Carvana (CVNA) Q4 2023 earnings summary

Executive summary

• 2023 revenue fell to $10.8B as retail units sold declined 24.1% to 312,847; operating efficiency initiatives improved gross profit per unit and reduced SG&A.

• Reported net income was $150M, including an $878M gain on debt extinguishment; Adjusted EBITDA improved to $339M from a loss of $1.041B in 2022.

Financial highlights

• Net sales and operating revenue decreased to $10.771B from $13.604B; retail vehicle sales were $7.514B versus $10.254B.

• Gross profit increased to $1.724B from $1.246B; retail vehicle gross profit rose to $746M from $371M.

• SG&A declined to $1.796B from $2.736B, reflecting cost reductions, lower advertising and reduced retail volume.

• Interest expense increased to $632M from $486M, primarily due to interest on Senior Secured Notes.

• Adjusted EBITDA was $339M versus a loss of $1.041B; Adjusted EBITDA margin was 3.1% versus negative 7.7%.

Outlook and guidance

• Near-term priorities remain customer experience, operating efficiency, unit economics and use of existing infrastructure to support efficient growth and sustained profitability.

• Focus areas include increasing customer vehicle purchases, reducing days to sale, utilizing IRC capacity, improving product conversion and expanding finance-receivable monetization.

• Management expected available working capital, operating cash flows and expected financing arrangements to fund operations for at least one year from the financial statements’ issuance date.

• 2024 retail units may remain affected by reduced industry demand, benchmark interest rates, used-vehicle depreciation and profitability initiatives.