Carvana (CVNA) 10 May 182018 Q1 Earnings call transcript

Company Profile

Participants

Mike Levin	Vice President of Investor Relations
Ernie Garcia	President, Chief Executive Officer, Chairman
Mark Jenkins	Chief Financial Officer
David Lim	Wells Fargo
Nat Schindler	Bank of America Merrill Lynch
Colin Sebastian	Robert Baird
Sharon Zackfia	William Blair
Ron Josey	JMP Securities
Seth Basham	Wedbush securities
Ryan Sigdahl	Craig-Hallum Capital Group
Sameet Sinha	B. Riley FBR
Gary Prestopino	Barrington Research
James Albertine	Consumer Edge

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon and welcome to the Carvana first quarter 2018 earnings conference call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note, being recorded. Please now Mike Levin, would like Relations. to to over conference the Vice turn I President Investor of Please go ahead.

Mike Levin

you webcast conference corporate call. Thank gentlemen note the that Carvana's afternoon company's Good will Please Investor quarter for be Relations call thank of simultaneously first results you investors.carvana.com. on the joining website financial ladies XXXX at this us on Austin. and and section

conferences website. shareholder be quarter posted is will The the schedule over letter out investor Events found section can IR first The of site on next of to forward on our of also look seeing we the weeks you attending road. be the IR the several we all and in

Executive Jenkins, Financial Joining me on the call Chief and Officer. Chief Officer today Garcia, are Mark Ernie

based of current Garcia. in I whether like Ernie? the Carvana Ernie or them And and new update would risk as that forward-looking to future are cause Risk cause Before call this here. from of expectations of the most with factors material involves within to not limited be market we and from The actual or the found obligation forward-looking A revise the that over results to to now detailed XX-K that as would today Laws Factors result to Carvana's but remind meaning discussed can on Form materially no differ said, contains a otherwise. assumes discussion the including financial uncertainties developments in Form forward-looking turn I Carvana's actual like in call that to of differ those conference start, following results statements XX-Q. the to section discussion results Securities of and recent Federal statements may you opportunities statements risks that and

Ernie Garcia

joining you everyone and thanks call. Thank Mike our for

the strong and strong XX,XXX board of the experiences continue outperformance offering our year. over very the estimates our exceeded and quarter growing time grew across for our sales driven to by which the year-over-year. are our which to year. strong We demand exceptional unit a by was our customers. delivering great are start first guidance demand raising first proud This We was quarterly QX units execution where us to allowed our that for servicing while was

to rate since organic to the to to our digit demand among the a for for scalability quality experience fastest we to quality retailers execution the of exists the those the triple all we Our our of time quarter, is the been automotive we the that's auto significant speaks growth This clearly to-date. delivering business model unit absolute this has public in of launched, terms retailers. among but of have the been had first achievement also our experiences, fastest the growth customers, public that level and

has us We surpassing achievement are those it give are strong broad-based goal of proud excited confident feeling mid-term $X,XXX. but what quarter drove our guidance. for GPU, about detail on our and more a gains and We will Mark suggests future. comfortably at of had what they this very about the

quarter XX%. clear. inherent We in leveraging our continued markets We just as for driven quarter, business. well. in total in is in population coverage GPU opened the expenses progress to was building to unit and growth, path QX by a and show EBITDA XX market That margin over that quarter significant in profitability to improvement the first the increased is the great

vending machine and opened another also Charlotte. in this a in Tampa morning We

that quality and grateful our to market quality even both In away bring everything their CarXXX. the for and Carvana April, an team of expertise with They of continue expansion, they estate the it. deliver Our in completed do. teams we assembled with to us CarXXX the build op previously XD real pair to our and continue computer of any and in technology are acquisition to logistics blew more our unlike they put importantly we products we expertise expertise We to that didn't complements of customers. reconstruction and booth proprietary experience have push vision highly the and photo with and will us own functional will and other. combination this an creativity front with beautiful our an that of believe enthusiasm create

continue the the of be experience aim to from our merchandising buying all technology get integrations year-end smile power it. improve while to explore will of the customers prior some to our the out are relentlessly usability interface to and them doing plan increase car to there, initial with rolling to improving an We to our they and and

roughly been and public year off we ago, short amount. five with now of a of for year, to This we the We tremendous progress. made time ago, sell a we about units. A just year that year have with we $X,XXX over GPU. that total year in year off were expect were times the company a amount have coming XX,XXX coming One

year EBITDA expect were the $X,XXX. year coming margin. off ago, we with A quarter, cross This to we negative XX.X%

what small market between way we leveraging margin. quarter. of and Five over wanted the launch process ago, the XX% We cars in EBITDA to we quarter, crossed we being negative the people with Taking fifth of a buying customer the to procured. we the larger view, team way were the wanted technology by dream modern about anniversary X.X% entire our years to the change thoughtful change car. and This an were a expect even could first needed cars reimagine that and buy first

to and wanted were We the change it merchandised. in a to all So we way way. online centralized cars do a built system

with seven-day take our that test built us photo booth the the test advantage policy believe that to could that drives paired allow inventory. fact we we eliminating a we of drive. So return to a would We wanted replace centralize

cars. before. access We never to our want So we had everywhere customers seen centralized centers built all at reconditioning that a those and certification give scale to

network wanted maximize selection. finance to built customer We that scratch our we change a from to way the So customers cars. logistics

customers So minutes. more and our complete we allowed process simpler We experiences. that to give the our wanted system memorable customers to built in a a intuitive

a built that culture them unit all a build exceptional shifting That customer We people prove In of to five company. we with just that centricity. ago. and wanted team and could do years be a to So economics wanted the we of united summary, compelling. paradigm was

reality. years, has Over turned this the team last that into dream five a systematically

done aren't building. or We dreaming

close. five even five. first and aren't the we did to We accomplish that than we period the can forward years We over believe even over more look next Mark?

Mark Jenkins

the what what otherwise quarter year-over-year a comparisons the are company's joining be and of for Retail Total QX units increase on in in means gross an Ernie. increase this our Unless history profit QX follows million, XXX% million of Thanks $X,XXX, an grew trajectory. our will XX,XXX growth noted, in to sold increase totaled was XXX%. QX, Thanks all XXX%. GPU $XXX. and excited everyone $XX.X today. basis. of $XXX.X was by for was we quarter of revenue us quarter an and Total about total strongest

from as to than of was more more than new from in GPU, XX improvements including days the year well in XX.X% to points margin points and prior ago and XXX see XXX in as sale products. basis financing to days reduction broad-based wholesale, quarter days QX gains reconditioning, XX an EBITDA We improvement negative in in basis a a continue QX, year-over-year.

well-suited more to greater XXX,XXX make GPU metropolitan six with to largest while up rapidly the people and and in geographic our markets a provide of opened are We so expansion all quarter. ever XXX now over have markets believe the serving a bringing expect to showing markets in gains, in sizes our that open end XX customers XX% also XXXX, XX U.S. population online than population. more framework year about than significant these useful for to our opportunities collectively these in are markets. addition XX model and There opened time. leverage sales of total statistics We our of this to We we In our U.S. number areas XX expanding markets to is operating XX footprint. QX, far

the total $X.XX billion units For year, are XX,XXX we $X.XX and to to in our full outlook XX,XXX to revenue. raising billion

our year strong execution to the we are all continued anticipate based we seeing parts across the second financial across $X,XXX also gains to on We of raising key $X,XXX our the are for metrics. outlook quarter, transaction. GPU In the

XX% units of expect We an retail sold of to to XXX%. XX,XXX XX,XXX, increase

march We our toward increase to of to we $X,XXX. expect midterm total $X,XXX, $X,XXX year-over-year GPU to goal of as $XXX an be $XXX

We expect leverage as operating and XX% grow. EBITDA negative between X.X%, reflecting to we continued be margins

cash and and You exchange million XXX basis XXX million ended million QX fully in $XXX.X shares average on should use QX approximately and in with QX weighted QX. We approximately for equivalents. a

follow-on ended more million of significant operating X.X a yielding a under execute sheet in as discounts leaseback capital amount under Class common be flexibility A On master additional after approximately $XXX of believe and plan. $XX to April than eligible also million. this shares balance We our sold capacity sale our million we with completed of quarter We proceeds estate offering stock underwriting provides agreement. public our this $XX.X continue real of the million we to agreement XX, assets on in

leverage. sales, to Thanks of As rapidly remainder financial look expand increase our are toward continue goals. XXXX, excited We to the for your and progress footprint, attention. we demonstrate continued GPU forward we grow operating about to intend our

We will now take questions.

Operator

Instructions]. [Operator

Lim Our first ahead. David from comes with Wells question Please go Fargo.

David Lim

efficiencies? is, I the a reconditioning How the so the from and dimensionalize, it other The turn, $XXX And Hi. or question that inventory you retail afternoon came explain have perspective? the you wholesale GPU, GPU versus why bridge Good strong the can can everyone. much was of improvement then, from process you can days versus $XXX?

Ernie Garcia

David. Sure

So I am hit happy to that.

our in our company's had we history in So QX. wholesale strongest quarter

are approximately retail sold we strongest that you we unit to-date. think per sold. profit. per have averaged to wholesale When it wholesale gross was apply numbers $XX of I retail $XXX the Those unit, that unit

there think that. driving a things of is I that number are

executing these a So think wholesale and units. first, job team I selling did our tremendous

starting where in have high the to know are dealers wholesale the come brand that build the like a up to consumer are cars. much we think market, place can in quality we you market I of buy we side wholesale done

increasing side this and from buy area. Carlypso our on valuing customers mid-XXXX secondly, acquire of we founders buying cars And we think for Carlypso management cars but that in enhanced technology about before, also placed focus customers. that product our talked I from over the of have we the

the that, view said having very we wholesaling cars cars or Now in customers. a early from all ourselves out building innings still of buying business

there. innings think pleased will we and with look is going. But the very, very those. optimistic about cautiously build we still are and continue the the to we early are that on in quarter it's in early But I how are business results to

to part it second gross As retail profit, your relates the question. of

we activity contributor was up about retail stepped any profit in by The in quarter-over-quarter. gross the sequential absence QX. $XXX gain So that promotional biggest to of

promotion, promotion in has do on In hurricane QX, recall, activity. annual may this which our QX you As Cyber retail we we an GPU. also some did Monday particular impact related

driver sequential And the biggest increase. so of that was the

you put with I of we we be were GPU wholesale were the may we QX. in seeing think have the thought and the otherwise retail we little the than would QX the as a associated previous at that end market that recall expected, depreciation might number rates given pleased softer generally the We up. on call, patterns

the what of we exceeding given retail. on that there We market our were generally pleased with our in were part beat GPU own was dynamics. seeing outcome, expectations wholesale Just

Mark Jenkins

Hi I add. to David. like is Ernie. This would

clear I think it's ever than $X,XXX is to been. path the

said we to expect we crossover quarter. this the remarks, As prepared in $X,XXX

really that were up to the turn we be where to imagining easy that to quarter. at we a $X,XXX to expect gets first It push in number down turn just overtime. by extrapolate We similar times continue

From get to the benefits We to and logistics from customers. the skip that hop, we we to we think are the can already scale $X,XXX and centers. better there, offering there it's network with continue and leveraging a a jump get of inspection products

really, good feeling path. that really are we about So

David Lim

the from essentially Just more $XXX like a coming a inventory Was turnovers, of on improvement was that? little the Or the it that in half than inventory turn? $XXX. follow-up versus significant that bit

Ernie Garcia

Yes.

clear. To Sorry year-over-year sequential talking clear, I are you retail be David. be changes was about a to certainly just in basis, On GPU, right.

part a decreased GPU bridge of QX and by we XX days year-over-year. days sale the That's XXXX QX XXXX. large average So retail between to

gains We and that inventory over management reconditioning also in made period.

relates of to sale cost course on initiatives we of talked XXXX, it then the as over think executed in that driver. I about gains the we some reconditioning those secondary side particularly the there. come average was big our But days calls was down and driver the to a

David Lim

bit just my you the Thank $XXX? the question it getting also the more Or Okay. you? And and on final $XXX a Is then little can you add-ons? is, side? are bridge Ally more

Ernie Garcia

Sure.

was bridge So that adding part mid-XXXX of certainly GAP coverage waiver in year-over-year.

year-over-year finance time. XXXX gross Another profit as in a part in for of quarter to on transitioning per that unit. That our was came part, gross normal brief finance softer profit first were from, we increases the in over QX than Ally

made usual softer quarter. we gains lapping that than so some And just there by

made also and scoring have that to year overtime technology We gains optimizing our finance to earlier gross led in and relative has as profit pricing well. a

David Lim

and you Great. congratulations. Thank

Ernie Garcia

David. Thanks

Operator

And Concepcion ahead. with Citi. Alvin next question comes go our from Please

Unidentified Analyst

early and on I then question early, This Nick, a is first Hi. is I repeat any in markets? your it's team color on your And you guess out to a little would that on Will improve to additional there Atlanta? vehicles? I you CarMax update be need in is know know what still Alvin. doing? any in commented probably anniversary on fifth for own customers progress your and match larger sourcing on build lapping

Ernie Garcia

Yes.

So operation is Atlanta. in about on just cycle The I once purchase average your crossed we for point, question, a to years. the year every buying over fifth five think car our of consumer first

cars heading So in we into repeat was of which on neat order kind that of in cohort, Atlanta. are just XXX purchases for year the first that of the

say excited much do So buying accounts are early customers And That third said, noisy But average. data is and will from we the still very early more it. thin. are it's I there quickly strong second would very about data data the looks car, and relatively a are than we car a enough enough. small that have the

think I comfortable But feel we don't we are that. optimistic good. say, I and would quantifying about are So that

for But family you I a not in we repeat up six example, letter, is the exactly cover we the think look cars from in that's a our the tend at you to gives bought us. when And there a sense, customers. shareholder cars family. that's picture if there of think everyone of I someone touch sell it to family,

nail the but to indications So are nothing good I down yet. there early just that think statistically

wholesale to our goes, I that the progress back was as as I our margins. And As from in related vehicles record average bit in terms far importantly bought as gains. sourcing think in wholesale every record to would answer we This Mark's it our cars go customers. quarter quarter of

it's the conversion good but to working that great so The have ready job. of I making and that are I a say, a progress are improving But looks well. early in we a think don't good. They of encouraging. off is several and yet. funnel testing things there which doing number the think give months what know people a is also on just are expectations And really for to I there starting been getting future is lot we more visibility as It relatively I to then that the our into small to top that funnel. last team the would base, quantify of are very test

Unidentified Analyst

Thank Great. you.

Ernie Garcia

Thank you.

Operator

Lynch. with question America next ahead. of comes go Bank Your from Please Schindler Nat Merrill

Nat Schindler

allowing Yes. Hi. for your And passing loans any on for you to having your to rising comment can sending from rates average also, Is are potentially Allied you an you at them? effect on score credit side? the money on customers Allied way there are that more all financing be are that of

Ernie Garcia

mix, buying have I mix say standard us. cars So income, et credit, of a your from seen buyers cetera, in that demographic is, on age, what I are question, first think we every dimension, would gender pretty

there out population kind there. migration And the is So I meaningful of we there anything been any in significant to think servicing. that call are hasn't don't

to So I think continues as that play out expected.

can those would As it is We think long receivable say moderately take implement basically just We rates, on there all rest we creates But think will them natural to we street sensitivity what to then something into it make less. any system is customer a do and as that considered. pass lag is headwind. I through. negative. price relates put our impact I of rising little through, of it impact responses as is rates rates worth rates what's consumer see When them that that bit that we to instead we rising is those the that's of that a rising rise, a rates market that originated way And we and actually happening the the straight us passing the and them the through pass market see the negative, rest of watch pricing makes given that super and and kind to in those it's meaningful, else can but a sure don't creates then of passing doing.

Nat Schindler

about follow-up any done And completely is discounting your sales? think The comparable that's question, Okay. one basic more used wondering you what your unrelated. Have X car change was versus you to GPU.

Ernie Garcia

either. to No. out That's specific consistent. been there Nothing call

Nat Schindler

Thank you. Wonderful.

Ernie Garcia

you. Thank

Operator

And Please from your comes with Robert next question Baird. ahead. Sebastian Colin go

Colin Sebastian

national on already ad website something add expectation Is Thanks an Ernie, improving you have of emerged mention more for funnel start. that website? conversion around seen more even And you about the Could traffic. you Or couple that that talked Great. you then past the you on expand rates is presumably guys. nice more also market traffic? the over pinch perhaps several you the out maybe to campaign you functionality more you the months? with quarter, a have points just in have and as to bringing the details of

Ernie Garcia

the credit us for Yes. one think, of a ever are Colin, good I of all, you first question. give at quarter your Well, beginning to first the

for got that. have we So thank you to

celebration. moment for a that's So

this we high-class as first problem. really I think your question, I a on view think

XX% of say for this you this we driving thing would $XXX I think the nowhere. So a order sold. something million always estimates unit think for I our find I for the pinch first kind is, are to I your means kind And that of revenue on raising up total year what and a and plan. is like we that And going sales we are roughly XX days of obviously plan saw in by season when tax increases. ago tax going ago a in in have That whenever roughly units is, a jump hit. month. we that or refunds point XX the days shows monthly prepared volume that up scale, run X,XXX think are increases at basis volumes your the shows expected rate But of business And some XX% holes quickly, sales into

very extra But it's So what handle that demand strains to just are little pinch route. will form we well. going those certain logistics see that I the ready a take is think points we versus

system have delivery a XX got have can of markets, lead of And extended so there markets Similarly, demand and are right logistics while out are bit. that kind that we sometimes doesn't can leading out most little of see delivery being those has pace capacity, decreased in up we certainly overwhelmed some times extending of routes to you the that conversion out delivery which those staffing times the your also pushing now to with inside constrain now When demand that are markets to and rates. and XX open. times system also tend the keep quite

driving think are I it. So what are those

would pinch resolve good very and are we relates to is high because in the very, the extremely the seeing of say, convert we as about all through, seems we Now working than are are January to these much are are it. this that seeing sales year. pulling way it what But about quality it that rates we top very and to al seeing, feeling the we points. And has are I definitely demand starting excited demand higher year the quickly them. funnel of Basically, at the into today able growth demand us

Colin Sebastian

more break the trend you response direct you national maybe spend regarding could over or And spend? brand between that expect versus expense. out time? then that Mark, that ad are Okay. portions to wondering how I local was And advertising the if or

Mark Jenkins

Sure.

So at has brand our a terms more not mix in high much. direct marketing of seen level, versus too

markets. total that as of quite in still a That's have expand I we we around national transitioning TV think a of Within are the positive case. one as hung for bucket, TV of our XX% places while see footprint. roughly fraction feedback the spend we geographic more now. advertising more That's a where we lot toward opening

one as impact of us efficient the has opening about have, TV markets utilize markets for more opposed overall. So to that nice channels to we more national more and it brand the positive things local spend becomes is the good so

that I we spend on our seeing are marketing think early from positive. results the are

XXXX record. CAC quarter has the Our cohort on we lowest first that have

excited we are of And nationwide. we that. with of spend. So will wider and expanding our our continue service forward we as to customers opening I time, TV do to set expand share advertising over look again markets about comes as national think more just a that a

Colin Sebastian

you. All Thank right.

Ernie Garcia

Thank you.

Operator

from comes Please question next Blair. Your go with ahead. Zackfia William Sharon

Sharon Zackfia

time far over I because Ernie, about you those were as kind Good model of logistics afternoon. in understanding asking of went that in to basis that you I satisfying you talking guess, amount go back pinch up a again? costs don't I in first to the my that pretty could that think, Or the cars at that demand. haulers I you per to? have Am is people like relation correctly goes. were least I would quickly am the as for on adequate guess get car points time, Hi. they you to

if am that's of I wondering tied kind together? So

Ernie Garcia

Yes.

So the of, would say. just first of is all, answer sort I yes

now. XX have that we are many markets There many, So different markets legs together. those as all you connecting logistics are think about,

got centers. legs inspection have We different connecting to

legs. to the often we out across shipping country, the When legs many different other to cars got customers have all are markets. We times through cars connecting go

rely times markets some it those need being you a point legs. is delivery in any pinch and in customers those on for extended that all legs result of can in out So

And taking. so that's form that's the

in growth. those network invested we Now significantly logistics in preparation for all also this

got part in And capacity, And legs across so we are are we general, have seeing. of a you what constrained that excess have that's big certainly logistics but network, today.

Mark Jenkins

Sharon, there between we is a at make other on would these high the point things very gains. are of network is, we bit one sales and then that lag have when to we growing large a there make And when very, realize when I logistics rates, expenditures the like

So for Ernie in a QX, out network, the XX% ready described. logistics that building are getting quarter like we jump that in demand

well are doing We that ahead of time.

so effect to some give temporary rise And expense logistics as fluctuations like in lag can that well. something

Sharon Zackfia

a And of the of Okay. you range you. for look Thank like XXXX? CapEx then us could follow-up. might idea Mark, give an what

Mark Jenkins

Sure.

not our we So when pars us. And the of and are CapEx business going of Part the historically machines. are unpredictable is one reason is for we away to the have largest guidance. of launch vending CapEx component more predicting machines given exactly vending far

but is again about the CapEx, think drivers key vending our about it network. a of well up our machine it we as meaningful majority of you Those hauler together make bit, talked as think those quite the I total CapEx. as

of terms I out pattern relatively when of that exactly the going are exactly But we we haven't anything consistent around we how time. machines many over uncertainty vending guidance, and of a in had crazily open. have wouldn't too to expect done the because ordinary. So specific

Sharon Zackfia

Good. Thank you.

Operator

Please JMP Securities. with ahead. And Ron next Josey your go comes from question

Ron Josey

wanted guys. there DSO drill just the and to days inventory taking know in the into bit that's XX, On I down Thanks to outstanding, the XXs gross importance you ones. question, Great. seasonality. to two sale quick And And the further XQ maybe second the a given just ramp rolled is quarter despite just XQ's profit. for little

picture, to fair are it legs that certain DSOs are understand get last perhaps pinch launching revisiting market we then you. continuing saw comment see forward points trade-off But follow-up is think to that we totally those like basically going are you just on slowing are are down Ernie, constrained versus the are your come as there you the XX today, maybe doing about Thank And just to now? up markets, DSOs overstressed down basically that accelerating a can XXX that. likely year? them to doing and to plus when legs to between talk rather avoid new bigger you as most legs? Mark, those rollouts and And running So we than to so

Mark Jenkins

day hit Ron, on average point So sale. to to the

we range And QX. in the then reasonable inventory progress QX bit driven have on of stable are gone our as on year QX that amount rest relatively We plan. the rest from a for as expect that is make in and to the looking So a we the recently pulled down given all of and were progress made, keep to a XX the of we to that by in of QX. XX year. Part average days down tremendous days days fall to bringing do we We at to that sale. XXXX further

quarters year flat you next for we inventory think end done think this the the then about the I inventory grow expect relatively year, to course in order to we satisfy when for of and down, as first past the of of up toward half couple over within our range, of or the the in a XXXX rest demand. plans have remain

Ernie Garcia

Yes. of where are And cars openings the our moving we parts less do network mature the to most your the is to oldest And stressed. have our most into we think, many in store where basically second are of system markets. out in and question, I stress get so then just East

months. a take do matter But quickly into also expect of we we over that So pinch account. to relatively fix points these

XX a points as see say continued So we of have you refunds the many, you of that it markets. the head a at a I say of to for just lot many logistics It's that plan ahead huge that level do to have pinch then would openings. bit have you then and is into as also which see off to wouldn't or best would got demand a where got here is if just When market I least predicting work we of time, result there granularity and a points are large but going pinch I there. only are routes, up late we that are result, tax demand we quickly February of less direct demand we growth to We say, at consideration. little emerge as emerge more some that. drop and there, remedy our

Ron Josey

Great. Thanks guys.

helpful. been have You

Operator

securities. Seth And question next go Wedbush Please comes our ahead. from with Basham

Seth Basham

afternoon. good a and Thanks lot

Ernie Garcia

Seth. Hi

Seth Basham

guys My beating first Could upside in Clearly cadence the did describe drove perspective? what your monthly What you question job is great a on March specifically? from topline the the you cadence quarter. expectations. happens of a

Ernie Garcia

Sure.

will We some on give color that.

I talked demand what to that probably we late about think February our we would just I on say our in So last in handle kind biggest the able the of on and variable we being expected out called as increase guidance. is, would see that call operationally

I were that believe think demand was did But convert. we markets that in handling that in good March. we job more to a we able definitely there

that May about full March as you why those and relatively that higher we in feel the think And January is expecting that resolve much point that's the pinch those rolling true think see we state and of April and are kind level more so a steady of February are able to then year. volume I which we when are over into just because sales. handle less emerged we points quickly at of and good I comes at to

Seth Basham

between of acquired a color. vehicle it. thinking from so lowering and are from those That's making on cost And auctions? other acquiring about how standpoint? And are acquisitions, mix is that then secondly, your trended? sources guys helpful that vehicles progress you auctions Are vehicles and you cost how what acquisition turning from Got

Ernie Garcia

Sure.

as vehicle I our broadly I acquisitions would So think or describe from approximately stable. even auctions being

I think looking make we to are constantly there. improvements

are We technology. our constantly improving

period. And really But it's like short stable so well, we time are the we relatively overall. been doing what there last over

cars I talked from One customers. this terms on think as is fairly well. thing mix, that particularly stable think directly as call, it opportunity of the wholesale in that's to a relates lot in sourcing have I we been more about,

progress nice are a in some the in in to seen I showing from wholesale degree volume our taking customers there cars of that's think terms we of volumes. up that have we

margins also the cars are taking feeling that good we are about We in. those on

customers. earlier, very cautiously that mentioned source cars as innings more in I from early But optimistic are So the are of our to today. that we we abilities

Seth Basham

Okay. talk about for about you That's about markets, me lastly But margins markets oldest from you investors, when we, mature? are in the as how then And your is, proxy individual thinking future to earning helpful. like don't one Atlanta. I other a much there of right the think detail. too should know as EBITDA markets

Mark Jenkins

Sure.

you results think is I most think about the guidance our about then we most CAC straightforward company fact market thinking our that a that proxy to because So contribution And element when the market the on do key provided that centralized our pretty XX-K. good recent inventory. we see GPU. economics One have GPU was average for market in our way use is to data and

upon that transaction centralized using a that all drawing markets have platform. platform. We are transaction centralized centralized inventory, And

so an we in in easy a about way had GPU $XXX Atlanta QX. had $X,XXX is, We contribution And to this CAC one think quarter.

so that's point. the starting And

expenses Now other there are market. in the

We last mile do have delivery. to

driving market to We haulers advocates door. the out in are the who have customer's

operating out We cost are of door. get to compared That's relatively to cost brick-and-mortar dealership. some inexpensive GAP a those the to a spending the haulers

that are those the costs small there those are but relatively to well so have. addition as you big line in And items

Ernie Garcia

as think And are is, operations XX we up market and we per well up which was had, market just nationwide employee, March in there Yes. per XX% employee to year-over-year. in one of point I sales useful data sales terms then interesting operations

is lot line items see, up of additional can leverage well. those in you a there as showing So

Seth Basham

Thank you guys.

Ernie Garcia

you. Thank

Operator

Your Craig-Hallum question come from will with Steven Group. ahead. Dyer Capital next Please go

Ryan Sigdahl

Good guys. afternoon, on for This Ryan, is Steve.

one Just for question us.

You profit. implying guys I And operating GPU, leverage. for both talked went off gross look revenue have your guidance XXXX about and lot a at when better

and to However what you higher incremental appears EBITDA be even gross the profit help implies guidance me margin loss. a bigger OpEx? Thanks. Can higher reconcile

Mark Jenkins

Sure.

shown we we pleased operating obviously in think the very I business. with So that leverage have are the

in in split big compensation included we XXX buckets, reduction of per in points. overhead by unit was and $X,XXX our and a think across margin improved benefits EBITDA QX, two approximately loss SG&A SG&A. cost. I then reduction That basis That

future see expect well. to there do so And leverage we as

about our we to As it all I are good relates year, the of guidance. feeling rest the of think

saw think GPU very I QX. on we results in strong

GPU We $X,XXX above are QX. our good feeling very guidance for

the feeling we generally. good are so year about And

Operator

question next our And FBR. Please with comes from B. Riley Sameet Sinha go ahead.

Sameet Sinha

Yes. Thank you.

are And So your of seasonally guess to you point, per leverage, Mark, topic stayed advance you or talking unit strong ad flat about are in I operating of spend quarters. how I guess staying pretty prepping your the on investing year-over-year. the much

ad also or not So points units? about try use model right thinking number am you right because I you use talk expected or of on leave? you a people not of one purchase that there my of age other about just And that? Thank finding you your future the your searching out and think and and the configure way of terms the points on And mileage spend? Ernie, people data something this And to figure many guess decide is Is right kind those about get or second Is factors it markets, site inventory, we quantify how to purchases? in can number the that? Can out? just for couldn't you, leave I as can about population, you in you. configuration of to do they just to question ad we pinch help especially the on spoke touch pinch us point. spend

Mark Jenkins

me on first. advertising let leverage, hit Sameet, So that

first cohort about I think point the and our level. is at leverage advertising to there the we really foremost make think important

evolves brand grows, the launch But And being begin data begin a per high to in all Atlanta age. how as that then we advertising raising first awareness. unit unit market. mature as what the think QX. provided about starts unit per ex most you expense awareness in Ad our a advertising over and and advertising per within way when unit markets a in expense we $XXX time the per in market very And down expense that declines we recent is some unit steep per so market see with have declines XX-K which steep can as cohort, there most advertising within also seen shows we

generates overall tends up when markets mix company at to the think the course, that be company which with when to unit steep advertising more start is you gone I based expense of per number, higher So the you opening effects. aged and it's of mix per then relatively of a level, at new company stable what expense mix are that mature lot in of see unit are that a can paired have a level that you through they stepping decline as markets kind markets on have advertising that

I per in it was of cost was first The more lower any are there XXXX and XX-K expensive, cohorts would then the in new of thing presented more seen new as the still. unit the advertising markets. quarter XXXX than before than we that trends from positive mature although is other markets advertising that there very market, we add an expense have lower

Ernie Garcia

Yes. I that. to would just add

a choice marketing, everywhere, then have or will per overall is you marketing see the new to an level exposure want more what so decrease exciting think marketing your to to When kind of local do basically tool when old marketing, same some to expect spend have and lead the hold flat in you I here in think then in but do markets, So national all you you marketing, market, think new markets. you saw national marketing sale. double when because move marketing the if markets the the markets, I you you want double will of which you about you double this spend then double I doubles responses to is you then if I

not inventory network that's it's so as that our of effect the in access a of our a in national result sort to unlike markets. ability exists And network, business

think that's So I exciting.

I a watch decisions of more. look and national you absolutely question no inventory, That's doubt we is to this as time that continue any having TV choice to over in same the driver about that make converting got think asked marketing that we the customer do continue at wants and to will and is I we learn given sensitivity have that think right inventory the primary a car there customer. the

leads And so or either inventory sales. a more a distributed having intelligently to more larger inventory

down to to get will number we we then and to are be want intelligently for we much I we it I that turn think and think to where we with cars clicking the think reason turn choice that on relates from want always site, them. grow the an inventory you we for data time, some we XX at our where going cars of which And months buy, growth I flatter make to them inventory be And demand, that the going leverage and kinds that long it of relates the so a as many are data it And exceptional and are we we to that's inventory, them and range as most believe until think we data last around all buy which inventory average, to increase inside or push sources be are turn our place time a roughly out everywhere. to customers conversion and to want of, growth distributed this held that how at are just get time by leverage many question pay That's are won't just different to a to it have want given to times continuously pushed every times significantly. we do holding exciting data we then grow I put of that. on any sources conversion. to website start inventory flat more And for you the all day we single of sources, informing over leveraging of down will external part,

Mark Jenkins

Gary that Prestopino go the from your And The answer next ahead. is Operator just Please to a comes of are then that marketing we with the spend second obviously in. we markets Sameet, marketing And quickly. very question also Barrington biggest our are your with is question heavily population to correlated which number Research. determinant of

Gary Prestopino

been have monthly But Most unique answered. the you have the for Hi. visitors quarter? do average

Mark Jenkins

from think I And one million April. in crossed two And the also million. X.X in nine up that said letter, was months we we It was Yes. shareholder prior. over that million

Gary Prestopino

just And then, get inventory have in flex season? Or spring up to QX inventory, Okay. with Ernie, in did how you selling here keep flat the your terms QX? of you much into to did

Ernie Garcia

up versus definitely We in inventory flexed QX QX.

historically we historically. done think the hits. have that I commensurate something sales that when the I And have increase is that season in seen that's we think with tax

just We QX. the And big demand while in to increase QX. in so average that and we that did day see we late that starting lowering to did grow sale corresponds inventory in

Gary Prestopino

Could inventory give here? is us an idea your what of going you quarter into the

Ernie Garcia

QX with sheet. ended million the $XXX We just inventory balance under in on

Gary Prestopino

with you taking units. I have in not of will do Okay. as IRC? considered might areas leading companies to where get have of for I some especially a to And grow, the auction country presence some advantage you thought the you, then you reconditioning an

Ernie Garcia

Yes.

we that take We strong car. in, it our we car centers inspection in. a at to make really stock doing We and important got process and sure all can go a quality have that's think got the right through car internally. are all about the the data of We have we control when the

put it We enough then believe to the it standards that certify we a is level our put to sure high as it so So customers make we our we properly. merchandising it it. can make we to of merchandise a we and well able in photograph sure we can level through reconditioning front car

and important so controlling So we are control think all for that's us that to today. all we

Gary Prestopino

Thank you. Okay.

Ernie Garcia

you. Thank

Operator

ahead. come today question Consumer from will for last Please Albertine go with James Edge. Our

James Albertine

me quarter. for Very on and congratulations gentlemen solid first us in a Thanks good. squeezing

Ernie Garcia

you. Thank

James Albertine

follow-on I offering. here the ask capital to allocation congrats wanted if to I on on bit, I wanted little as focus well, and a may.

that's excess gauge we new are am I you of about benefits? manifest how soon how timing as in demand going then for then into to in perhaps? points, into pinch given through? of given growing seeing And integrating carry am market that you flow leveraging branding you machines have every just are ROIC going your does to you it's supply wondering, we degree there we about an now, well, are national highest are opening How obviously did those necessitate think of you fulfill. utilize terms further vending are are calculating you successes large see you curious, terms the machine and without machine to balancing it itself Where on better progress additions at lot some are talking your vending lot you it sort the to of vending here is I of are You one to and machine? uses of the are that markets, not elsewhere, making vending your as And country are and where a in investment acquisition a Carlypso. talking you the necessity swaps the a point? serve you this too. CapEx Or right having should

Ernie Garcia

Okay.

you let's touch that. also mentioned there. with And will on So start I Carlypso. briefly CarXXX

was the earlier through, that A year brought the lot in that first the flowing up the Carlypso So as already in did earlier XXXX. of we acquisition that in in benefits are call. was Mark

running buy great now a from directly to Carlypso is of founders cars and doing the our customers of efforts One job.

are we feeling that. we So really to we integrate how are able where good there about have been and

general, in partnership. well on that over happy that's working many rolling we that still But out very very many, definitely are We to are things be we with expect and time. going

experience were second that first laughed where excited and you million the a on website, in I spinning will got I demo the it they car. because And enhancements explore how are trying integrate out time, really give to technology incredible doing. our can technology should a was vehicle go click CarXXX that what was car that then to I my pretty player that we they I so really our mind where on exceptional As to for customers. and customers loud a to to and just thought out figure doing expect CarXXX, and built is it were our see relates miles to say, when just

interesting of expect levels that will So time. are over do to because different integration we time to plan that take many and many there we functionality that rollout

toward expect to integration first to rollout be to technology built. iterations quickly working the we year. And they the of will as think end we to start then the more I of as have rollout and incredible continue possible the

think let flows we back very around about I Mark will are excited how financials. that So through talk to come the that. about I

with demand do markets have right. both to believe company and across pleased machines. in machines, We markets definitely We do the have relates are of we seeing growth with and vending vending it vending As we very without our that all are the not today. excess are that machines in you we

that's think exciting. I very

remains finance capital. the quantify equity And the machines vending up don't the many ROI machines those believe benefits very that the be on changes ground. we because feel that the those continue sale-leaseback sales. also can that those and that then We ROI. different up math pretty we put to very across markets. to measure up arrangement against the get. remains the vending of and vending surgically consistent operational through cost machines response put We high even We We end very tying We see to clear see we the can

So I about feeling would offering. core say, are we great the

machines investing of strongly more continue those. leverage continue we to we national We very the and power we vending of excited as fully marketing are about the and will in keep benefits to believe that in

Mark Jenkins

revenue, the with depreciation additional will then be OpEx be other will that And and than profit, QX. to CarXXX the additional immaterial. as so of some details and acquisition relates we impacts gross on amortization, the amortization There financial, and in would it depreciation and associated terms provide in

James Albertine

and answer degree degree to it the of past share you I trajectory and are But that go understand share think the a again I and but to you really comments be have there, trade do the on thoughtful the on willing the a long to secret. ROI market could shared the luck. thanks that Listen, appreciate I data way, and I side, appreciate in Okay. that best

Ernie Garcia

you. Thank

Operator

the over for management to turn any I our conference to like back closing session. And would remarks. conclude this will question-and-answer

Ernie Garcia

more pieces collection more Thank for Team a nothing the day. Thanks a for place everything great a All and goal you do importantly, are degree of to had on We Much great common than you call. quarter. all for to the are everyone every change a part of of Carvana to cars all bright future that joining proud goal in by people, companies full and the we to toward collection way people be I working people with be to of this you. missions the you fulfilling am the in Thank succeeding quarters. share are.

Operator

you concluded. Thank now attending The for conference presentation. today's has

You disconnect. may now

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.