Carvana Co. (NYSE:CVNA) reported Q1 EPS of ($2.89), $1.47 worse than the analyst estimate of ($1.42). Revenue for the quarter came in at $3.5 billion versus the consensus estimate of $3.39 billion.
- Outlook
- While we faced a uniquely difficult environment in the first quarter, we are already seeing positive trends across our key metrics. In light of the current industry trends impacting customer affordability, high used vehicle prices, rapid movements in interest rates, rapid increases in fuel prices, and other macroeconomic uncertainty impacting the used vehicle market, at this time we are no longer providing specific numeric near-term guidance for the remainder of the year. As we look forward, we expect to see the following trends: • We expect to continue to gain significant market share in 2022 through continued growth in retail units and revenue. • As discussed above, we generally prepare for sales volume 6-12 months in advance, meaning we built capacity in most of our business functions for significantly more volume than we fulfilled in Q1. Over the next several quarters, we expect to better align sales with expense levels through a combination of higher sales and expense efficiencies. • We expect to continue to improve the efficiency of our logistics network over the next several quarters, speeding delivery times, reducing rescheduling and cancellation rates, and enabling broader inventory selection through increased inventory visibility. • On GPU, we expect retail cost of goods sold per unit to return to more normalized levels over the next several quarters as we move further away from Omicron and logistics network disruptions. • We also expect the spreads between loan origination interest rates and benchmark interest rates to return to more normalized levels as we move further away from the rapid increases in Q4 and Q1 and due to changes to our pricing cadence and hedging policy. • As a result of all of the above, we expect meaningful sequential improvement in Q2 vs. Q1 in retail units sold, revenue, total GPU, SG&A per retail unit sold, and EBITDA margin. In our last shareholder letter, we provided an expectation that we would achieve over $4,000 GPU and approximately EBITDA breakeven in the last three quarters of 2022 taken in aggregate. We now expect a return to over $4,000 GPU and positive EBITDA to be pushed back a few quarters and then to resume our march to our longterm financial model. This outlook excludes any impacts from our acquisition of ADESA’s U.S. physical auction business.
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