Cazoo(US:CZOO)2023-08-02 02:58Financial Data and Key Metrics Changes - The company reported revenues of GBP171 million for Q2 2023, a 44% decrease year-on-year, attributed to lower volume as part of a focus on unit economics rather than volume [4][38] - Retail GPU improved from GBP596 in Q4 2022 to GBP1,290 in Q2 2023, indicating a significant enhancement in unit profitability [3][36] - Adjusted EBITDA loss for H1 2023 was GBP70 million, less than half the losses from the same period last year [25][51] Business Line Data and Key Metrics Changes - Retail units sold in H1 2023 were 22,438, a 22% decrease compared to the previous year, while total units including wholesale were down 29% [38] - Ancillary revenue for the first six months was GBP17 million, only a 2% decline despite a 22% drop in retail units, showcasing improved customer journey and competitive pricing [11][46] Market Data and Key Metrics Changes - The company has exited European operations and is now fully focused on the UK market, which is seen as having the largest opportunity [35][44] - The UK used car market is valued at GBP100 billion annually, with low online penetration and a fragmented retailer base, presenting a significant growth opportunity [44] Company Strategy and Development Direction - The company has prioritized unit economics, cash preservation, and optimization of the fixed cost base, resulting in a restructuring that generated around GBP100 million in annualized SG&A savings [33][45] - The strategy includes improving inventory management and targeting inventory based on desirability and GPU, which has led to price increases for certain vehicles [65][68] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in laying the foundation for profitable growth despite a challenging economic environment, emphasizing the appeal of their proposition to consumers [52] - The company anticipates that factors such as the cost of living and financing will continue to impact consumer behavior in the used car market [46] Other Important Information - The company has identified an additional GBP20 million in annualized cash savings expected to be realized in the second half of the year, benefiting performance in 2024 [10][49] - The cash position at the end of June 2023 was GBP195 million, with expectations of year-end cash between GBP110 million and GBP130 million [16][26] Q&A Session Summary Question: What percentage of the expense is fixed today, and what level of volume can the current cost structure support? - Management estimated that a little over half of SG&A costs are fixed, with the remaining portion being variable, indicating limited additional costs to support increased volume [54][58] Question: Can you elaborate on the average price per car in the retail segment and expectations for the full year? - Management noted a 5% year-on-year increase in average price per car in Q2, with improvements in GPU being a key focus [56] Question: Any updates on discussions with bondholders regarding potential restructuring? - Management confirmed ongoing discussions with bondholders, emphasizing the need for an improved capital structure to support future growth and profitability [60] Question: What trends are observed in unit sales growth in July? - Management reported continued focus on unit economics with improvements in GPU and variable costs, despite a challenging market [68]