Vehicles are on display at a Carvana dealership in Austin, Texas, on February 20, 2023.
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shares Carvana Its shares rose more than 30% during after-hours trading on Wednesday after the automaker reported record results and turned a profit during the first quarter.
Here's how the company performed in the first quarter, compared to average estimates compiled by LSEG:
Earnings per share: 23 cents — not immediately clear if comparable to loss of 74 cents expected Revenue: $3.06 billion vs. $2.67 billion expected
Carvana reported record first-quarter net income of $49 million, compared to a loss of $286 million during the same period a year earlier. The company also posted its best-ever adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of $235 million, up from a loss of $24 million the year before.
The company's gross profit per unit, or GPU, which is closely watched by investors, was $6,432. Carvana's adjusted EBITDA margin for the quarter was 7.7%.
Carvana's net income included a gain of approximately $75 million in the fair value of Carvana's acquisition warrants. Root company Common stock sold. This did not impact its GPU or adjusted EBITDA.
“In the first quarter, we delivered our best results in the company's history, underscoring our firm belief that Carvana's online retail model can drive industry-leading profitability while delivering superior experiences,” said Ernie Garcia III, CEO and Chairman of Carvana. Industry-leading clients. statement.
Garcia said the company's performance was driven by efficiency gains in its operations, particularly reconditioning vehicles for sale as well as selling, general and administrative expenses, among other areas.
Carvana expects to continue to grow its adjusted EBITDA margin further as the company continues to grow, according to Garcia. He declined to reveal the extent to which the company believes it can achieve these results.
Carvana shares in 2024
“I really think that just one quarter holds meaning about what the future holds for us. If we get it right, I think this is probably our biggest quarter and it feels great,” Garcia told CNBC during a phone interview on Wednesday evening. .
The company expects further cost reductions or efficiency gains to increase profitability through areas such as advertising as well as overhead and operational expenses.
Carvana is also working to increase vehicle reconditioning and profitably rebuild its vehicle inventory, which was approaching an all-time monthly low of 13-day supply in March, Garcia said. It has increased its capacity to recondition vehicles in preparation for sale by approximately 60% over the past year.
“Getting stocks, in general, seems relatively easy at scale, but increasing replenishment capacity is difficult,” he told CNBC. “Inventory today is certainly lower than we would like it to be. We are working hard to build it back up, but we are in a very good position to do so.”
The results follow a major restructuring the company has undertaken over the past two years to focus on profitability rather than growth, following bankruptcy fears when Carvana stock lost almost all of its value in 2022.
The company's shares have since rebounded. They were up nearly 67% year-to-date before the company reported first-quarter results. The stock closed Wednesday up about 5% at $87.09 per share.
A joint letter to shareholders from Garcia and CFO Mark Jenkins said the company prioritized growth, but did so for profitability.
“We are now focused on our long-term phase of driving profitable growth and pursuing our goal of becoming the largest and most profitable auto retailer, buying and selling millions of vehicles,” the shareholder letter said.
For the second quarter, the company said it expects a sequential increase in the year-over-year growth rate in retail units, and a sequential increase in adjusted EBITDA.
