CZOO - Earnings call 3 2023

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Operator

Greetings. Welcome to the Cazoo Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to hand the call over to Anna Gavrilova, Head of Investor Relations. Thank you.

begin. may You

Anna Gavrilova

Thank our everyone. joining call today's Good for you the discuss results XXXX. third to morning, for quarter of

be today's find Relations We able on everyone will appreciate today. Investor investor.cazoo.co.uk. website press us joining our at You release to

are call and Chairman; Officer; Chesterman, Founder Woolf, Chief Financial the Paul on and Chief Whitehead, me Alex With Executive Paul Executive Officer.

forward-looking to I'm Before we Management statements, language, the which sure company's assumptions. all of guidance may get started, including make remind I underlying and safe you would with. you're like familiar harbor

statements that Forward-looking results involve and uncertainties are materially. differ actual cause risks based on expectations that to could

will For the be not will available risks filings transcribe a the it recorded related for see Group be kindly will ask to over not replay. Cazoo record business, it. call to Limited hand to with please I Exchange of you now not further Paul of call Whitehead. and and not U.S. and to discussion Securities We our Today's the Commission.

Paul Whitehead

Anna. reporting Thanks, pleased we in of profitability. and results improvement for lot we the with I'm a are us meaningful thanks today. and delivered joining another very that our have quarter morning, today, Good everyone,

lot backdrop year. against the footprint a been quarter-on-quarter improvements first achieved deteriorating have time, have business. same our we economics of of and in a unit the this consistently And driving the We our economic months We headcount X scale to over our match operational restructured of better environment. at the

used of the normal cost higher living rising of credit the volatility towards cars. before X% inflation market had and same for persisting market, COVID higher for in are At our of has has the far much and High are supply above new rates the been of Bank been set and than pandemic. selection of stock demand the demand depreciation aggravating than target misalignment This in supply is cost car time, causing daily has used a levels ago effect year of the the cars seen and by Interest conditions. England.

took continued X,XXX economics finance most higher approach. to to Despite a significantly, have GBP a which rates Retail number record of helped we was on We mitigate Cazoo achieved unit. of in web several partially improvement efforts journey maintain all impact steps new The GPU finance our areas. of focus we this, per our and platform focused reaching demand. on with customer first quarter-on-quarter customers' the optimization digital And we managed across to enhancing of on improvement unit interest

attachment we of finance goal areas such our implementing XX.X% future of this our from improvements, previous these Despite as our pre-approval rate are quarter. the in with And actions of to performance range in enhancing area. declined performance and a to the target pre-eligibility XX.X% record

further digitization. acquisition scope sources. And our to on third-party is with we with targeting faster these our further operations. made We further opportunities also customer. as to ancillary program across over ancillary to own sell the focus we've delivery Retail to and well of products in areas turn our work the has we offline enable through optimizing to particular stock combining car in customer focus we initiated to the to efficiency all attachment we efficiencies specialists progress for operations purchase the a cost increase helping growing our source grow rates And our on GPU offer. centers sustain for as of our when proved be a hand reducing by data our in continue our products costs revenue by This proprietary reconditioning there And pricing on us, Cazoo as still

was and by online of XX the by of focus by we fully Average GBP X Gross million Retail In with quarter-on-quarter results retail GPU X,XXX. XXXX XXX% of lower X basis with customers, Retail primarily volume GBP by Gross first unit line cars million X,XXX on margin XX% higher million. increased X,XXX XXX to proposition profit units. to year-on-year. GPU our months sold of generated GBP of GBP GPU third by quarter, year-on-year, XXX our for revenues GBP as increased driven economics. to X.X%. we were resonate improved the Retail These points continues in and

to XX% higher due at however, and represented metrics, GBP quarter-on-quarter XX.X% finance sold the related declined Ancillary rate X.X year-on-year. revenue per XXX rates. a percentage to by interest of Both attachment year-on-year retail factors improvement unit increased points

in to reduce our continue cash We extend to line fixed costs expectations and with variable runway.

cash remains Our of and of XX of equivalents GBP cash September million XXXX. with position GBP approximately strong inventory million self-financed XX, XXX as plus cash

noteholders in We that we a into transaction certain shareholders and contemplated announced connection transaction. agreement September had in entered support the with with

account now into were We costs, fourth quarter will our year-end which incurred XXXX balance third for the in We such are be in updating the cash incurred quarter. to XX and expect and XX transaction-related take million guidance between and XXX cash to million cash GBP million XXX and GBP equivalents, of self-finance million with finish the and GBP inventory. of year between GBP

will -- units. between XX,XXX spikes sales, be are to amount in expected expect to unit rates, the to continue to this Higher year Total volatile. between backdrop, driven and to and be sales retail of be cost unit per XXXX used geopolitical customers. our And higher prices, both premiums ownership Demand conflicts sold. car car cars interest QX better retail unit wholesale, and against unique for And the priority prices, sales including and to XX,XXX used units. economics in remain fuel rising full high is better around deliver retail means and X,XXX we XX,XXX XX,XXX insurance by to recent

previous be of and we though we year, the expected year averaged to average expect approaching X,XXX end year than be economic now and rate X,XXX, challenging is guidance, expect GBP around months and have X,XXX seasonality average for market with reflects the normal X to higher the for GPU environment. GPU GBP first full which GBP Retail Even exit the the we Retail this to Retail GPU a

our maintaining are and between forecast million. adjusted GBP of We million negative GBP XXX negative XXX EBITDA

remain unit we base runway further economics, our towards extend our priorities goal work cost our improve top cash reaching Our to and reduce as fixed of profitability.

Thank you you much, take might now any we'll questions very and have.

Operator

the [Operator Our from questions Instructions] come first with JPMorgan. Gupta of line Rajat

Rajat Gupta

And on can the to if decide on the growth can you side of cadence first we current are timing? or to again? relatedly, the know forward. of a I return follow-up. I'm unit can to more or had growth to the to order scaling that I curious fixed profitability or company-specific expect to growth And business or macro the to a level factors cost question kind determine quick opportunity when should cost return there have eventually? target more the savings in at GPU we that be to what just then going return watching start company capture before SG&A

Paul Woolf

Paul I Thanks here. the would -- so question. for much Woolf say

mind. that particularly are sale referred -- to the on as reduce are on and to is is website, the I refurbishment, little And fulfillment. the in depreciate do Obviously, across days we on our faster multiple site The less forefront So but X do the that, business. then our taking in we vehicles, the the ownership. our the -- and to on a areas. our levers there's think getting GPUs. bit number not One the sort of to that of of a over there to The faster we vehicles announcement the more eventually turn said during

overall [indiscernible]. at Finance in by level a how it So the finance been in that success from attachment way rate for income finance still terms or but other just through. income and back step attachment lever Paul has a ancillaries that significant all an offset products. largely is ancillary remains that's mind been the story you, taken QX, a has described of

So at just referred a evaluate drive then in to journey, a channels yes, would opening albeit attachment it are drive new go that And we also attachment we we to we lot called expect small to to numbers take first. and finance there's and we a describe is the time up, the announcement of GPU, moment, due we question seasonality. spending from where continue out to up products, our back again, expect our QX technical their take to new that QX through as it in and -- we've improving really so which to team continue -- step the digital then will the the market commentary, to and continue

come in sort X to against those of So are expect we'd then is terms more there out. QX. to track fixed in back But again. costs, QX, us be on of the growth things And

the numbers now. I out think -- the main big are

numbers costs continue the going slices, it's really fixed -- relatively not costs. about every quarter. because done, fixed aren't to smaller we We're So are numbers terms the smaller. certainly, big up shouting are go are but chunks of there but in the But reduce to it

down, to everything go to continue We gently expect and inflation notwithstanding else.

foundations and around, sort as which -- off we button growing growth due we be year, said the XXs units, to which to growth. But better. wouldn't -- we we'll more going fixed now we doing would or is you we're process again. we plans What certainly economics, were for putting at to means not that, cost consistently do and of profitability about the by question a And next at we pointed be the once be prior that we've final we're right unit, the levels is push the we to -- expect out, we course. talking wish when But per be building that the will XXX% of of the there's our -- in rightly question better We're XXXX. for established great around was question together in unit

Rajat Gupta

it. Got it. That's helpful color. Got really

SG&A? just give update help what end. on mix follow-up one is be from an all us fixed on today my will as variable your you stands the versus that. us within it Could That Just

Paul Woolf

sure. Yes,

is variable the XX% versus to mean, SG&A. changed. hasn't sort XX% So really I fixed of mix, within fixed it It

Operator

end the Gavrilova question-and-answer to We back have over floor I of like the would session. Anna turn reached closing our for comments. now to

Anna Gavrilova

joining us very today. you you for next time. speak much, you. Thank to We'll Thank everyone,

Operator

conclude you. Thank your This today's teleconference. We does participation. appreciate

day. your lines of the your this Enjoy disconnect may You rest time. at

Cazoo (CZOOF) 25 Oct 232023 Q3 Earnings call transcript