PHOENIX—Carvana Co. , a leading eCommerce platform for buying used cars, today announced financial results for its second quarter ended June 30, 2017. Carvana’s complete second quarter 2017 financial results and management commentary can be found by accessing the Company’s shareholder letter at: https://investors.carvana.com/financial-reports/sec-filings.

“Carvana accelerated its growth in retail unit sales and revenues to 145% and 142%, respectively, during a very strong second quarter. We are seeing tremendous growth in both our existing and new markets as we continue our rapid expansion nationwide. We also increased our gross profit per unit, both sequentially and as compared to last year,” said Ernie Garcia, Carvana co-founder and CEO. “Our mission is to change the way people buy cars. More and more consumers are turning to Carvana for a seamless, hassle-free car buying experience. We are scaling our business to meet the growing demand, and with the recent announcement of our launch in Phoenix we are excited to introduce the simplicity of online car buying to the Southwest.”

Second Quarter 2017 Financial Summary

Carvana achieved significant unit and revenue growth in Q2 2017, coupled with increased total gross profit per unit. All financial comparisons are versus Q2 2016, unless otherwise noted.

  • Retail units sold totaled 10,682, an increase of 145%
  • Revenue totaled $209.4 million, an increase of 142%
  • Total gross profit was $16.0 million, an increase of 166%
  • Total gross profit per unit was $1,501, an increase of $332 per unit compared to Q1 2017
  • Net loss was $38.9 million, an increase of 115%
  • EBITDA margin was (16.1%), an improvement from (21.6%) in Q1 2017
  • GAAP basic and diluted net loss per Class A share was $0.28 based on 15 million shares of Class A common stock outstanding
  • Adjusted net loss per Class A share, a non-GAAP measure, was $0.28, based on 136.7 million adjusted shares of Class A common stock outstanding assuming the exchange of all outstanding LLC Units for shares of Class A common stock
  • We opened 7 new markets, bringing our end-of-quarter total to 30
  • We acquired fellow automotive tech disruptor Carlypso
  • On Aug. 4, 2017, we upsized our inventory facility with Ally Bank to $275 million through Dec. 31, 2017 and then $350 million through Dec. 31, 2018

Q3 and Fiscal 2017 Outlook

We anticipate further unit and revenue growth, as well as total gross profit per unit and EBITDA margin improvement. For Q3 2017, we expect:

  • Retail unit sales of 11,500 – 13,000, an increase of 129% – 159% year-over-year
  • Total revenue of $225 million – $255 million, an increase of 128% – 158% year-over-year
  • Total gross profit per unit of $1,625 – $1,725
  • EBITDA margin of (14%) – (16%)

We are reiterating our FY 2017 guidance as follows:

  • Retail unit sales of 44,000 – 46,000, an increase of 135% – 145% year-over-year
  • Revenue of $850 million – $910 million, an increase of 133% – 149% year-over-year
  • Total gross profit per unit of $1,475– $1,575
  • EBITDA margin of (14%) – (16%)
  • 16 – 18 new market openings, bringing our end-of-year total to 37 – 39

For more information regarding the non-GAAP financial measures, please see the reconciliations of our non-GAAP measurements to their most directly comparable GAAP-based financial measurements included at the end of this press release. Guidance for EBITDA margin excludes depreciation and amortization expense and interest expense. We have not reconciled EBITDA guidance to GAAP net loss as a result of the uncertainty regarding, and the potential variability of, interest expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. Depreciation and amortization expense, which is a component of the reconciliation between EBITDA and GAAP net loss, is expected to be between 1.0% and 1.5% of total revenues for both Q3 2017 and FY 2017.

Conference Call Details

Carvana will host a conference call today, Aug. 8, 2017, at 2 p.m. PDT (5 p.m. EDT) to discuss financial results. To participate in the live call, analysts and investors should dial (877) 270-2148 or (412) 902-6510. A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company's website at investors.carvana.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the conference call will be available until Tuesday, Aug. 15, 2017, by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 10109151#.

About Carvana Co.

Founded in 2012 and based in Phoenix, Carvana’s mission is to change the way people buy cars. By removing the traditional dealership infrastructure and replacing it with technology and exceptional customer service, Carvana offers consumers an intuitive and convenient online automotive retail platform, with a fully transactional website that enables consumers to quickly and easily buy a car online, including finding their preferred vehicle, qualifying for financing, completing the purchase and loan with signed contracts, and receiving delivery or pickup of the vehicle from one of Carvana’s proprietary automated Car Vending Machines.

CARVANA CO. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands, except per share amounts)

Adjusted Net Loss and Adjusted Net Loss per Share

Adjusted net loss and adjusted net loss per share are supplemental measures of operating performance that do not represent and should not be considered alternatives to net loss and net loss per share, as determined under GAAP. We believe that adjusted net loss and adjusted net loss per share supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period and relative to our competitors. A reconciliation of adjusted net loss to net loss attributable to Carvana Co., the most directly comparable GAAP measure, and the computation of adjusted net loss per share are as follows:

         

Three Months
Ended June 30, 2017
Numerator:
Net loss attributable to Carvana Co. $ (14,542 )
Add: Net loss attributable to non-controlling interests (1) (24,328 )
Adjusted net loss attributable to Carvana Co. $ (38,870 )
 
Denominator:
Weighted-average shares of Class A common stock outstanding 15,026
Adjustments:(2)
Assumed exchange of LLC Units for shares of Class A common stock (1) 121,666  
Adjusted shares of Class A common stock outstanding 136,692  
Adjusted net loss per share $ (0.28 )
 

(1) Assumes exchange of all outstanding LLC Units for shares of Class A common stock retroactively applied as if the exchanges had occurred at the beginning of each period presented under the terms of the exchange agreement.
(2) Excludes approximately 0.5 million restricted stock awards and 0.5 million stock options outstanding at June 30, 2017, because they were determined to be anti-dilutive.

EBITDA and EBITDA Margin

EBITDA is a non-GAAP supplemental measure of operating performance that does not represent and should not be considered an alternative to net loss or cash flow from operations, as determined by GAAP. EBITDA is defined as net loss before interest expense, income tax expense and depreciation and amortization expense. We use EBITDA to measure the operating performance of our business, excluding specifically identified items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations. EBITDA may not be comparable to similarly titled measures provided by other companies due to potential differences in methods of calculations. A reconciliation of EBITDA to net loss, the most directly comparable GAAP measure, is as follows:

 
Three Months Ended
June 30, 2017   March 31, 2017
Net loss $ (38,870 ) $ (38,439 )
Depreciation and amortization expense 2,584 2,061
Interest expense 2,507   2,059  
EBITDA $ (33,779 ) $ (34,319 )
 
Total revenues $ 209,365   $ 159,073  
EBITDA Margin (16.1 )% (21.6 )%