Carvana (CVNA) 7 May 212021 Q1 Earnings call transcript

Company Profile

Participants

Mike Levin	Vice President of Investor Relations
Ernie Garcia	Chief Executive Officer
Mark Jenkins	Chief Financial Officer
Sharon Zackfia	William Blair
Zachary Fadem	Wells Fargo
Nick Jones	Citi
Chris Bottiglieri	Exane BNP Paribas
Rajat Gupta	J.P. Morgan
Collin Sebastian	Baird
Michael Montani	Evercore ISI
Nat Schindler	Bank of America Merrill Lynch
Naved Khan	Truist Securities
Ron Josey	JMP Securities
Alex Potter	Piper Sandler
Seth Basham	Wedbush Securities
John Colantuoni	Jefferies
Edward Yruma	KeyBank Capital Markets

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 2020 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] Please note this event is being recorded. I would now like to turn the conference over to Mike Levin, Vice President of Investor Relations. ahead. go Please

Mike Levin

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

letter shareholder quarter on first also posted the IR The is website.

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

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

our issued a Garcia. can on And Ernie? between Ernie reported that Relations can metrics our our now, which today call to will results letter be I'd GAAP measures. to include today, in and found Investor over commentary like non-GAAP turn non-GAAP of said, found website. Reconciliations the Our financial with copy be for shareholder

Ernie Garcia

Thanks the thanks for all call. Mike. joining And

growing GPU across by $X,XXX scaling and year-over-year The XX% quarter-over-quarter. and been impressively, Even and these them. operational achieved each our business by and quarter, despite of making out X.X% EBITDA we've $XXX margin made versus grew these year-over-year first across the shareholder first of in fourth our quarter, In XXX%, quarter. priorities. quarter-over-quarter, leverage. of the financial weekly over and constraints up we rapidly priorities revenue first operating GPU We great was XX% across and and our We board, alleviate the another XX% respectively. always results business quarter leverage investments production grew we the progress more by over quarter the letter; we were lay almost tremendous was demonstrating to In the meaningful units average significant the

inventory tracked relatively closely As result low production quarter throughout the levels of a unit of were carrying the sequentially. XX% volumes we

and capacity general our the our Importantly, center in to are up in ramping we've ops in particular made inspection starting off. capacity pay investments

last we've ago, thank culture. a people own. and is had us year they're And XXXX to a put beyond. the point well execution Eight years From started this and the into is simple actually and to look our pandemic of and XXXX. constant opportunities These been scaling As through just buy positions cars for hard the way. over larger. in that simple say and for careful closer be for efforts and easy enable to hard plan, of the in lot the again we to to been up we're who way times market a and is has of taken with people, driven XXXX year. a well look dream fight a more critical buy of demand just growing It a have our every a the center, real very of levels inspection result customers planning our us job begin change $X and had in hard a and way a mass way. Getting first the car imagining across back dream our continue list progress. ongoing to recently, we made the fear laid that ambitious Great and you, by And continuing great excitement ops and teams. we to those to of who built foundation attract us a selection out years production for year of time since ideas, When dream of struck ago. customers incredible constrained lot Those learning. to us focused rapidly increasing efforts ambition, us catch positions up million enabled the quarter inventory advocate of to In work, there, all our ideas the teams was above The people new to which perseverance over all weekly put have fourth better XXXX ongoing to made long it to action. focus, XX% estate important their have customer to of Today self-reinforcing first enthusiastic the logistics, our revenue. tremendous a pandemic we result work off

is best our investments unit as a excited selling the still were Looking showing or today customers to And down the beginning. are that. brightly ambition from of model quality in our up when is that The delivering The we've did as economics can scalability we underlies the business further our see car. made our over forward, buying available emerged time of we're experiences burns dreams it we at take, and results. we just We're we're as step every the the The as gets better with bigger, that field. and apparent it dreaming. gets

scale the to get people. where be where want scope. build While near we're To that customer team or we'll either we proud maintain with we'll nowhere still focus, want we in to are here, surrounding keep in at what got we of ultimately exceptional extremely to we're the us be, we ourselves our We're where to beginning.

ambitious. remain will We

our efforts. We way disciplined In harder We'll to do; of around just have to the us way. traversed the will in it. the have stay We same doing those in and will us a we'll traverse working behind Mark? front than little what short, know the fun keep along we've prioritizing path path us? we keep

Mark Jenkins

was quarter all results Retail Growth across outpaced long-term retail totaled joining increase growth unit And of Ernie. our other Revenue an today. Carvana $X.XXX average goals. sold demonstrate QX of a in toward due increase XXX%. for and XX,XXX, you, key and you was financial Total QX billion our all strong metrics, Thank financial and for higher prices, retail unit progress and to thank revenue. wholesale significant XX%. us Revenue selling

these in We expect commentary expect half we primarily revenue of in focus the of $X,XXX customers unit majority revenue $X,XXX QX, retail part that quarter on and improvement increase impact over plan. both Since QX, a ended will do of to to I the $X,XXX Other and significant from in QX, of in ratio ramping $X driven industry with sequential the growth from ancillary approximately as increase sequentially. GPU in by was a and primarily by of COVID-XX. We than in QX, with costs, or onset total strong an driven our in to impacted reflecting SG&A source latter back an customers $XXX was liquidity public capacity then to the costs a them to QX, to $X,XXX from GPU $X,XXX of as negative X.X a by negative in QX. wide changes. slightly unit transitory for transitory point the wholesale not in $XXX time product from $X,XXX to was QX securitizations GPU expect $XXX year-over-year, In March, increase be we prices $XXX in first many outpace from of of growth attach increased cars rapidly the COVID-XX. paired GPU year. driven We margin midst similar more X.X% gains retail again Wholesale my EBITDA QX, execute XX%. in giving reconditioning continuation rates buying growth cars achieving the We percentage GPU quarter had completing growth sold in one-time QX, resources, by in Total in buying to Retail per QX. flexibility to QX, QX. primarily benefit the billion unit offset approximately two us driven in another strong declined from customer by of QX, XXXX and leverage. X.X%

clear, customers provide on of years quarter. and has two expect Our customers offering success cars longer over made cars we the of detailed our buying from strength the to no statistics buying each last and

we in relative retail company QX, So far basis we April, cars on bought unit set and and in outstanding a are new record absolute sold. seeing customers, to an both from for performance

the excited ahead. We are as ever as about opportunities

additional at units our on our open of utilization total to our remain production Alabama, capacity demand. scaling units bringing near to full our IRC focus to capacity on meet XXX,XXX we QX, continue to XXth We In approximately opened production total by to bringing X.X end and X in at one the We in capacity million IRC XXXX, Birmingham, track over QX full utilization. XXXX. eight annual

these and we've of coverage increasing consist Northwest, fill-in on we long-term and toward XX EBITDA expectations of loss, markets also expect sold progress Thanks unit XX% After expectations bringing and population growth the attention. our adding QX in our markets, the excited opened the GPU QX, So our growth, track In five first to population about for nationwide We region exceed U.S. opening XX% XXX our investing far growth small we and QX, letter, step primarily to launched our with continue revenue shareholder coverage while our retail to accelerated line for XXXX last In significant a new or leverage. as outlined the XXXX the unit major to smaller a footprint. for our be to demonstrating markets. than to to in our we population. growth, total May, mid-XXXXs retail we including on XXXX your more in total our goals. path remain Pacific continuing meet in year margin

We will take now questions.

Operator

ahead. go comes Please William question Sharon with first Our Instructions] Blair. [Operator Zackfia, from

Sharon Zackfia

line I I'm that that and to of period. the good of for transitory I the then the to first. it's I on your will improvements What's ago mentioned itself. to the competitive there thoughts did car costs should you'll would year. available soon think was and GPU, afternoon, would mentioned levels? productivity little be was your back on kind great. a you year sight you on when I'm that, more bit about $XXX And pandemic I think get and are I first inventory? than guess bit that contraction kind that? be think a not have you city? great pre making little of a you've congratulations And know ideal Ernie, on the that What we you quarter. obviously, been about And rest pressuring the Hi, more to finding to pay else You're Any how that trying and that be of guess having more, wondering, inventory of to ahead year-over-year be expect

Ernie Garcia

Sure.

and demand of second production, just last then, been since I basically, the to given we've up. production you think the with start in we the let's seen year, know, then and as catch trying pullback we've constrained of made, that that pretty all quarter So

think first grew. production grew the kept sequentially, our same effectively pace; basically, quarter, as rate, sales we in the So our I at

place. end we've then kind that in our see of to But quarter, made that constraints first lot those the we've of production think suggests progress and I a growing. post were So, of the continued still

now expect there's to Basically little be exactly we we more we kind a be we've kind in be conversion to a gotten we to grow. specify to don't But saying about expect expect grow place growing to inventory. marker of able which we So than across a rates helps production of want to bit expect place we're pretty where to to that. And what kind we're mile excited sales. of the grow the that's And inventory. site. a inventory now inventory Obviously, middle with

into quantify be going And and to as two. there. it to trying we've that's capacity, hit. important we're we around grow of million as But the that from as not number quickly we working Mark, that $X.XX keep grow to And an so to you hard production can we end want the by We'll hit XXXX. milestone expect

Mark Jenkins

question the GPUs. hit I'll on Then Sure. retail

our expectations talked with GPU QX. largely taking costs So in was when transitory we into QX that retail aligned account the about

those we year-over-year impacted on phases customers transitory talked cars I addition buying about costs, iteration think impact the that of year; to some a from some last basis, of early of last look on QX. the in you positively GPU when

are phases I effects of from that's year-over-year those there iteration comparison. base impacting think some early the

at we QX, by transitory look we did call we majority and think gone QX. when of this we're where expect from I be to headed out the QX costs impacted year those that here,

there, so expect tailwind good in And costs GPU as to other to equal. that's in we solid overall, a those about feel step retail a quarter of had the things toward we our to being and really progress move XQ, light Obviously, QX. transitory up

Operator

with go Fadem, Our Wells next Fargo, from is ahead. please question Zach

Zachary Fadem

Hey, for taking question. guys, thanks the

talk centers over the now inventory a could versus regionally have and higher you you've the extent to your opportunity that or to listing operating GPU this efficiencies start Now what unlock can Northwest, the nationwide? across about level of business? entered reconditioning the country, Pacific all And

Ernie Garcia

obviously, Pacific Northwest we last about excited region so weren't that the Sure, that yet we're in. kind footprint launching was our of

So goal, here run, roughly the population from opening basically have market we to XX% means in coverage I that long That basically fill is exciting. think up our in.

us a Also, as we very that's and larger, in just new exciting. that general So the in larger in markets can in puts grow we carry markets economically where position inventory. a demand existing

so that's great for news country. the conversion across And

some have delivery are and inventory you inventory is an minimize is As customers larger, take put inventory different to some want gets input to of around to larger that which you it closer where country duplicated and optimal, places in into duplication certainly the conversion. that also times

of and talking happens should some we're kind rates what of is go drop the up. should conversion automatically you're scale, shipping there about So with distances

what inventory of impacts But precise numbers. to right internally. think around tests getting how all give we that concrete time conversion, don't I to good size times that the guidance and of different on handle the have a how impact thing kinds conversion is the delivery We we're those all have on, kind going we're do more expectations

Zachary Fadem

you for one then how XXX,XXX could go full-on lock production you've about year. capacity Got IRC of But this to talk it. on your move through the path facilities? the more And should And production, lines the as in more adding about think existing got year? in glide we we the

Ernie Garcia

by at look facility think of XXXX, I our that, We you of so see capacity that took of looking of our our shareholder way Sure, at sales capacity for actual in And to it production, in future previous sense years. past. our how our capacity, long a kind to facility look rates us then our in provided to is just in the each letter with at unlock QX periods. can get production kind you production can

of to how the parts different of a being parts We've that. many on able more operational all spoken those So that business. before times other working unlock we've the quickly can unlock been alleviate of of production hardest year. And you is you lag definitely there, last the constraints if how quickly with area business with very longest yourself find different kind seen the associated have lead quickly capacity grow to it's you is we we've internally that'll capacity something the of quickly. And about different that Is sense times, constrained. give can production

on ourselves So even flexible. we catching lot of making up a more definitely focus put and on

grow then And of can that we're last quarters, that now sales in for the expecting our fact the several you of see so progress to inventory. growth results the and kind

something focal to get think So better that are point. we we been huge at. continuing that's It's a

Operator

with from ahead. is question Nick go Jones, Our Citi. Please next

Nick Jones

at I the or and situation? what you in And of a a has legacy question second longer doing targets guess competitors, Thanks the COVID been capacity. Ernie, brick the feel can too Carvana are guess, production I these how than capacity have competitors out lasts investing in then your shortage due are question. really, all Great. years? do for pretty competition now. maybe is large if that hanging noticing has takes chip you be what all Thanks. fluid puts if where I mortar to is, you situation changed, or people the the in much have some how And expected?

Ernie Garcia

Sure.

is So one road XXX around another. the today, I than road. think on trading just it's first, the new customers independent; market the use with the different cars transaction market. cars fairly million ways. is market But on those not are It's totally already the in many basically use use And there's impacted all

of new market the by market market in levels it's and use new of over is. through flows the way kind supply the today, an demand model fundamentally all the of levels as down to because use So then new available other not kind flows that kind late excess use degree that to kind the production impacted year impacting decrease underlying well. is The of

then don't training beyond there unlocked to expect again, So profitable in over over the be think that, million and than market of six facilities, the and and there. them we to capacity capacities build future, these super becoming to means use to growth a a those next and investment automotive importantly retailer. the capacity that kind pronounced, of year. more hiring in we that powers impacts think to and by most cars I like production open driver happen X centers, the we when have that those people kind that cars our inspection largest our But long-term of to wouldn't Even going order over I or first months what's that's and some a are

wanted And kind with chip probably big I competitors, much expectation think the we've that So our with a I the those shortages be fortunate today. competition. there's always from of have to being along lens fair where think be, was of longer success, there where path kind way, as a than to it no reasonable there started that current been made investments we're future to we relates wouldn't seeing to we of are competition And success. amount then in are of that enough our

to competition, car continue more this properties. competitive the think used market, I show and expect do lot With as that of probably of evaluate competition, have expected nice we said, we a should if kind should to to we future. competition really back you we success in up continue the to does So, step environment, I expect that have think the market continue

First it's of unit XX million a all, market.

And the so has in the share. it's market a just highly order largest of on player X% but now eight player the years, second fragmented. We're largest

e-commerce providing are are there of that the with at to are start the similar And customers differentiated in a ahead they XXs in market another. goals very, still to energy put to way very of fairly experiences, be And small industry, may there. others an competitive so of players very when of experience XXXXs kind these that harder very, we're of XXs even time, are there's the measures, XXXXs But very the itself. investments players considered big by really make sense capacity being in have compared And market the then, money and one it. some to you look And that to by necessary out players in are the the platform. some of build that few those

we our in for really the most customers we're thing competitors our look kind constant. demand, you that that that that aren't and make accompanied of other comes stay to that operate rapidly, circles. in want And easy can you're focusing trying we challenges ourselves. instead really then solve. nice each taught need. we're on then important on think they on that chase customers do other on solutions is year grow to has also dynamics, to really us last each we gets market of position, two almost building really really up And the we're operational think It at competitive that we're ourselves. So that we And excited has that about lot trivial we focusing our that, a of with when sure The bunch the a that to focused see

execution. goals. think we're ourselves need And stay focused so if our to achieve on to we our really we going in And do that, we

Operator

The from Paribas, question BNP next is Exane with please Bottiglieri, ahead. Chris go

Chris Bottiglieri

I Hey wanted our just guys, thanks to for focus retail GPU. on taking the question.

use in might not about quarter. you in be movements use tailwind if favorable I was thought any been that that. be QX. model the should wasn't incurred pricing headwinds GPU have retail of then, did headwind And as QX that this other in we pricing Some we not was a versus it It case car Were if a car thinking more this quarter? the see there

Ernie Garcia

Sure.

So going always are I dynamics think there retail many are that into GPU.

toward started quarter this wholesale to seeing of appearing that market. the in certainly appreciation, on the we rapid end I retail some degree appreciation came the That's the really think in more market quarter.

I our sure So, QX not particularly effects that large number. on I'm think was

on have those main namely, majority disappeared as So mentioned, we think the And transitory I of same these expect $XXX, to probably order we the costs biggest, unusual called in GPU were on transitory I the QX. That QX. in experienced QX. on costs as what I the ones retail was by effects impact roughly the QX, the of out,

think be as the so we things a tailwind. as And we equal move toward Other impacts QX. those will that removal transitory of

Chris Bottiglieri

it. Got you. Thank

Ernie Garcia

Thanks.

Operator

The Morgan, ahead. Gupta, JP next go Rajat is question please with from

Rajat Gupta

use Good to follow-up afternoon. guys question of a Good like evening. previous view. Thanks on had for to just questions. the question taking I one my you

start does as see more I is about just pickup delivery, up IRC, How as a happens? production main we ramp capacity up. leverage increases? election had to the look, advertising open capacity that's piece start that increasing, think Did the And should the meaningful like once you to how as in and like a You that that follow-up. you know,

Ernie Garcia

Sure.

of So ways think lot think a there's about probably I to that.

would almost up. expect So conversion certainly, as rates grow we go we constant, inventory to

you up. acquisition rates we time, very to The As and is as conversion customer customer go of from expect see acquisition expect rates go to conversion rates relationship conversion would up, we clear, cost to costs. would decrease kind leverage delivery

that take looks be would can you those acquisition cost cohort of relationships look kind in kind some the older we've that think last at look a provided the like QX, I customer of a I think, if data what also take So over you our as of several cohorts. our at expected.

think I around was or last order our in cohort, I oldest QX the give versus take, company $XXX, of of QX. approaching a level $XXXX, on think

demonstrated with So, what I continue grow older the to time brand. to markets. kind decrease acquisition think further over go we've customer times we can inventory as expect of in Obviously, do it and we costs in build those the older we down markets, delivery and

we customer brand how general, relative in measure well that you gives think a feel And decide where think that our quickly that opened, at then we But times execute. it's still how we grow of any ways. still we can in many And decrease we of markets between we different of function here is of delivery want marketing there, very to our we measure how be. can to like we hopefully, building, I sense awareness what a to our go. and do quickly inventory, can lots we're virtually just early with So low where how levels budget, we in

thing do. to continue and about not as so to long a our smart brand we in that we'll as being do shy think that invest And that's we're

Rajat Gupta

broken helpful. or based quarter. bucks it just math, it. And separately on GPU. the I or XXXX like on like But guess wasn't I this That's points out know around like, Got somewhere so. finance my

much accurate? more are the like general, to half the should are this what as back, about a how a to would like, of and and obviously like Fortunately, higher? about Is you curious kind the medium normalized have finance uptick? Just sustainable that, Thanks. look and factors number expect, like that at like, or And forward? just then think near going Analysts versus day is targets GPU years that close level in at what But are two this rates looking lower. driven the

Ernie Garcia

at tend so Sure, all, so of didn't to don't try here. that first we provide breakout, we

I think it's rationale there. understand to easy our

to the think the XX you of GPU Going was it what time, core half, we're as is cars even order on or our of today. And reference, time order in that back at our selling EBITDA points a were maybe analysts data, five selling I our on worse. as we less today, XX, than many

trying at could so to pretty time. understand detailed would they walks for that investors, we those time, And provide were how over our buildups occur

as think, line think, of general we've in how progress a of industry progress, those and simplifying I I with and understanding standard. much matured, the better seen a more kind just reporting of we've the has as of of And lot in market items. our different many things we're closely aligning kind

general areas in it's you don't think kind tend to we that the so is And outlined that we I at initially strong day, out said, That it's not in, and general what exciting. very compared as break And hard of of to it infer to that pointed very at area that level to, detail going it's forward. XXXX. analyst

we're business think fundamental of pretty sustainable, really So and reasons fundamental I a couple some are we've able for in and way monetize we've job with the that a able progress done credit risk, a price, I good terms of that the so to platform. our risk credit of way lot assess to think that, finance there's and that them made we're

can of additional a And that we we think that some probably of. lot unlock. there's that we've proud value there So done fundamental that we're are there things

be of environment, probably norm in kind very generally over would low something a in we the interest of also tightened we've know, last several unique we're a credit the almost think tighter early I environment. pandemic, in been of than you quarters credit constant. rate We've held pretty dramatically, the

So that's helpful.

well then progress couple progress items, be But there's across over rest there's by And there. there we progress persistent necessarily time. be other as we of to in things are adding that made the other we that So in that think a additional existing to still think made think our aren't be items time. there's made to

So we to going that lot have success long-term we think we relative forward. stories gives we think out flexibility you'll to model in of that's, our that XXXX. that a us And want put several that

Operator

The Sebastian question with is go Baird, please Collin from next ahead.

Collin Sebastian

participate to Thanks. couple us rates I Good then those. might and could curious guess, been Google's afternoon. of much I was there questions might attach auto secondly, that's the attractive landscape other hoping Thanks. have of you might listing room you testing how at products of think the on And all. competitive update to off, that some that in? I a find and there change be if around ads, you services, Or first something and if questions. grow

Ernie Garcia

so I Sure, apologize.

think I those kind of able to answers to give not I'm boring you questions.

to for clearly other We've do improvement So room to definitely services, over our we several to continue that years, is improve kind made out the there. room tax from don't products believe last and to there's we break of there we but plan of a think rates lot go here.

And work do so that. we'll to

well. Google several different search channels. many them one We As of use and then customer in other ways in testing is far as, as We a use marketing, as ad use our product. acquisition Google obviously them we

a like other that we channel. us our the marketing would of we'll as return, we And extent to think channels. to that I evaluate do as quality gives well. utilize a evaluate it So it We'll all marketing high and expect

Operator

Please with Montani, next ISI. question is The Evercore ahead. from go Michael

Michael Montani

the for taking you Thank question.

over to when tailwind able you're provide a any have follow-up. can had versus go $X,XXX of kind I that thinking is if to GPU a I sense I gives, had self-source and there you you that then I there just was you So when was wondering guess of the potentially XX% first just unit, give around to auction? benefit a one could clarity to that but

Ernie Garcia

Mark. ahead, Go Sure.

Mark Jenkins

take I can Yes, sure, that one.

it a So our GPU. at varies in wholesale sourcing I think think is benefit from way reasonable quarter-to-quarter. about of the context it the to it But of to our customers look

GPU from market of car car. basically, our captures customer So and that is difference wholesale acquisition the the wholesale price trading a cost the between, of

cost And a the to benefit about of customer good that's so think way sourcing.

quarter, this a it gives $XXX on that so that, were to sense sense of or we around And you so just GPU. a quarter-to-quarter, wholesale you varies give

way it quarter-to-quarter. cost customer And But reasonable vary relative that's sort track keep that's, of so of I just the a that's, of sourcing. to benefit think does

Michael Montani

with a CapEx look? that share on year, I and makes color next specifically, think kind just can year follow-up next any number and year of normal then had And how does eight then year and was to the question then this a Okay about how what's the IRCs, you this sense. incremental outlook,

Mark Jenkins

sure. Yes,

a one bit for rough the the more And IRC's, is think order a the So, investment market investments, think financing related that and of great to historically way IRC, million from actually there's the financed financing our they're unit that they're a ways maybe lots of business capital than about perspective leaseback sale is for we very we've outlays. that, that of but these but per think not magnitude. on IRC that, then to of those efficient on net about so outlays $XX order of little way IRCs we course, XX,XXX

magnitude to from a of financing about how give rough think that's cost. much really good the I those order feel desirability assets perspective. they so And you And we a of

Operator

next with America, The of question from Nat Schindler go Bank ahead. is please

Nat Schindler

Yes, I under you, GPU Thank think desk. made the guys. great. questions And

May the related thought people Does let's tax try more. on as up I usually filing impact maybe any is then XX. get weekly stop it, impact quarter? well, Secondly, weighted QX to have you on to after with Finally, can little just prior I their and you add that on seasonality stimulus out how a going returns? tax tax had pushed that a on the note, saw, date So daily probably more Could basis walk I'd in the that through different. what much a them more and something or

Ernie Garcia

car multi it So try nice let's down. questionnaire, to break

depositing So both I once. account tax form refunds think, let basically, of at checks me I concepts, bank to in the take people combine think of the stimulus large many and first relatively basically try two government the many,

see wherever than different people in their else have money generally account. traffic on next you'll to what And And before, it past, to to the site, know, see of get I start show that materially or they so years day, didn't that email looked happens start is the lot notifications, through you'll think and you hit look man you'll see, activity of a then kind up. evening the happen we'll

I year. think was material this that undoubtedly that

think undoubtedly did was compressed rates it therefore and to we just stimulus form that sequentially XX%. a takes but the your key reducing us, XX%, grew statistic demand mind on inventory, dropped, for to keep further then afterwards. in sequentially everyone production We we of I grow that day As relates kind is, conversion sales also saw after increased that the

imagine hard absent to our do. think happened very I had first what we just directionally, all, if of so would sales think, to And that's kind to I of stimulus, But on have we kind clearly in try weeks immediately been our have weeks, after days drop. more would And the been of weeks couple the stimulus. and after stimulus would of expectations kind to less the have

years, kind the was don't us smaller afterwards. in demand handle carrying it been to I big I our still customers then that inventory able of know years, for into we're was, impact and it for heading an enough than So because year that but be of sufficient how this would previous big have think onslaught inventory event have to in previous

returns being don't I out largely is I So then vast an think think that little the us. a the do too of behind think that that's pushed is I impact, had was that little I different. for impact but And bit. bit impact it a majority do us. meaningful future. The think behind tax

Nat Schindler

QX, going QX taken drawn normal is into up despite the still be to a out call expect being a week, out pushed don't into tax QX, refund well much was you month. seasonality pretty So it it

Ernie Garcia

April date has So which XX, is get historically the from a accounts out was I at the money XX. tax to most filing sometime believe their May date month in February. what But customers in pushed been

back, has then year end even week probably was kind January. a been have kind And demand is than kind released terms day itself see from just there spread But the powerful might February. the this you filing If tax more kind later go filing as That much, in But late of been of of that moved. date the and that move of you less it's far a moving of years, the itself masses. been of maybe normal recently slowly the refunds the to and impact. date had are XX the didn't out it when than normal

Operator

Khan, Securities, next ahead. is Truist question The Naved please with go from

Naved Khan

on related Yes, lot. thanks Maybe note. a a

behind trends some stimulus think the sense Can then So looking a for how the of maybe like seems you quarter? give be since to noise follow-up? And we shape tax April the the from and you? are us how about And the have the us. should of I

Ernie Garcia

Sure.

letter stay giving to I want continually really in shareholder but almost be inventory, helpful, we we've outlook And for wish growing of we kind too offering. provided detailed inventory that strong we the lower from our excited believe were constant. able very kind Demand I expectations. our where we captures carrying. think for place at think that be which period, So, now think intro color, an that to much last we carrying is we a away, we'll than been, start We're of to has the year and been a

our call notable other are we So direction. perspective. I any to And out continue have kind to would from expectations great look There's nothing say outlook. that our what in things in of go those would

Naved Khan

for products. days near product for then or introduce on term still mentioned platform Okay, away? that's to thanks. it you And Is maybe there ancillary a guys that opportunity a the potential new more the

Ernie Garcia

entire building running across centers on, business so work things inspection inspection we customers, the acquisition. the customers, warranty there's on. that have I we many running can we the the product, centers, for to there's many, can obviously that our vehicle for different it a think business, pricing very merchandising Transporting it much for focus business, complicated finance

can. we intelligently So of we business, the future projects that on And to exciting. add kind there's working the comment the product underlying no to could looks doubt teams like. on we products, as in time. as across and won't But what various Generally do all XX different opportunity have potentially that all that prioritization we that be roadmaps prioritize of on best these are at there's the we order have in different additional different points our speaking,

Operator

The next from Securities, is with question Josey, go JMP ahead. Ron please

Ron Josey

two Great, thanks. to I ask questions, please. wanted

and chain and new those talk I into think help of an just Can time as the the is question five earlier the deliver distribution region, still I And the Ernie awareness, your is then spend overall pretty brand on talked question second we've a awareness, new? just about pretty on just expansion flex on quarter that with you XXX population coverage brand can supply markets about XX% insight, you Pacific just think now marketing how which is Northwest. the interesting. low follow-up in million in your

about spend, you. to you are on performance. marketing to wanted sense forward, educational awareness, all Thank putting we your Just get think and dollars work spend how around should brand how going those

Ernie Garcia

the Northwest obviously Pacific isolated population for relatively a at is it's center we've way But been Northwest. that time. something a So looking up long in the

kind to logistics network. And sensible add where it to time our was to us place to we a thought get so a long of it took that

two, City in the the also we Over midpoint we kind Salt added Utah, that which a us with up connect us month gives also or to added area we've there last and allows California. through that of connect Lake

long-term time, national So get approximately a we to XX% thought our brand. it absolute aspirations coverage to to and are was obviously an population be

point. something markets. holding ramping the to years of grow And new that a knowledge as was we've some constrained and been our over up as couple times at volumes so now's to given well inventory that as we're so off need inventory. we head expectation, into We've your But do and been in good in our our lag historical We next time. thought visibility going

the of a footprint. lot that And pretty awareness, trigger rest mind, excited to of budgets around still is kind to that to are numbers meaningful brand on dollar do to of went our time. to of of But been awareness, have spend compared On that compared very remain of our So mature low have very we starting ahead brand more we we're companies. regional spend in the a keep companies that. our lots dollar approach accumulated that marketing and out low is the sizable think pull for in long we fill kind I also

we're car think from that car a a education, exist, still spend you brand, I first a think how so traditional in for of understand have kind to way. from in customer early, and buying that what they kind definitely do to And different it's buy of lot a a and spending next, lot do Carvana, you we to it's we they have a

value have comes they the that So you're your them take and to real different kind things that that trust in those just props trust And about. car all have we have And quality is time their can mind. policy build and consumer return real, a they to educate of then to lot we up of that way. it

over given testing a looking think that we're in as we're knowledge go, we're very customer just we're that time levered I at how costs, lot we've the by position we've lot, a we accumulated the our So excited acquisition learning with cohorts. older about

in that building. pretty believe confident we also we're significantly. But very lever to we brand that acquisition we're early customer know So how

that long different money them like we in can channels that different a audience brand I you be the investment so we before, we're and so a as good to find spending our not a and get hitting way, building long-term. said educating about as are in different think And shy going

Operator

Piper is question next please go with Alex from ahead. Sandler, Potter, The

Alex Potter

consider front lot. a you'd if wondering would be off have pre-owned; that that I strategy I a share or to in that Or certified thanks, willing less interesting? more Great, to segment is a anything trying had question a you you about limits, on be was for there? just break

Ernie Garcia

approach think I there's that to a problem. ways maybe couple So

is processes. So process certification certified, sell luxury was first that patterned our some of car we its certified Carvana manufacturers of certification all, of off every and the

are a generally warranty OEM of specific the we that cars sale, that that customers of owned. always certified the with of and for quality. that associated of of of although, dealers, kind of deliver pre franchise oftentimes, condition necessarily is to gets kind so branded And combination that owned, that's per kind brand reserved not brand certified The the the

to market high a certify So, building delivery, I logistics to think able same believe reconditioning centers we by quality by we're cars, that and quality. of very that that brand that and that infrastructure cars of building network are a breaking do into

our goal. So But four brand franchise the that's is generally our particular dealers. by protected

Alex Potter

you then appreciate last be And ahead ratio, customer thought what you forward. I well, can really guess, won't you running understood. just of source still that now several Okay, do question, to years that starting you're still disclosing going tailwind strong, I maybe you Are a GPU. higher been could get that you ago, sourcing customer at indefinitely rates? which I'm these Thanks. convinced has can great. it's sure actually for keep qualitatively, running

Ernie Garcia

very at a units. a level of Sure, getting is also speaking, a car. is market around well, possible so rid another high the customer getting Generally XX of selling for car million cars are

you is something buying in QX XX,XXX, kind of very theoretically the the cars bought number us for ballpark, you're market. a sales so of like and market in from of similar of customers, cars at look looking if at at similar And X% size. And basically least

markets. So those very, small compared we're both very think of I that to

sense and happens certain are later, that particularly lot them and maybe we and of we a those of fairly subset car. in all buy brand, build But a which generate and the A brand later. of where in ways customer simultaneously sell simultaneously car cars. buy kind also then connected and buy a car are speed sell at our a separated buying they think the a car transactions awareness both customers disconnected customer across I a another and will that through can a brand our they're in sell car time, trading car is only when

that it finish business I the cars they and can We've somewhere out line other the think race useable going you're business grow years think undoubtedly last couple I over progress of about of amount tremendous, So, now tremendous extremely buying seen blue the each independently. of to and and great business the we're and excited basically yonder. in are to customers retail in the

Operator

go Please question is with next Securities. ahead. from Seth The Wedbush Basham

Seth Basham

of GPU. you trying think Seems high high for Thanks question there on with this we back watermark a and had lot the do is finance and longer the topic can results, where is like understand quarter's good I'm that you a that to go term? afternoon. watermark think if XXXX, My

Ernie Garcia

think we've ever. hit in I of level definitely other GPU kind for general, our highest

And other can think other As that fundamental every there we GPU. described for products item there gains certain time. are in opportunities over earlier, line make we continue I do that can to are add that of

running hard that control with the doing environment also exists we that credit. impacts I one, And rates. then from exciting. I benefited two, to So likely tighter in kind of do leading this where, slightly think GPU, but that's have something to which low is we're we've size, over, is interest very other it's beneficial that higher, that think

likely So those to unwind. are

predict. in outlined in and think precisely we're couple we're think too I of too balance things, I unique the But update the it's an that of model. those that great a hard is clearly model to years ago. And environment early, shape we versus long-term to

general, several And done that's about in that way roughly quarters. to very it. right think think against model well in obviously, we last continue So we've the the to probably

Seth Basham

services? to plan question And in than follow-up my just for do around you And helpful. reconditioning alright, that reconditioning. other future? it, third-party specialized do been Have Got the using things you

Ernie Garcia

Sure.

capacity significant utilizing the and utilize well. various ramp our the we recon a we business we to across continuing has it various in are tests, overall But some think that are expectation of we are produce included it that I our up see minority and that's try what continuing about today, the as talked something have ways cars So we for today. third-party recon, to some utilizing third-party past, that remains the can production to we test future the to is

Operator

Colantuoni from The next go question comes ahead. Please John with Jefferies.

John Colantuoni

near-term to the some outside on wholesale you expecting notable Thanks. the impacts if the the going prices? in of inventory what's channels Carvana tight question. for acquisition? taking on with any thanks inventory have vehicle Hi, wholesale talk my new of about unlock measures environment to GPU you're have for Can market and those measures And implemented

Mark Jenkins

can that take one. I

talked one historically, think, That's focus business on long-term. channel has I become grow number now to to directly certainly and our mean, I the that. we're for that has advantages we've So customers, I continue several going want that build, we think sourcing to inventory, to continue from a cards over sourcing about which

number And the so answer question. focus. area our that one certainly I that's think of to first And

buying we the I making still think in certainly terms market, wholesale of market on think we're on we're retail the them. dynamics, cars, cars wholesale money cars, those I buying we're and

in comfortable current going of buying be to environment. the continued the cars I to of main focus from our area a we sourcing think grow is perspective, customers. business from very feel And

John Colantuoni

Great, much. thanks so

Ernie Garcia

you. Thank

Operator

our And from go Please Yruma Edward comes question final ahead. KeyBank. with

Edward Yruma

in. Hey, thanks me for squeezing

impact. been We've broader interest guess, me, two Just your first question. a then seen in there offer rates. to for quick I significant ones your any industry your close difficulties. on been the numbers Obviously, and I service guess, customer but movement consumers has of When competitors, an levels, service particularly kind how you customer as had kind Thanks. score ramp to business? phenomenal, you have has scaled, of they've as continue And your would your

Ernie Garcia

Sure.

material. come from of little kind but pretty and there's I upward down over movement obviously, some quarter nothing then think or so pre that last rates, on they interest dramatically, around they've the pandemic So bounced been bit since a there

I they're don't there's that think that story I low. don't think is that super recent so that material. there the are movements And

all been up to great great focus build enable from are way. customer are And levels customer day business build And customer think for things at kind really look looks been all focus. the to like; be different from our terms that. we that things experience that differentiated in has what service of ground of drive delivers a of one our to In that's experiences lot those scores a to required there the a experiences that always when our fundamental I of and

technology there, from those business capable way I of think, how the way and think that and foremost and the And I delivering. experience. of good then designed is your that got we've quality kind of the the processes your and you've designed customer first the are experiences we've

think ops the our different cars go job cultural How together good is layer importantly, getting call And largest we're of constraints, to moments and having layer delivering make your a about Prior like places. to cares is pretty and the life, emphasize constrained back the customer are I building sufficient throughout deliver and in do think a much very constraints talk market have the you I XXXX, your many, if we purchase in next deliver the last obviously, to customers people the that do when there the which think culture over And heard operations really time, we've is we've the doing life. been we that many think that customers about to layer. capacity had they to do with we customers you've that of that I in customers, great would the care what much depicts customers. about your groups, your a their all experiences. times they in logistics the How done exciting that car think experiences. constraints. pandemic, we car, to center across to various great they the second And that, care I customers have

constraints experience constant lead measures do of have points Those across constraints we had the business almost little in various down customer going generally at to bit. our So time. a

most, we see is in matter they underneath they And step continue when us gone technology, those we're of down, feet elements which up design, then means place were, go back that to a and they kind go that at to far alleviate when culture. get by remain small down in and constraints, above of the which they've Now, relatively levels right business are industry importantly, where we the kind our personally foundational and amounts, that great and processes standard. them

has job growth been their growth we experience, managing year first about customer good to driven we of impacts high you are us which done goal XXXX way primary the very I launched really those that all is historically. would that we've today XXXX. them able impacts so times directions from we've levels through that And larger were to this and happy think the the of our in expect, undoubtedly, were a than But in in manage but company that be

Edward Yruma

Thank you.

Operator

I This our concludes session, question-and-answer remarks. management to back any would the closing like for to turn conference over

Ernie Garcia

in I appreciation of still quarter center has like Carvana you. a to the going. been done good job, team, done hear to had in absolute really to an know that something battle. teams. you every ground slog; operations this great it calls a the inspection the To This cover, a and everyone great Thanks, day incredible you. has those job. keep we Please up an say I couple got sincerity and thanks job to thank inspire, lot been the that a joining you've inspiration. appreciate particular, sound team all that delivering Great really that Have And taken doesn't the experiences. you every it. call. did job hope great entire coming for but customer all. And of long all pinned we just of it you've the Great locker appreciate to last on We for We one. your Clearly call.

Operator

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

disconnect. now may You

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.