arrangements were assessed as sufficient to fund operations for at least one year from the financial statement issuance date.