Core Viewpoint - Carvana is experiencing a significant business turnaround in 2025, with strong Q1 results indicating robust consumer market performance and improving profitability, setting ambitious long-term targets [1][2] Financial Performance - In FQ1 2025, Carvana's revenue surged by 38% to $4.233 billion, exceeding MarketBeat's consensus estimate by 575 basis points, driven by a 46% increase in retail units sold [2] - The adjusted EBITDA margin reached a record 11.5%, with adjusted diluted EPS at $1.53, reflecting over 500% growth compared to the previous year [3] Future Outlook - Carvana aims to exceed 3 million annual retail unit sales with a target margin of 13.5%, representing over 700% growth compared to 2024 [2] - The company forecasts sequential growth in revenue and earnings for Q2, with no immediate impact from tariffs, which have pushed used car prices to two-year highs [4] Balance Sheet and Equity - Carvana's balance sheet shows improvement, with a 28% year-to-date increase in shareholder equity, despite still carrying significant debt [5] - Positive cash flow and increased cash and assets are noted, indicating a strengthening financial position [5] Analyst Ratings and Price Targets - Analysts maintain a Moderate Buy rating for Carvana, with a 12-month price target of $260.35, suggesting a potential downside of 8.03% from current levels [4] - Some analysts project a high forecast of $340.00, indicating a potential upside of 30% [9] Market Activity - Short interest in Carvana has decreased but remains elevated, while institutional ownership is above 55% and growing, providing support for price action [10] - Following the earnings release, Carvana's stock experienced volatility but rebounded, indicating a buy-the-dip scenario with potential resistance at $285 [11]

Core Insights - Carvana reported $4.23 billion in revenue for Q1 2025, a year-over-year increase of 38.3% and an EPS of $1.51 compared to -$0.41 a year ago, exceeding Zacks Consensus Estimates for revenue and EPS [1] - The company has shown strong stock performance, with shares returning +46.8% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change, and currently holds a Zacks Rank 1 (Strong Buy) [3] Financial Performance Metrics - Retail vehicle unit sales reached 133,898, surpassing the six-analyst average estimate of 129,401 [4] - Retail vehicle sales, net, amounted to $2.98 billion, exceeding the four-analyst average estimate of $2.88 billion, representing a year-over-year change of +37% [4] - Wholesale sales and revenues were reported at $863 million, above the estimated $804.95 million, reflecting a +31.4% change year-over-year [4] - Other sales and revenues totaled $389 million, exceeding the estimated $339.14 million, with a significant year-over-year increase of +69.9% [4] Profitability Metrics - Per retail unit gross profit totaled $6,938, slightly below the estimated $6,956.18 [4] - Per retail unit gross profit for retail vehicles was $3,204, compared to the average estimate of $3,350.74 [4] - Per unit revenue for retail vehicles was $22,256, lower than the estimated $22,762.43 [4]

Company Performance - Carvana reported quarterly earnings of $1.51 per share, exceeding the Zacks Consensus Estimate of $0.75 per share, and compared to a loss of $0.41 per share a year ago, representing an earnings surprise of 101.33% [1] - The company posted revenues of $4.23 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 4.70%, and up from $3.06 billion in the same quarter last year [2] - Carvana has surpassed consensus EPS estimates for four consecutive quarters and has also topped consensus revenue estimates four times over the last four quarters [2] Stock Performance - Carvana shares have increased approximately 27.3% since the beginning of the year, while the S&P 500 has declined by 4.7% [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating expectations for it to outperform the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.96 on revenues of $4.31 billion, and for the current fiscal year, it is $3.67 on revenues of $17.2 billion [7] - The Internet - Commerce industry, to which Carvana belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8]

Financial Data and Key Metrics Changes - In Q1 2025, Carvana reported retail units sold totaling 133,898, an increase of 46% year-over-year, setting a new company record [10] - Revenue reached $4,232,000,000, marking a 38% increase year-over-year and also a new company record [11] - Adjusted EBITDA was $488,000,000, an increase of $253,000,000 year-over-year, with an adjusted EBITDA margin of 11.5%, a 3.8 percentage point increase [14][15] - Non-GAAP retail GPU was $33.08, up $97 year-over-year, while non-GAAP wholesale GPU decreased to $964, down $189 year-over-year [11][12] Business Line Data and Key Metrics Changes - The operations portion of SG&A expense was $16.58 per retail unit sold, a decrease of $192, driven by operational efficiency initiatives [14] - Non-GAAP SG&A expense totaled $468,000,000, an increase of 20%, but the growth in retail units sold led to a $750 reduction in SG&A expense per retail unit sold [13] Market Data and Key Metrics Changes - Carvana currently captures about 1% of the total U.S. used car market, which consists of 40,000,000 used cars and 16,000,000 new cars sold annually [9] Company Strategy and Development Direction - The company aims to grow to $3,000,000 in annual retail sales with 13.5% adjusted EBITDA margins over the next five to ten years, prioritizing growth over margin within reasonable ranges [8][9] - Carvana's mission is to change the way people buy cars by offering a differentiated selection, experience, and value [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges, highlighting that they are currently the most profitable automotive retailer, with significant cash balances and a strong growth trajectory [50][51] - The company anticipates a sequential increase in both retail units sold and adjusted EBITDA in Q2 2025, expecting to set all-time records for both metrics [16] Other Important Information - The company has been focusing on improving customer experience and operational efficiencies, which has led to significant gains in profitability and customer satisfaction [25][30] - Carvana is exploring opportunities in third-party marketplace selling and ancillary revenue streams, although these are not a near-term focus [90][91] Q&A Session Summary Question: Impact of tariffs on financial performance - Management acknowledged that tariffs could potentially drive up car prices, which may benefit used car prices and business models like Carvana's that offer value to consumers [20][21] Question: Trajectory of retail GPU - Management indicated that they are focused on improving various inputs affecting retail GPU and are optimistic about maintaining a strong overall GPU perspective [36][39] Question: Positioning for potential recession - Management highlighted that Carvana is now more profitable and has significant cash reserves, positioning the company better to absorb macroeconomic variations compared to previous years [50][51] Question: Update on lending partnerships - Management confirmed that they have strengthened their securitization program and added new buyers, indicating a robust lending backdrop [56][58] Question: Third-party marketplace selling - Management stated that they are in the early stages of developing offerings related to wholesale and retail marketplace, with potential for faster and lower-cost solutions [90]

Carvana (CVNA) Q1 2025 Earnings Call May 07, 2025 05:30 PM ET Speaker0 afternoon, ladies and gentlemen, and thank you for joining us on Carvana's first quarter twenty twenty five earnings conference call. Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website at investors.carvana.com. The first quarter shareholder letter is also posted on the IR website. Additionally, we posted a set of supplemental financial tables for Q1, which can be ...

Supplemental Financial Tables Q1 2025 May 2025 ©2025 Carvana, LLC Supplemental Financial Tables Over the last several years we reported three non-GAAP financial metrics to clearly demonstrate and highlight the most meaningful drivers within our business: Non-GAAP Gross Profit, Non-GAAP SG&A Expense, and Adjusted EBITDA. The Non-GAAP metrics presented in these tables do not represent and should not be considered an alternative to gross profit, SG&A expense, or net income (loss), as determined by U.S. GAAP. N ...

Sales Performance - Retail vehicle sales reached $3.0 billion for the three months ended March 31, 2025, compared to $2.2 billion for the same period in 2024, reflecting a significant increase [215]. - The number of retail vehicles sold increased by 45.7% to 133,898 during the three months ended March 31, 2025, compared to 91,878 in the same period of 2024 [209]. - Wholesale sales totaled $863 million for the three months ended March 31, 2025, up from $657 million in the same period of 2024 [216]. - Other sales and revenues, including gains on finance receivables and complementary products, totaled $389 million for the three months ended March 31, 2025, compared to $229 million in 2024 [217]. - Retail vehicle sales increased by $805 million to $3.0 billion, a 37.0% increase compared to $2.2 billion in the same period last year [263]. - Total net sales and operating revenues rose by $1.171 billion to $4.232 billion, reflecting a 38.3% increase from $3.061 billion year-over-year [261]. - Retail vehicle unit sales grew by 45.7% to 133,898 units, up from 91,878 units in the same quarter last year [267]. - Wholesale sales and revenues increased by $206 million to $863 million, a 31.4% increase compared to $657 million in the prior year [265]. - Other sales and revenues rose by $160 million to $389 million, a 69.9% increase from $229 million year-over-year [266]. Profitability - Gross profit increased by $338 million to $929 million, a 57.2% increase compared to $591 million in the prior year [261]. - Total gross profit per unit increased to $6,938 in Q1 2025, compared to $6,432 in Q1 2024, showing improved profitability per vehicle sold [235]. - Non-GAAP total gross profit per unit also rose to $7,140 in Q1 2025, up from $6,802 in Q1 2024, highlighting enhanced operational efficiency [237]. - Adjusted EBITDA for Q1 2025 was $488 million, up from $235 million in Q1 2024, resulting in an adjusted EBITDA margin of 11.5% compared to 7.7% in the prior year [287]. Customer Metrics - Customer satisfaction is reflected in an average rating of 4.7 out of 5.0 from over 221,000 surveys since inception [211]. - Average monthly unique visitors rose to 17,421 thousand in Q1 2025, compared to 16,612 thousand in Q1 2024, reflecting a 4.2% increase due to changes in measurement methodology [233]. - Total website units reached 53,707 at the end of Q1 2025, up from 30,694 in Q1 2024, indicating strong growth in vehicle selection available to consumers [234]. Financial Position - Cash and cash equivalents as of March 31, 2025, were $1,858 million, up from $1,716 million at the end of 2024 [296]. - Committed liquidity resources available increased to $3,739 million as of March 31, 2025, compared to $3,595 million at the end of 2024 [296]. - Total liquidity resources amounted to $5,861 million as of March 31, 2025, compared to $5,690 million at the end of 2024 [296]. - Net cash provided by operating activities was $232 million for Q1 2025, a substantial increase from $10 million in Q1 2024 [313]. Expenses - Selling, general and administrative expenses increased by $79 million to $535 million, primarily due to higher employee headcount and associated costs [273]. - SG&A expenses increased to $535 million in Q1 2025 from $456 million in Q1 2024, with SG&A expenses per retail unit decreasing to $3,996 from $4,963 [287]. Economic Conditions - The company experienced no material impact from inflation and high interest rates during Q1 2025, despite ongoing economic challenges [241]. - The average selling price of retail units is influenced by macroeconomic conditions and the mix of vehicles sold, which can lead to fluctuations in revenue per unit [242]. - The company anticipates potential impacts from macroeconomic conditions and the used car market on its business strategy and financial position [326]. - The company faces risks related to consumer demand, global supply chain challenges, and competition in the automotive industry [326]. Other Information - The company has sold 2.3 million retail vehicles and generated $68.0 billion in total revenue since its inception in 2012 through March 31, 2025 [206]. - As of March 31, 2025, the company estimates that 75% of the U.S. population is within 100 miles of an inspection and reconditioning center or auction site [211]. - The company plans to increase the purchase of vehicles from customers to enhance inventory selection and profitability [218]. - The logistics network is designed to efficiently transport vehicles, with capacity to inspect and recondition over 1 million vehicles per year at full utilization [218]. - The company continues to focus on expanding its integrated auto insurance solution with Root, enhancing customer access to insurance products [249]. - Interest expense, net decreased by $34 million to $139 million, down from $173 million in the same period last year [275]. - Other income, net was $122 million, primarily due to a $158 million increase in the fair value of Root Warrants [277]. - Income tax provision changed to a provision of $2 million, compared to a benefit of $1 million in the prior year [278]. - Net income for the three months ended March 31, 2025, was $373 million, compared to $49 million in the same period of 2024, representing a significant increase [287]. - Cash used in investing activities was $35 million in Q1 2025, a decrease of $42 million compared to cash provided of $7 million in Q1 2024, primarily due to a $24 million acquisition of a franchise dealership [315]. - Cash used in financing activities decreased significantly to $53 million in Q1 2025 from $375 million in Q1 2024, a reduction of $322 million, mainly due to lower payments on short-term revolving facilities [316]. - There have been no material changes to contractual obligations or commitments from the previous Annual Report [318]. - There have been no material changes to critical accounting estimates from those described in the most recent Annual Report [322]. - The forward-looking statements reflect the company's views as of the report date, with no obligation to update them publicly [327]. - There have been no material changes to quantitative and qualitative disclosures about market risk from the previous Annual Report [328].

Exhibit 99.1 Dear Shareholders, The first quarter was another outstanding quarter for Carvana. We grew retail units sold 46% year-over-year to nearly 134,000, a new company record. This growth makes us the fastest growing automotive retailer by a large margin. Amongst the other public automotive retailers, the fastest same store unit growth was 6%. We more than doubled Net income and Adjusted EBITDA year-over-year to $373 million and $488 million, respectively, in the first quarter this year. This growth wa ...

Core Viewpoint - Carvana is expected to report first-quarter 2025 results with earnings estimated at 75 cents per share and revenues at $4.04 billion, reflecting a year-over-year revenue increase of 32% [1][2]. Financial Performance - The earnings estimate for Q1 2025 has increased by 2 cents over the past week, compared to a loss of 41 cents per share in the same quarter last year [2]. - The Zacks Consensus Estimate for 2025 revenues is projected at $17.20 billion, indicating a 25.8% year-over-year rise, while the EPS estimate is $3.67, suggesting a significant increase of 130.8% [4]. Sales and Growth - Carvana's used vehicle retail sales have returned to growth in Q1 2024, selling over 100,000 vehicles in each of the last three quarters of 2024, with a 50% year-over-year surge in retail units sold in Q4 2024 [6]. - The company anticipates a 32.6% year-over-year increase in retail units sold for Q1 2025, reaching approximately 121,868 vehicles [6]. Operational Efficiency - Carvana's adjusted EBITDA is estimated to rise by 85% year-over-year to $434.5 million for Q1 2025, driven by improved operational efficiency and cost-cutting measures [7]. - The company has streamlined operations through various initiatives, resulting in significant reductions in SG&A expenses [7]. Market Position and Valuation - Year-to-date, Carvana's shares have increased by 26%, outperforming competitors like CarMax and Sonic Automotive [8]. - Carvana trades at a forward 12-month P/S ratio of 2.97, significantly higher than CarMax (0.37) and Sonic Automotive (0.15), reflecting stronger growth expectations [11]. Strategic Initiatives - Carvana's turnaround strategy is yielding positive results, with a focus on achieving positive adjusted EBITDA and improved profitability per vehicle [14]. - The acquisition of ADESA's U.S. operations has strengthened Carvana's logistics and vehicle processing capabilities, positioning it for growth in a fragmented market [15]. Future Outlook - Despite economic challenges, Carvana's enhanced efficiency and strong fundamentals suggest a promising growth trajectory, with expectations of an earnings beat in the upcoming quarter [16].

Core Viewpoint - Carvana has experienced a significant recovery in its stock price since early 2023, rising over 5,000% from its lows in 2022, although it remains more than 30% below its all-time high [1][2]. Financial Recovery - Carvana faced severe financial challenges in 2022, with free cash flow reaching negative $3 billion annually due to overinvestment during a downturn in the automotive sector [4]. - The company implemented cost-cutting measures, including layoffs and reduced capital expenditures, which successfully returned it to a cash-flow-positive state by late 2023 [5]. - Revenue for 2024 grew by 27% to $13.7 billion, with a net income margin of 3% and positive free cash flow [6]. Growth Potential - In 2024, Carvana sold 416,000 vehicles, a 33% increase year-over-year, but this represents only about 1% of the 39 million used cars sold annually in the U.S. [8]. - The company has significant growth potential, as even selling 1 million to 5 million units annually would still be a small fraction of its total addressable market [9]. Valuation Considerations - Carvana's current market cap is $55 billion, with net debt of $4 billion, leading to an enterprise value of $59 billion [11]. - Management aims for adjusted EBITDA margins of at least 8%, but a more conservative estimate suggests a 5% net income margin could yield $685 million in net income based on current revenue [12][13]. - Future growth could see annual revenue surpassing $50 billion or even $100 billion if retail units sold increase significantly [13]. Investment Outlook - Much of the potential growth appears to be already priced into Carvana's stock, suggesting that it may be prudent to avoid adding the stock to investment portfolios at this time [14].