Carvana (CVNA) 8 Aug 182018 Q2 Earnings call transcript

Good afternoon, and welcome to the Carvana Second Quarter 2018 Earnings Conference Call. [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. Please go ahead.

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

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

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

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

strong toward in continue drive changing people targets. units was continued and We to as the second of you, in by revenue and importantly, high our our demand customers We significant top market The share against deliver driven top joining This margin GPU markets ranges cars. call. comfortably progress performed EBITDA guidance guidance Thank to across as also and well the We had across you, experiences thank our quarter. we execution buy our the to a both mid-funnel the great Mike, our both stronger-than-anticipated and exceeded beat and for of everyone, more end way mission business. make and well and growth cohorts.

continue the have level is The Our midterm making $X,XXX market show toward and remain trends at progress seen cohorts to GPU the significant goal we cohort we meaningful significant. unchanged. other consistent oldest are growth, our and of

quarters fact, since have going we metric. $X,XXX in this made in five the of public, In progress

relationships, in It to from gives like directly sell cars several is And customers to just our customers our buy progress buying they're to our of and with GPU additional large we serve exciting a will a and additional it website. demonstrates customers. the provide finance this The also X through This quarter, better his in we monetize are into also of generated transaction value on our and in cars finance in transaction in from buying shareholder progress our more opportunities covered very business on in a simplest available another opportunity most And willing to started us detail demonstrates in that other cars GPU our the online, to letter visibility get the and experience receivables meaningful them finance existence our receivables selling willing comments, It greater are the deepen detail. topics clearly them. Mark us and to significant ways. car. our demonstrates opportunity. customers the fair provide when

along about our increasing be believe to it's significant opportunities. despite very to continued term, well operating X.X% and execute in sales EBITDA confident the past, Stepping markets, all have are optimization. other you we this EBITDA of we Narrowing is discussed profitability old. longer growth do a we would margin path efficiencies cost against margin are crystallizing, our triple-digit significantly and demonstrates still and lot X.X the learning with Importantly, valuable all to early as the GPUs with only a gains of and supporting having We the the still and may beyond. both improvement progress we doubling in variable growing these path GPU but of to finding progress the by still year-over-year. expect volumes, have rapidly efficiency days but the way, feeling our progress ability also that's are that company also of believe The very subscale, medium loss potential and turning as from a of business, years $X,XXX opportunities is back, before driven

process Our roll ever redesign will that by beginning product quickly. redesign improvements the also us communication make our car step the it the and will This include It year. many it many design should include completed be make our more site that roll website. it's improvements as to also and additional value and of will stronger that pipeline an been. to We're make as those to easier functionality every well test that functional simpler U.S. architecture than of find out it even a proposition on and buy is out for a end rollouts to easier understand modularly

built milestone opened impressive business, we crossed build U.S. We operational which of brand delivering vending supposed can population. several in in on an already opened of the raising use projects we experience the over four QX. teams today, believe also a business machines, improve operations' - side to Carvana the the the The motion. bar. it of quarter make are the side the half - and our data in the efficiency. to now responsiveness already We to than major and but experiences, are we is addition, we In deepening are consistently believe to customer operations and are personalize to better our further the and operations We best the of our X even improve of markets the customers' which and experience the had efficiency dedicated offer brand it further market and

opened brand over in to quarter, country the featured were the in didn't. machines and testament we where both the the vending a local we power, where spots XXX markets news around As we in markets in

which also ground In fifth our add while Indianapolis new our near logistics to center the capacity out in our quickly own those broader constrained additional pinch demand, in business. to many points Indianapolis well. with markets of We capabilities in growth and big logistics, into the additional teams ops performed we center broke points network a paired nine to That in logistics inspection inspection progress build is aggressively routes. connect our parts of alleviate our the in part on the and logistics network, quarter, reason mobilized strong the the continuing other so we of our to said, pushed top funnel pinch

trajectory. in best meaningfully but to exciting problem, to more The higher it's Those and we and into a on improving to as in high-quality year, are very The capacity and they're to the we cushioning individual triple-digit position the To elevating prepare more this is make a unit our profitability, a and satisfy continue and the This higher on an as promise at have has unit as the we provide be economics that continue visibility ensure volumes. than been operational year when of long-term car. flexibility experience even growth is this transactions with true. and priority. buying coming view Heading plan. against of to for XXXX, we even is handle half all following our ourselves scalability in problem invest the the first we half well markets are. deliver The resulting the to of demand anticipate aimed taking growth, a progress improve the our invest of year. to continued customers and our volume demand sufficient back we business we We're faster the This as sure to efficiency investments even begun better under customers always beyond. to economics and many continue as importantly, the but forms, building nonetheless. to especially we've available experiences growing nicely of operating customer time delivering a are We and does are from upon seeing strain

further in our results technology competitive continue of This the to We all make our execution. the challenge. both points separate that to competition And additional Mark? modes. direction up from provide is and being and the us that show operations risk our strides team business primary to

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

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

now more in total simultaneously GPU top our We in expect so opened We bringing gains, QX XX of our to our this to of to to geographic range. addition while bringing markets XXXX, our our range total be operating XX leverage nine are have expanding near significant showing XX. footprint. end-of-year end of In end eight top markets quarter, the to XX we near opened XX the far opened and

several annual a per Indianapolis other QX, in to XXX,XXX inspection fifth In took acquired have Similar capacity facility this and steps year capacity will IRCs facility our to at our five XX,XXX IRC. also our to to capacity. to our near We full bringing produce total the units. IRCs, units utilization, service reconditioning increase we

us a to IRC more the to logistics Midwest. in allowing service Indy the expect in key our customers efficiently network, role play We

our sole We expand anticipated became us Dallas growth of Texas inspection transition also, production Philadelphia, sales of accommodate we reconditioning and XXXX. to in Northeast regions near our which the first with the half and to and we DriveTime. shared This toward centers as expected, the allows occupant look previously as

On our transition in fee X, their the increase million production, provides previously earned this small $XXX. we sold. ability expect third have our guidance. refinancing to efficient time GPU. of quarter revenue August of value facilitating and for ramp is The we demonstrates on purchase, created. impact a total than finance receivables our are line This originated million Carvana-originated reflected approximately to our $XXX with our website. the the negative of fee QX to that GPU through we of a purchaser monetize refinancing other receivables impact will the more we The we and on believe As had initial finance $X better $XXX transitory other at flow sharing in financing in this item We transaction by the

In terms the quarter, of for anticipate our outlook, gains continued key across financial metrics. we third

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

$X,XXX toward total We $X,XXX. to goal GPU midterm we expect as of to our be march $X,XXX

EBITDA ago. a year QX, expect We between margin X.X% from X.X% an negative in and XX.X% be improvement to negative

You average approximately QX weighted on shares million fully should basis and QX. a exchanged use XXX in

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

the also transaction. for strong full year $X,XXX, are outlook the We based to execution across on our $X,XXX the to are we raising seeing GPU

half progress preparing to continue first an of As the business, in of attention. financial in second towards we continued now questions. for take efficiently We ability our your surge seasonal intend goals. half are to for progress look with eye to forward our our XXXX. to we excited you a XXXX, Thank We'll toward scale the about

will Josey our [Operator with Instructions]. Securities. question And from first come today JMP Ron

outstanding XX-day please. topic, last an Two and XX, XQ goal. and clearly, year. down from so We're days the half closer that's at the back to sale to With improvement certainly that of from getting presales,

few reasons why improved. So a Ernie you Mark, mentioned DSO and

quite Ernie, expensive And you you pinch newer mentioned Just in helped then faster how pinch wondering that and or mentioned some you to how points last benefit less turn or cars you merchandising site. coming-soon that impact better then, due didn't points presale improvements the the what arose. helped. I vehicle the fixed but the from Or perhaps, from said, the catch quarter, it, if on times inventories

Thanks, Ron.

$XXX same think to first per QX That's XX So on your Average I QX by by days question, days. increased comparing 'XX. year-over-year. GPU period sale to declined retail over unit 'XX that

in retail majority the average gains does we've that explain And that over so days GPU that to reduction of sale in made the period.

we in think course, reduction I I made of is biggest average The some way said, areas. like to that, I driver, we other sale. small days in the to think executed gains we But the achieved was a have. e-commerce of continue basically advantage we through to degree that forward. the that will our execute inventory And XXXX throughout strategy taking that's and going model

can and control that And inventory past increase demand in over the that good pooled over sale we've have pooled leveraged over going quickly very drop markets We to days the add leverage forward. those on us that gives time, we'll average inventory. year and markets, and

Yes, this Ron, and is Ernie.

progress do we we last called against the - I call. points of those out So pinch a made lot in

invest alleviate building places bit of have logistics advocates invested in or over many of the We I think some that with outside constrained. to advocates. out in with started were to flex or we in took quite that kind places push a we to target to try are where forms. routes the we where to constrained capacity network inside enable teams excess us logistics We

So number underway a outstripping to there's to our it. our improve said, see of satisfy been this That to ability ability demand. different continue demand to we to try fulfill initiatives

and happy as made points if it many we pinch of initial purchase alleviated through But points results. the down QX, additional further with think alleviated we're we the funnel those of pinch very kind created I points. pinch we sort

sure, a problem, So focus. high-quality I it think definitely requires that's for but

a very preparing high-growth we're but doing of sure a revenue. definitely business, we job QX being And ourselves that $X really effort kind at of making rates, nearly I And a addressing to some I growing operational a at run of despite so triple-digit that concerted in and billion expect rate now be them. think good we We're creates the think difficulties to are QX what for very we're XXXX. make

Consumer Research. Our comes next question with Albertine from Edge James

Jamie. going is Derek This on for

inventory a more are of sense long site market? Just inventory run the you opportunity economic or composition since the majority questions. to segment older the greater those it strategic XXXX the the younger, years couple can sort vehicles, capture you gain scale, tell, on used years older? try As those vehicles, you of young, an to share into four or in the expand would of late-model is Based do of what of see we in that that and used make the on listed model

Yes.

they the So used the I cars. started buying expectation it the customers seeing, say therefore to of mean, have we buying kind be I'm and I that site, closest later-model easiest initially the time would with would sell were new latest-model easiest as on cars online used because would to

we also you think move the less to and out to look sort spread expensive continue more last I into several cars, older expensive years, if over up cars, more of cars.

vehicles. fundamental our segment selection. of great a very think delivering particular that's is specific a broad I to value price, fair customers And proposition don't experience, that think I a a

think, to time, continue we I over expand. to So are likely

they're in monitoring directions seeing from expand that We're seeing different website at we're way us want cars. don't to signs. we're that But material that reviews see cars any good rates in telling or older at for are demand the then rates and all the the migrating we customers, demand the in go. segments. constantly elevated they for customers cars will lower our levels return see We older for we're We from

to well. there's to the move, don't up spectrum. So I there can for there's would a single big move we they think do that think for I throughout a opportunity direction as us say, us

two change on Okay. meaningful your the demographics, in you just makeup seen quarter of base? of And terms Got have customer the it. or then over last any

very stable. been It's Nothing. No.

from Lynch. comes America question Bank Merrill next Schindler our Nat with of And

of A then just you're follow-ups. roughly not the Or population XX XX% - quick where some be you the that of then servicing to One, that have we worth your assume Could described couple the And markets are currently questions. XXX incremental would it those get does effort? with markets. point the I markets? target

Sure.

following. think the over expansion framework market time used Nat, we to is So about the

more So fit that have majority population. a those the over markets so in those the time, good are least markets, there's all or in for the Carvana of vast We or about market XXX XXX,XXX at model. people that U.S. or think, markets,

in model logistics do a several headcount comes market. network in limited efficiently I model, it our we just when serving markets sizes. of the have many a features nice has and markets very think Because headcount-light our extension expansion to can different launch new capital an and we with

We we also logistics that centralized one make our from day network. - all to the customers because market available inventory, inventory via the we're have in right to able

markets, I a a much to we're think able serve that's than very inventory advantage large smaller in to seeing. because that and with those are market markets customers a used big larger midsize in inventory,

forward, think lot And markets us think more XXX over that for the we is so about with key in as we that I time. think a - we or stats there's look of markets framework. room are And XXX,XXX people to the expand

know Yes, resist top the Nat, spin know opportunity I but more already for you can't here. I this,

saying, about open was really the excited we're markets. opportunity I So to more

We bigger already in up in our and to grow. an continue markets for opportunity to also to most market to mature that opened share to believe there's markets we've continue Atlanta the even catch

We see signs continue exciting to there. really

half those the already to launched three And so to major rest the we markets to time. country over with we think then continuing we markets, and kind have oldest up growth catching markets older go of have drivers, grow, still

then just that. And Okay. a follow-up from

- XXX,XXX, markets close that guys you people. those obviously, be physically but - CarMax actually to to has of go You mentioned the XXX,XXX

usually You have XXX-mile markets. radius your surrounding

San have effectively you Francisco. California, Jose, San in opened you when So

open whole But how Or it San Bay. I that XXX,XXX the in many in whole, is markets X want if just would of Bay And though the as, You that, guess. that's East Area, or that with this I I Carvana in people San in million has market. is that area."? to could you one miles you Francisco, and XX already Or say, away, San Bay don't have opening area more, another you Area, need think open think can even it? Jose? of to you people, so do the would it count another you that effectively, can I "Well, have Francisco, open

Yes.

So that's good question. a

define free markets markets Carvana branded Carvana means you've way we and delivery we the local with delivery what is got the Carvana full hauler the is So having think as experience. that about advocate. employed And a

- You've make we when also San to free in funnel. market. the look are we and top customers Carvana things our Jose. got two finding suite toward the our we've advertising sure opened those - local open awareness are case, particular that full any defining market a of And that to access this In that gaining we're the of at that a

may full Jose. Some and San San officially those because Francisco experience Carvana and haven't But the find opened we're other in customers we not because market markets we're doing in us yet. that

follow-up markets. older growing about then said within just your And Great. on you something else a

something think, growing roughly oldest Atlanta Is your cohort, that? in your the last to market in the Nashville? or can a - older a were number follow-up that sitting I And were a call, growth year you old and relative let's to constant? say, you're other in characterize seeing have that that you markets that you in roughly. the Do us than you stat XX% roughly cohorts gave

would say continue trends we to see I similar. that are Yes. very

our to see growth continue markets. significant in We very oldest

than the are they've the ramped markets how in in market. ramping similarly past, to faster those New

generally the So that still to we holding all pointed in up. those trends past are

tend they're All very markets; those: growing older approximate trends, remain larger faster to markets new markets to than restate than for to more those part, markets; grow are markets growing; just are to the now, tend smaller the faster. that faster markets older preexisting So markets consistent. grow most

call. one Okay. monopolize can just so then I follow-up, And completely this further

Tesla I slow was it - San towards noticed because sense of seven that higher-end on you downtick - that did in notice slightly now if have Is around makes move a you're to ASP I the drop-down, have your Jose. cars? roughly from growth actually had which You this up. turned

Sure.

things So there are going a of couple there. on

First, ASP typically quarter. second increases seasonally in the

sequential was you increase. of was rest that driven out. of component change So the by point The a mix, as the

cars, So cars, normalizes. in forward, the inexpensive we relatively those We strong site relatively in expect which more a QX. little mix demand resulted for as more in the think, moderate inexpensive basically as expensive bit ASP which up. I more saw cars, look expensive to on QX, do relatively a pushed sold ASP we we cars

tax something disproportionate that seasonally see, occurring, market? side should having the probably on of a that refunds effect because that we the normally, lower Is of

to model our site one-year-old mix the year. one thing is we'll have start QX in that the cars So typically to happens more previous on from

the that so And can and years. that ASP. And lower newer that the seen are those several push driver that's we've have up past typically can - over mileage

the And Blair. next with William question comes Tania Anderson from

quarter. the Could didn't you other from then first were what near-term really understand if those it were And then goal this, planning of do direct you out help are they understand a And what hit have exactly, soon? down functions for missed. teams, - Are so the I'm there advertise XX% flex different purchasing line this you I And on quarter. consumers, pinch that? you to the advertise from like your the sorry didn't Do - what I you? dedicated kind points that doing you it? to I

Yes.

again Sorry, with more little a clearly. the start thing points pinch I'll

funnel, you puts mean the transaction. see the other moving of parts what pressure So to it site. When on as to what conversion is those points, higher more rates on alleviate we see I that higher down through on generally start just rates is pinch by site the start conversion we the

they where schedule they want, the delivery. the may find they car they If it find customers site. off can delivered to on to understand have want, they show they bounce car may If and the site. then up So don't want a they want they do

for out to door. pressure their may on inside them. have or delivery to talk questions. the and the call the They want field logistics put may Or can they advocate network in to an last-mile on that So

tend So pressure in area, just elsewhere. starts then to with any demand, higher rates just conversion see as level of we to any put we make given progress but

we can and they high-quality when it's too and extend deliveries can can think we're that's kind problem out that provide That us I trying see but of teams, a fly what markets various we so a single relief network. don't I I demand logistics that is because elsewhere. going to it's and kind When there progress customers' at make now doors, single problem, out able get we of delivery market kind out hard for in much. of say every in that sure of. a markets at every additional we grow have the again, so times and And to that we we flex then to mean, predict those across constraints pressure edge have go dedicated where get is And we example, is right it high these scene that then gives to any given to that make to kind see to to field last-mile of are Phoenix of rates, delivery having out some flexibility handle with in the front

we in start quickly able so to need we a to up, show see flexibility when handle to build demand so to move it. we're And resources

that concerted dedicate more more more resources started effort, a to I so think we've to And recently. that's

I an customers, exciting opportunity. our think extremely that's from Firstly,

that of point is one the that is a automotive to. customers major cars of that most for meaningful resales places one lot retailers, I think think those acquiring they There's differentiate of automotive I theirselves in standard not in differentiators ways. areas. from And will

area industry. the an that's And so lot a about it's in spoken

prior of to as being transaction the biggest differentiators think less here, our in progress of itself we've cars. and more always in our acquisition viewed I the kind

has recently for more become focus a us. this so And just

get value experience I In on we deliver they pick that also up to it pick a of old a car schedule car think can Customers give and come can good. for website. we're we car minutes, drive selling a just a drive for couple they're very the away their buying that can car. check they're the our very a to it them and And is customers we Or deliver new us. if time if and confident a us up. go us, and up pick from their away. car to They

we've it's until very for the I operational experience. customers think So on have that a simple recently. experience but that really area put just attention known And business a as the while, we more enjoyed much of haven't

I progress but opportunity a there's the and is believe very makes really and early us significant also innings. exciting of think the here, lot kind we're early just of in

those through think we're that the both either percentage margin And so can from getting transactions, flow I from and in the customers cars that those we're from in incremental getting which of buying - the margin that over we're it to we directly auction, GPU, flow sell time. think of that just or can there we lot we an through up retail show if wholesale, could variability at customers, a that sell if there's

that don't make a in the progress. want to think the expect a we immediate opportunity, to we And anything so term. huge it's of But we longer-term, lot promise in

question our with comes And next Wedbush Basham from Securities. Seth

gross looking the the is of top at much question - gross of line flow-through EBITDA. where because profit pinpoint were that flow-through first point shortfalls the of My - didn't that? you we top Can strength. the to And line see to biggest

Sure.

So we scalability. about talked for letter shareholder in investing the

And a forms. can scalability you we think of continue took in and actually QX. of then those think investments them in expect variety variety starting forms, as to that of to I take a

like investing product and QX started also science investing long-term technology process in on to that the takes increasing and investments will to focus automate and of it strategy is rest that first scalability. also as continue increase our as in efficiency plan the flexibility. we to and improvements engineering process improvement in in the So well year processes. and in investing data form management We've That's our operation, improve investments and believe things increase

QX, spent in bit we on used Ernie spillover relieve a flex as to So also, little third-party points. pinch We've talked logistics that about help teams.

demand back is top degree for network, the is of to first-party that I logistics expect scaled in expected our really the we're seeing first do build we the that in geared that of to we're we're make and we last-mile as of which year, meet of help to capable and well, the seeing did well logistics of making category staffing - we the We begin meeting routes. demand half staffing funnel, top A expect at the the on capacity sure the in And service. significant, also hit that constrained delivery in customer to particularly third investments do fully and the rest while additional some to, of all out demand at is funnel, as the that meeting network, as and XXXX. half importantly, that toward the

of seasonal unit the most the we seen you've the and gains year. showing sequential of If sales business, half our first have typically in cadence largest experienced in the the leverage

we we're that. for prepared so fully make And sure to want

this simply least Or increased is past there The color. here? increasing immature first Is mention else didn't on year-over-year the for of mix That's of Advertising unit for you because the was something one advertising. helpful going item per X the time, quarters. at markets?

Yes.

So mix. all that is

very just year-over-year more but in this, to point the per alluded within recently. Ernie think seeing advertising we're cohorts and expense unit, hit both trends I to again, positive

metric of trends driven markets. the older is going primarily of with positive cohorts, newer to versus company-level so And by the in be mix all

the quarter. the guidance by incremental question me the I is planning the you're my receivables gross the monetizing for profit was $XX. financing you please value that there? Got increased the in looking that help full it. in Can And at year before. less unit per assume That's third that than pieces guidance of you XXXX from moving last understand

Yes. I was, precisely some would there's guidance the the before, I buckets hard improvement. through GPU exactly different so it's to and to walk many say think for it in because guidance degree,

So in we model definitely improvement.

on just put quarters. to long this go a improved by over had it have $X,XXX and of known that buckets us. we've we focus We is for was said, I've the it. As time get opportunity an X last the And our for one

I So before. the largely think in that was guidance

question Mark May next Citi. our from with comes And

think, for expand that. on there a over if a going new This repeat then has place is any customers trade-in? On, secondly, a Carvana first, I you customers, advantages color your from May. Are to can its Carvana weren't Jones car that to more guess is there competitors compelling any do sell Nick I And to Mark cars make markets? you provide on on early in

picking there what logistics car I first kind I would I from network is advantages I going most big offering our and the there and competitors the of thing are that say our of think, versus are up you, think think So out offering.

that. of answer having think the and take questions a computer, phone on ability the not it get a and think in go pictures get to someone lot calls to physically value there's value where you're I to have from a talk your a the then inspected of value, into and bunch to dealership and I and

of lot a leveraging we're data think to enable I that.

are the brand of think If that show they up. fits of of alongside We've able the areas and sense the we there. brand; add to differentiators marketing; So up. those that and then one the big place much our is be much one where get we make think great in that areas a understand makes I for a more kind new build where is inventory showing positive this where customers quickly. brand we'll that's experience that about then progress a make believe much, long we feedback major offering, size. is brand a But can offering talked existing I business: Three is also one simpler. network of that experience effects one time think leaders the is the I

differentiators So those we and be they're that would the I major we would think clearly point to, showing up results. the in think

repeat XXX of say new On forward on cars. sold would on And metrics only just you the in time about years X quarter. moved X again, numbers remind there, ago, we've to I kind we customers, the

thin. for that feel give data we look on to data. lot early think we said, just rough are it's But that right we be at very really, as a think repeat good of I proxies and repeat concrete because customers, would so customers about now And metrics I so really

and continues is quality just the it very those on website, of One strong. to of reviews our get that metrics we be

as we in So I of think soon share could the any and stable, that we're that very you. we sure as got future, excited about it we'll what be with make

Wells question comes Fadem The Zach with from next Fargo.

profile economics, On your of you impact out-of-market how versus sales, with that then at XX% margin can trending? the tracking is XXXX And that's advertising? the also to date to and still talk about in-market any been respect level? And national to change

Sure.

any we the So yes, there. of in metric, seen terms meaningful changes haven't

current outside recall I sizable nothing advertising. of particular, increase there. in that there's network where small in are seen demand there's our in outside network, I national out of that think but the We've pickups regions certain logistics

terms can as, that think of profile, of course, broadly margin of as order the being In similar approximation. you

just XXXX, then market could maturation in terms 'XX there markets? your you've in bigger trends, you of And improve uptick a and along and a that curve of your maturation about is sales 'XX how or anything then, your we the markets future cohorts learned the talk for way and share? market Okay. to earlier XXXX, bit And forward, customer newer picture response compared on move maybe some little the curve can you that's as cohorts

that that same the the to in be it's we've we've very and I would just drivers say consistent, of continue that trends past. seen the seen kind

see much economics improving with interesting markets that's unit GPU. they because definitely start we newer thing is note higher one think the to at I

I would we're economics the the kind much, also cohorts they lower speaking, they underlying CAC trends and are for we've broadly GPU And contribution because margin-positive ramps the are similar the say, of recent with following higher start national So in outside example, cohorts, cohorts and because marketing. much unit the start of faster getting leveraging older are seen all of XXXX more with But there generally our to what past. today.

macro, today? in business anything Okay. are your rates on you impact, seeing prices, any from gas And interest headwinds rising rising then quickly

I think, in macroeconomic general, I forces. think we'd end up by saying we don't to think we're immune

lot So impacted a a over we're have that way. got move really, we've like does these likely the control if think than broader I get the quickly forces over. industry, control are of it forces that there that because don't that we're strongly be similar feel in business much our are really also not just impacting and growing attention we more we forces to

can to So all be are the I automotive would just say, those we'll whatever build in your I and going expectations things expectations how are that for focused impact just retailers, us, on would other your that control. we things for

comes question Salmon with next Markets. BMO from Our Capital Dan

William is X. This on I for have Dan.

on plans And So maxed your and forward? more of first, can detail having much pretty across second, acquisitions your going that you What business? into go CarXXX increasing your facility, your impact out about floor plan there. then you're are the Carlypso for are

Yes.

ways I is as So Carlypso said, us now. right serving in X

of is I and a the progress one founders think making of we're has that. business great there - cars is purchasing a from about on very job, and one quickly, very public the excited obviously done of focused lot

And so I news. think that's great

see the that powers of data many much as to vehicles, I a more we're benefits making data the the the little enabled there. we Carlypso of visible, into the steady important say we're bit vehicle got merchandising, many that vehicles, would a granularly site. price from see I making we're we're areas business, but we just and the is different many of physically area less the of valuing our that having progress think bit the be way it to every of way And that it. understand progress of lot is the some purchasing parts starting in vehicles to business us specifics a other ways, The in we're without on way rolling

there's that we're can to fun through. have extremely don't I you we yet, looking flow to kind think starting on of excited but kind the progress share. our see until all side, of be nothing CarXXX, it will and by at that's we're long So something

Yes. plan preparation do upsize And plan, the back times the of then, William, historically the so several on it upsized inventory the to first for year 'XX. in half again as of floor we and we've ramp in the floor intend half

The comes Gary from next with question Barrington Prestopino Research.

When to is I catch questions. it. be Ernie, of your completed going IRC didn't couple Indianapolis? in A

there So we of expect out cars by to year. the end be of the producing

Okay. Midwest were IRC where the is servicing What And servicing Midwest? you prior? the

Midwest, and so. Delanco, either the are lesser lesser could by the IRCs, were or to Atlanta. prior all be where and extent, a the depending Midwest I to do And launch IRCs Winder. closest So Dallas Indy, Prior of a launch extent, the serving the Blue will on that, continue to Indy to Philadelphia, mean, of to exactly you Mound in

to in cost. lower because coming generally an much I have higher But and would times increases that reduces Reducing that the delivery I Obviously, thought something miles exercise. that growth inspection from in the emerges in and future. us the center think, in we think and that that results stay delivery also capacity, which great, it in customers. inspection conversion. there's now that our down kind center results we Yes, closer Indianapolis, anticipate times say is miles is it customers I of to interesting putting front helps two, one, of generally delivery Reducing

country think the to as inspection around we centers that that's add continue we So over happen something additional time. will that

of another harder-to-see think I additional nice an IRC. kind that's of opening So benefit

of maybe some And the not auction maybe of you're a as dealer-to-dealer just then cars, technologies seeing comment market? their could on companies at on are as clients some supply you newer you what use particularly that to able And auction the the out physical basis? but far auction are offering coming the buy location, of to and

Sure.

to of out. major call the auctions So patterns no

at are our accordingly auctions. customers of think seeing the great I we're and a purchasing for selection cars

information obviously, on auction we're bidding the in purchasing those amount out In analytics algorithms that which we've of through and decide all our are building using sophisticated invested terms lanes. proprietary technology, consideration a range cars - we're wide take what significant of a deployed into to

and of to additional we're to there's new supply, in looking extent, nothing always looking channels, but the to test, of terms specific In sources call that that's new interested out or there. for products something

to today. send home do the remind our the don't physically in all we to is anybody office auctions as Phoenix. you, We it purchasing just And from of Gary,

And from come question Dyer Craig-Hallum. with will last today our Steve

Ryan for Steve. Sigdahl on

helpful. QX, although additional retail X, by color decrease will $XXX only So about XX. be days Any up to was to from would from GPU there sequentially sale XX

Sure.

of rates and about our the to lower-than-otherwise effects faced depreciation profit sequential lower of bit than in QX little on late position in part gross of the the QX the particularly our driver QX where average We example, QX, was and days high talked increase were leading declining in depreciated QX one a inventory and inventory. wholesale hurricane So QX, to year of for through then prices last first QX. sale

point QX the QX second rates depreciation second in driver be than would average the I would be that to. lower would - So

retail Okay. linchpins lots - of points. will at from pinch to QX to And is the looking new discussion assume about guide, QX? down that then And GPU just be it GPU correct quarter-over-quarter

the negative progress across as $X,XXX parts give generally don't XQ do GPU production. point all we in specific we're transaction. taken Obviously, guidance looking $X,XXX ramp, forward. GPU very have that strong think, made path to we're as very we goal. DriveTime speaking, retail dissipate that we that guidance then, towards we've impacts then those the One from taking And for and And about in we with excited expect I we the QX, on of is good over So we ramp midterm feeling of about GPU our expect transitory out facilities. components did facilities. on over we But call

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

the Thanks, everyone, great We in Most us. with the importantly, and had the we the front for opportunity the extremely with and call. of quarter. We're thanks team. to broader trajectory business a the Carvana of have quarter joining pleased enormous

to did this ops a foundation to quarter. the very continue for thanks future. build for We everything you teams special big A the

a had You a coming you you. and job. lot at did Thank tremendous

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

now You disconnect. may