Carvana (CVNA) 26 Feb 212020 Q4 Earnings call transcript

Good afternoon and welcome to the Carvana Fourth Quarter 2020 Earnings 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

call Good website for Andrea. the full and and shareholder of also that gentlemen XXXX the is webcast Thank Relations letter investors.carvana.com. Investor us afternoon website. The on IR you section this note Please joining conference company's and on be Carvana's thank simultaneously earnings on corporate you, the call. ladies will at fourth posted year quarter quarter fourth

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

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

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

ago, as for we and to most penetration call. a online a likely look modern goal customers deliver a customer joining have customer and over XXXX more than we one on that the and our be When Analyst GPU. defining a back set the four experiences And selling providing of Day, we two the million vertically profitable launched Thanks best of – seller becoming proof integrating by to experiences in the market from per X% Today, penetration. as retailer that outlined cars supply and Today market automotive When largest the we set XXX been many modern ago, and spoke by our – in for X we've margin. will of a cars the as preferences available cars us a buying Carvana journey. year. we audacious online for wide above car. company our the eight and business out everyone buying eight market we sizeable were selling years, building to and our cars And first was mature we leading modern years leader midterm the new a given years point for serve significant in years best the went of of are we we we Mike a X% technology, goal available. reach milestone thanks the markets leading at are $X,XXX to year we seller optimized of ago, our most could build chain Atlanta public solve company

final them levered seven of to our EBITDA we In and becoming we have used on milestone GPU second years, consecutive we've country and progress hit by And our continue marking demonstrating and half our our them in million Overall than significant being consecutive to $XXX years, third year automotive our XXXX set and growing we quarter. to profitable. of life and we're goals per retailer to cars have sold than path selling of margin exceeded or company, in consecutive the the path most grown XXXX, country, lighting more consistent goals have year. the path $X,XXX the in about the largest. more Today, we detail to for want celebrating largest where in X talk fastest the the here. our the hit what the full goal we cars more many seller before more we But now us bought I front we we becoming we to best of and we us. about for on hitting to second a in more for diving customers from got years have and the seven goals our ahead, are GPU into year our For moment how cars plan are and $X,XXX a

incredible with who like chosen boundless the transitioning ambition, as energy has even another This closer back are reverting when always more have that day, along get a the us people close year the and shift care feel before prouder. little year pandemic been who discipline, into Our made learn a but most than part for way. and of of We who position our something little fun to engine have has be every rapidly we better high been of demand posture posture in direction. hyper-growth defensive they're and a group drew growth hit a to to and part proud a and growth to came XXXX of, even rapidly us who

Fund managed the Our COVID automotive simultaneously levering we to moved margin. teams, retailer and we And team year growing company growing GPU our and that three their without that to another All the member we fastest throughout funds of together. were able hours sufficient together, EBITDA team When effective the through you. members that in pay created the of for by XX% and stuck team, of team Carvana the the were the our defensive generated posture came over every with take-home Together of hundreds and We operations from over our ensure without maintain a team people In single hundreds delivered a furloughs. layoff hours This We're when To our reduced managed entire pandemic impacted being those while thank country reduced still ways of adjustments, period. to made contributions through

You have of. an proud unbelievable amount to be

a to were with So satisfy strength we supply demand more adoption our we and have the and we where In brand, of from experiences go accelerating do current now as are of and of chain. our short-term the our far the model here? customer result our able than we where

opportunities allows eight powerful end demand, long-term quickly capacity chain, increased to forward. they at we bigger successive a team to We experiences customer a ambition. we We're between with scaling term, will this In got two to additional us platform and We innovation and ambition to waves customer XXXX our by We've are front IRCs ground and efficient, us up and the in hardest combination. just half we and and of with opportunities, keeps the most additional in given working are to bring Innovation year capabilities improve, investments continue the Fully a In evidence progress ago. charging of here demand. training open we our allows and the charging working enables to more the is demand logistics to more past. quickly. stresses XXXX operational network XXXX, better, additional by opened plan more to economics, This plan IRCs the paired December, open technology scalable. the make total path. execution, XX than in us demand delivers of the bring us than end inventory faster. have built unit hiring most catch medium as X.XX facility per faster cover grew available ramp, production three achieving focus IRCs As we the had with along make of forward our handle did capacity is Execution us XX% that best scale so further in that four that The prepare even they same. COVID the and and our as pronounced speed our experiences, of to to are This year million result by that immediately max January that demand operational sales comments the to even of and year-over-year we and at that Since led in across broadening but our to to there. and IRCs constraints possible. is move our before were our now are we even the remains time. the plan will to have even total and potential we're our and XX%. uncover and our also business the best to making the In XXXX,

to continue growing, focus must Our We'll to prioritize ambition maintain continue we is and must disciplined also move fast. we also to only but leverage. growth, demonstrating stay operating

the hard. teams we at important march do better will for every And day the all All we'll experiences our best the along bit keeping while decision delivering will of our get while fun of up the every and make We customer them are, the a always center to It be challenge, little Mark? continues. customers that around. things and have way.

all Thank us today. for thank Ernie, you, and joining you

an year sold pleased and units revenue. billion, $X.X of are and strong increase retail an retail XXX,XXX, totaled increase Revenue used an the both us increase revenue to billion, the in total fourth XX%, sold increase $X.X XX,XXX, of U.S. report of making units retail The was XX% of We Total totaled another XX%. quarter retailer XX%. of an automotive second largest in unit growth

industry-wide chain cohorts. cohorts retail In sales in rapid our units and driven our and used related overpowered election by Our despite our oldest cohort growth This to in promotion XXXX our headwinds this Monday exceptional growth sold year. our our XX%, XXXX significant grew XXXX XX%, by strong an decline to supply cyber market Atlanta growth was of grew run QX, not vehicle constraints. within COVID-XX by and

completed $XXX improvement $X,XXX. as our oldest cohort in per growth profit margin for of year XXXX growing of was our the XX%. consecutive we or leverage. year seventh growing XX% January unit XXXX, seventh In consecutive exited in we with year accelerated Our and and EBITDA the Total by XXXX of GPU cohorts more our year by our gross Atlanta to

Our including $XX ancillary growth was $XXX finance in in wholesale, in increases of in GPU products. $XX retail, and broad-based $XXX in

$XXX vehicles an $X,XXX, was QX changes increase an buying Our GPU in XXX,XXX performance Sequential approximately saw of cars normal seasonal primarily depreciation, were wave from was XXXX seasonal of GPU depreciation and the bolstered which of increase reconvening of of In COVID-XX. from our GPU, retail $XXX year-over-year. of of transitory in we costs ramping third driven Total $XXX by normal customers. capacity primarily by midst than customers, acquired GPU XX%. driven higher rapidly $XXX by the in

QX leverage. was QX, SG&A bringing QX, gains to We of the million platform. in to with expect our new EBITDA IRCs prior our $XXX $X.X our to flexibility year-over-year. first the We the the improvement our transitory away reflecting as XXX costs securitization significant in meaningful total wave. giving flow a move XXX. X% to markets forward in SEC successfully beginning we negative year we finance finance in we but In further another resources, XXXX, us GPU balance total from ramp selling these plan. year, year-end contributing took third opened margin our In an in ended In and execute moderate X.X% GPU QX, principal into $XXX both in versus completed and and liquidity billion step registered we XXXX, increase in new

population serve With U.S. XX% XXXX. from end the at of XX% up market now we these new openings the of

made year-end. the to vehicle XX% We for scaling XXXX, serve will significant expand capacity, also U.S. our XXX focus in production markets annual in inspection the to and capacity continue we units centers XX In continues bringing this our than by progress production population expect to XXXX We of more at end. and year to over added XXX,XXX to four full in XXXX, be utilization business. an of and at area reconditioning

XXXX million of to full XXXX than utilization. XXXX, more production expect to at annual ending We in and open IRCs X.XX in capacity units eight with

And we are eyes our units X support to goal maintain of achieving focused future of Our more million IRCs our than year. continue selling to growth. healthy pipeline squarely per on will a

margin. sold, we and EBITDA we on forward expect strong As look to another year retail XXXX, revenue, GPU units

and XXXX by primarily to to an units sold in speed expect capacity. at expect we governed of our acceleration retail production which We be scale in level growth that growth the

growth. in retail growth revenue unit be with in line expect sold XXXX to We

many major your retail sold, we Since invest such attention. margin and leverage. both the becoming we the as EBITDA made long-term. Thank in positive tremendous public while improving Finally, year-over-year, a grown are and for across progress about achieve units achieving have EBITDA significant XXXX, questions. operating in small expect next. milestones now take quarter mid-X,XXXs progress of metrics years first Since rapidly made the four We'll company XXXX, nearly GPU increased total loss We've for and and a you ago, business consistently year. what this demonstrated our continuing have GPU to all comes aspects we excited

of Zackfia [Operator Please Instructions] first question William go Blair. And the ahead. come from Sharon will

of the as an reconditioning logistics that starts all maybe that I trends been kind and well, of about the seen where could have to now talk the commentary are into you're line may I facing know to may letter, curious January this good sand elsewhere? of time? was think is mean, on about times, or the and And guess have what as February? us you Thanks strongly Hi, shareholder versus bulk checks pre-pandemic? delivery a of talked And in the give I'm there's what January, you of year. commented times about of delivery on stimulus you not there. the this for delivery looks customer and and I then where continue lot afternoon. I kind think what and the you idea optimal what in is meant

Sure.

Okay.

in demand. it's respect disentangle to So had with probably I'd result large noticeable I hard stimulus, been a did really think not in Stimulus say Xst the on. discontinuous super January going all that different to things bump

too don't stimulus. would think we what saw we that So I of assign to January much in

majority what shrank our of up would we just production the to assign instead think ramping I the capacity. is January

driver. – very As ramped nothing arrival January tricky to level that would be that from seen capacity excuse demand of February, from which we've a me, remarks so February the because we unlocked which that additional I couple think be in there's largely about said inventory, rapidly my production I I would the to perspective our into of bit sold, January of February a production a approximately same. month XX% can and tax exception up you a think the be December probably expect has the this Heading by really season, from weeks. reportedly with of back different year been pushed then

up couple Although last starting of I least that it's days. moderately at some we're see showing evidence over the to think

our we've continued. lot inventory. prior limited say, to that a got just So given than taxis of we're just would more hitting, kind satisfy able a and I looks same lot February like the trends and to trends January demand are Those

trying And a the weeks, impact. magical year been think of or that were far times. up of take the crimp moment they – logistics brought speaking that don't delivery produce biggest delivery materially sales. over of probably long that so that and of the ago. couple has on by our impacted you is order to roughly kind times starts longer get recently rest there's and on year-over-year. than been ramp focus chain delivery also the probably XX% I supply a away last give and too order has where More up includes to obviously also of is inventory is But the definitely logistics The on

that ramping quickly I I think due a we to increase And it's delivery just part in as that strain of is business continuous effect. underlying the more the times of of much think are. as

the a and work we over next of expect to would the that the I that been of which out country large in we meaningful has we very expect Although portion or two, week transitory the strain to think just week last storms middle or also be so. very saw the over

do at fell be. what I reconditioning think you I needs love. knowing where it now, you've know point what in guess mean, you I to mean, I got

need You've we're demand. talking where related about logistics be points they to and to not got pinch the

Sure.

I do problem. mean, – it's I think So, quality high think a I

supply we've times life. form see we'll takes many that will resolve is supply think with or we the Generally dealt three constraints, I side company the maybe so. period constraints throughout over those speaking some and month a then

year direction. We pandemic. kind preference in in into then unique growth our pretty hit was came has XXXX largest the in the by that for we year we customer and rapidly think And I sense ever. of then pulled positioned shifted our were the have overlaid entire that was catch three of and chain. before, obviously more up. across we COVID, waves demand And of impacts we'd ever which seen tried our rapidly of We to kind than saw successive kind then with supply

been this think that think some kind about to three can we it supply and events being has almost of side led I I separate difficult So think as a year, constraints.

to hit supply and then think out in of to growth different an year, has to then back I side the different the start of of think again. events. the evidenced constraint kind think that's we points inventory I year, done And team go January and in pandemic. And all despite of those job we in that tremendous. saw kind build the of we we had and at the three is working wave that I by the next of worked start the with saw some obviously And the incredible out got again, growth we

a that supply front of producing quickly. the we'll components shareholder think get at letter to think hopefully together is sure IRC clearly of in work normalized physical we're active to building. put building that a our we I the we're future. capacity ourselves, are we are as of longest building long cars, That's we I the which that about that time we out as than large facility when capacity into lead reconditioning. but materials capacity, the trying very pretty look is different for helpful this do is some production make supply And So more We chain chain world, in because facilities head the

front would hard to statistic longest from the working we lead is the capacity. circumstances and to today The hiring job catch the think get rapidly plan. the to just about all XX% us think said, I I move. to people in incredible capacity then is up. second in And of into very production And light But total reiterate it. that I time I And again, active feel training increasing team's we're turn by an pretty December unbelievable a done as incredible the of

Fadem comes Fargo. question Zachary of next The go Please from Wells ahead.

Hey for taking guys, thanks questions. the

about the if units would X,XXX able step that So January we commentary rate run company, you're week. for quarter-to-date since weekly every look at you've at been single a to that per tracking back suggest public been quarter. And up you've

the anything me rate? there to up inventory and the think out that, there ramp unit Could production first weekly preclude That's constraints, I is when you things So that? commentary and would run question? continuing around capacity talk about besides through you that from that those

Sure.

entire just point put than you're cuts directly outlook I materially strong. pointing I of demand rates, The up. our some very want kind want the back remainder and to We're very the clearly that commentary for this think making. into but we sales is I try aren't be going work reiterate And very, catch think this numbers to that satisfy we're don't in about the you're And to demand quarter we're And able that expected the differences in to So of the unreasonable. that year. to hard going to shape kind more to dive weekly to of we're seeing year. we probably seeing, to

important are of shareholder letter, available immediately at provided numbers our the That the a end means ready that graph I website, we think immediately cars were in them. around customer a of look can whereas light for it's truck, be those inventory right X,XXX cars had on customer in available we the loaded customers. the on when at to January that purchase to that purchases and

is of quickly the number a site, that extremely inventory selling to rapid get cars there car start can customers the And an go find against cars of is natural So an and through just purchase the something turn. process. how kind they on X,XXX limit to of want of

relative be impact being just probably of our season I pushed So future. sales years, think think of catching up back little the weeks. is be Partially to a going that couple pushed volumes into that's because a our catching bit us to bigger and to tax production probably expectation is previous capacity. up But I the will demand

we seen think, I past. discontinuous big much these been supported Those big you've inventory discontinuous so today. by moves moves have ready the And have larger really in than a

in so quickly. to inventory discontinuous order be turning And extremely would to take of extremely, have as step, a big we

then So be through severe. year because as the demand excess move we may it's setup kind But of later likely shape have will production see in catch as and up more year. the the the beneficial we that a we in term, immediate not

Got it.

you operating year, that. and your $X.X sense. about Okay. you an at last I to then took XXX,XXX sold as billion That cars expense one it Mark makes of about business And look today, support base

to look you talk cost, a and to expected think much So through step-up an as then and guess and how unit fixed SG&A about variable walk be can how SG&A to which a could cost? what is incremental call me I would I per we the XXXX, be about investment

Sure.

of alluded you as show as So to in we've able been SG&A. to, leverage the business, grown sort we've

going we long-term for our model. the be forward march to case I think that'll continue as

leverage as cohorts a is leverage As way I that question time where our think is, we definitely through into of about we've this one narrower view XXXX, over take age. we cohorts think seen

in as they One, cohorts, I grows, awareness word in as our I seen think some that we grows think items. that happens as data on in line age the provided of historically letter. the in that cohorts advertising of the leverage several shareholder mouth we've

line also seen the of As it relates we've expense leveraging to other some there. the items, cohorts

benefits think from that scale. the of takes form I

it takes and think we more some more there's and form and markets. base scale more I And out network. benefits logistics in cost our of also fixed units of the benefits of utilization more spreading the then as over of

And so leveraging think, SG&A we margin we've as be some great business. I of of good on. feel another model; improvement. improvement will think seen with lots we're the and EBITDA we We our where in on guidance about long-term think trends path that pretty coupled year expect provided We we march the that for I

comes next from Evercore The question of Please Michael ahead. Montani ISI. go

Thanks the taking for questions.

guidance I were down like itself? The bit. clarify you about a one single the EBITDA a small loss. Does Or EBITDA dollar you basically little low had was the actual mean to had talking margin first digit In that a mentioned margin? just amount

small is I and loss. GPU what a I EBITDA So, to think we margin were the guiding think mid-X,XXX –

be I the the of will I that Zach's think just And again by eighth question. think response describing I of to consecutive will – that was driven think sources margin some year that, EBITDA our be improvement. I a

line the in the that you. Thank retail roughly being question year-over-year. had revenue Okay. I I success and was the it faster seen thinking you've up might with growing given ASP's then sold, just And total then wholesale, was, ancillary other units in be up

that I'm of missing other that lines consider these business. need just some to something as I'm there So on well of we if there's wondering

Sure.

couple of points hitting there. good a you're think on I So

ASP I think and all drivers those, And the revenue made we've the obviously two. vehicle major other and then of revenues. in of really progress wholesale are latter

that's half we've point what little make that's here ASP up is supply demand. constrained the that in responding and occasion, toward, a on reconditioning a the Part cars I a little less shade of driver. that's year. in our demand also centers, require that the seeing a reconditioning more algorithms bit so just supply bit back we've would intentional as to degree, some I we're and the tended think to Part stripped of maybe been one seen in we're of purchasing to

that saw I the ASP we to in expect think in a moderate XXXX. gains we back of year, bit the half the little in

those balance of all And so of led our to the is things guidance. what

ahead. of question next Securities. from go Naved The comes Truist Khan Please

Neved. Thanks. on Congrats the This couple of A is Feller a for quarter. performance Robert questions. on great of

your very back discuss So can just market you Atlanta, markets, attractive what of just which And about first as what to stepping that enter? speak made reiterate we made one then broadly Rule EBITDA – margin. we've that Internet improving Rule line the about XX, great and growth space, the and XX below within really XX XX the shown Rule become has the Carvana top seen is

thinking So curious how you're phenomenon about Thanks. general that moving forward?

Well, first of great you there. great all, tell thank you. internally you and quarter good you're debating with quarter appreciate going I can We quarter.

to scaling we reconditioning of distracted way [indiscernible] kind operational had that. history. out of for to that's basically is you a that preexisting thank enter, benefits market So going area. back center our in story in some The short

market that more markets think that's letter, And our responded nothing to to ramp we've point there. us put the in And are the it's [indiscernible] fit we well of at the even would life. faster launched And the go uniquely since. ease commentary so I unique thought some XX% that was obviously to model. about that operational market ever than continue market. same on choosing then of to choose we Atlanta really did that just about led kind was that what There It

that’s grow. had us. think the hit It's do and to for to right. at great So It's market was the growing XX%. about a performing other of And Mark, XX choice continued I Rule I similarly. It think that market. been want XX, very a January great the nothing XX, there are special markets

fast very Internet Sure. Yes. I Thank with that. the you companies. for mean we're growing I to happy comp think

well I any that we on you put fared think historically together. rule extremely could

strong to historically I e-commerce growth think other compared has our been companies.

growth, I showing also we've that while significantly narrowing loss margins. strong continued EBITDA think

we've we've EBITDA been So leverage, simultaneously those top for progress on I growth continue continued think something to fare which both to able going seven on line look to margin farewell to years is obviously metrics. consecutive and make on do now. to We're

we're we to keep going possibly trying to high as keep as number can. that So –

The just I of I think the other visibility We underlying thing that the benefit EBITDA having as were about quarter would rule underlying infer drivers of from try are; data cohorts our the into in oldest already were that cohorts I that several also of well. to say the is approaching positive and range, third cohorts target what long-term has business the unique as our perspective. our that share our

kind making narrowing So and I over think investment into that losses, negative is our all going have kind help that that, growth. EBITDA we're clarify but while the, to the this margin constantly of of shown clearly EBITDA that really time, progress we does

Understood. Thank you.

Thank you.

comes Morgan. ahead. go from Gupta question J.P. next The of Please Rajat

Hi, Good be with follow-up? you different afternoon. have helpful that that the What and and quarter. transitionary Do the just could of impact you that breaks Thanks is I us out couple into to three like The That businesses? GPU. GPU how good come through on just fourth a sense my would relatedly an of mid-X,XXX flowing have respect on a assumed taking evening. questions. guide for the have XXXX does back? the for $XXX mid-X,XXX Thanks. retail give in across all a quick the guidance still element I like narrow that,

Yes. Sure.

QX. our COVID wave away beginning impacts new moderation we from So third the we cost, to as we comes COVID, as into flow further it we relates move to QX, ramp of moderate. transitory but then and the IRCs in those the to as from, expect to And expect them moderate do

progress improvements make that the we've of pretty consecutive of to So was year. I progress. question, there GPU for our the given we're think total really various that we your we feeling sort And components. total first year; second think question. next On consistent about really mid-X,XXX year expect year down in next we're about unlike with to a good and of plan feeling EBITDA past I good that GPU GPU, on into the make that. margin, break sense But Not don't we'll that your eighth given good outlooks we've our

Got it. That's helpful.

I'm just you and it, the same of sure I was or point? adverse not trends initially weather Thanks. comment impact to about February in missed that federally continuing the Just talked growth that's the January, but clarify if on January from despite to wanted what see continue there level any like that you

Yes. Sure.

in several So there. concepts I think there's

underlying of far. So the seen early of demand, this so part we've underlying very throughout year demand consistent in be terms

In terms for related of the sales, but of we've seen demand the some be kind delays storms have there to the middle of been in the very sales country. consistent,

or over resolve expect week to the We those next so.

timing far underlying year that be to expect we than we what And later will is by this but mid-March. for of the that also you're modeling mid-February business of But signal kind just looking the strength so it growth, to season relates sometime it the relates what then tax of and forward, expect between happens sales, year. been impacts demand saw, impacted for this and we very major and last. which that As of of by year-over-year be consistent which implies getting timing growth as the kind for it's the to that storms catalyst that

get in Got queue. it. Thanks. helpful. That's back I'll

Thanks.

Markets. Yruma Capital from comes Edward question next KeyBank go ahead. Please of The

Hey, two good question. taking I the guess afternoon. me. Thanks for for

First penetration source continue higher. vehicle, push guys to consumer like on looks you the

the two more how net to fact through you're that to we're Are expect pricing having if just that some the sourcing? the of vehicles to should of wondering and Just a pay that you're to a for the rate your trying And more now you. where securitization question in out? consumers rising consumer particularly doing starting potentially environment, that then your those against point Thank yourself you to as second flow maybe competitors. we get to your P&L,

Sure.

cars for of customers business the incredibly obviously do that buying impressive to I first long-term is from the cars from continues think XX% customers the just fourth statistic out to XX% well our grew in there and goal XX% on of XXXX. to been that in all XX%. customers had quarter So do that sold we of a ago. put had years Day we two We the context, that bought set Analyst most

cars our other of customers and excited that extremely thirds two sold remarkable customers, about. bought the pretty roughly something that for we that's So we we're number from a

but But probably about to buys And the a move small were of keep that. relates relates runs majority bigger you simultaneously retail X.X% it business. customer future to together very, market, we and than each the car. and a that still remaining for trade the compared largely are to please we're side the than of in independent. on the opportunity, materially that, bigger little implications on two businesses business, the and not business bit a sells very And those the the of of as mind intersect kind independently. business As side entire the They purchasing when the of it remain

forward, those grow looking think businesses some to I So independently we degree. to expect

our are against of network, We retail to transactions to other expect we in scheduler. will vehicle strain favor moments each basically in delivery pursing race logistics transactions tend to in we constrained them when our

to grow businesses can But some and expect possibly we're and makes we don't impacts to as medium driver work near-term and over have the interact those to just that of be So can. the fast both together. the long-term, that kind in going businesses we as a big

think that reinforcing are we opportunities and enormous As mutually independently. they

as rates rates far kind period at say goes, speaking of facing selling I consistent. kind medium of we are spreads or into spreads any consumer generally time fund that that. of lot would fairly kind and loans a range that goes would interest over that of consumer As there's have

a those a entire similar those quarter or two, I across relatively sometimes the But quarter bit for little speaking, small impacts can a the time. two. are for bigger bit can rate very lowering rate they finance is environment and get generally little a And in compared raising margin. margin to or so finance environment, compressed margins I expected think generally a do then think get

you're think I pointing kind to of directional impact reasonable the So is a factor.

Although factors, that year the there including business or improvement just seen we've over are so. in many last underlying the

but contributor. think you it's think in, a I could model I big So don't that

you. Thank

next go BNP ahead. Please comes Thank Paribas. from Exane Chris of Bottiglieri question you. The

taking for the Thanks guys. Hi, question.

Hi.

least arrangement? I wanted levels to outpacing production. you've that now. websites? inventory are economic two or on your benefits ask of And you scale the the third-party about inventory selection website What and Can on how my any your talk your ability evaluate from a do of and to this seen? partner website. testing standpoint, investor results Carvana Clearly, you for observations, the in prolific trade-offs you've been at initial dealer year third-party for there's parties then that's demand implications your both third From very an we about from allowing more

Sure.

in So there. lot there's a

at running. to probably many with given across set large smaller tests any XXX start very test, have that we're this we tests me There's XXX business. Let potentially that we're but have running quarter, much in a the of many, we

up have that We different running break made developers how own XX on database – their it technology. infrastructure own building you XX independent analysts all engineers in designers and and and groups visual of and designers product to that and down, are are probably area their kind developers product depending of and

potential to particular we business probably going on. much. that So to there's and near-term. to have material early – doing of start about our you said we discuss to impact test, always to bit of with that on in higher expect small things it a are into test to we scales. just too believe just And test P&L that, have impact prior be that have little will discuss that. you We moving to a But still be second we the changes to the more tests a phase talking more. discuss be slightly and not extent it to that to the will material the not will to are that at be That these going a our lot have policy will choose we And going underlying general, is the on in to that

up partners you more some and more inventories showing there. So see may

then of offs tests the background be going helping opportunities, faces. And most of many collectively those opportunities some could trying with that and where we about that our understand energy dimensions. offer but is And invest and choices how economics question You about us think how to pick scalability, can the we good we put most are trade-offs of we're the the and there'll trade unit three be things in often what lens to different evaluate to energies lens will those the ways that make we generally all trying these most on and the we're think that's oftentimes the speaking many that there many are may some ask the into. determine compelling and best Carvana customer we that always experience, opportunities that the the we use we

follow XX% to helpful. you January. follow to flank just could you really are you this seem opened they markets it open the sustain any some from the these Atlanta in benefited I perspective. That's when feel IRC of a IRCs? markets want growth you. the year Atlanta on disproportionately geographical attribute there earlier IRCs reasonable to Is you a two from to Orlando, Got other benefit? Atlanta a think eye-popping is And then where your would like up acceleration? I look And that What similar When in really XX% the at Westmeath up performances and

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Your Citi. comes go next ahead. Nick of Please from Jones question

Thanks Great. taking the for questions.

you go As think the a exceeds I original sell goals ratios also potentially? to you retail I to have And your where of demand can as ratio source you, guess customer consumers guess those what cars can directly revise percent learned sold? goals, for do you then ratio? Or and the overtime both

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grow just we're so to we as to can quickly going both businesses as look And independently.

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nationwide of our And just so, going here near goal we're forward marching toward to keep coverage.

question next Securities. go JMP from Please The Josey ahead. Ron comes of

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us scale scale as up chain meet all in doing the us other job, to can, we're and addition, network to hard of supply are we're logistics that amazing help production capacity, an In Ernie – we is have alluded seeing. as working that as to also the many teams they our working demand our parts the

really so we're fulfill know to we and demand And it as make We a amount hard off. of can we can we're have working sure tremendous where that's focused. as we that

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in And near-term to a So have there. an just the there's it we view, to even we lot that demand. room supply recognize do as of already and the on clearly a constraint can conflict side look bit go of a long-term we're still when though the part like things, those try of balance excessive

thanks helpful, guys. Super

it Colantuoni me? question Pardon inadvertently question from out. The next queue is John go of Jefferies. conference And our Instructions] for [Operator comes Thank operator. was This the you clear Please waiting. ahead.

decent On taking proxy Hi, growth a in thanks for as not should grown had what have QX think the for capacity my in a constraints, been unit I and constraining could factor January questions. capacity have sales XX% of follow-up. a we

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true. the in grown kind January. I of think that So underlying think side materially demand on that sufficient was they than believe we likely have to is for I more January, in either did sales And of

I think that's right think to So, it. about the way

to can like today. feel is look be than drives to a forward, able capacity. significantly be going how And to this we There our As we we're that's more up of ramp quickly really seems question demand what we growth. sales handle production

between finance Great. GPU XXXX other? you $XXXX in expected help retail, the mid and And can this in and wholesale aggregate

Yes.

past guidance will over we the with total the components mid So our years, several that consistent our GPU the given $X,XXX the year out but in outlooks we've hope last that we GPU for break helpful. be total don't guidance,

so Okay. Thank you much.

question Nagel of Brian Please go next comes from ahead. Oppenheimer. The

Congratulations. Nice quarter. evening. good Hi,

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of Our from Jonas ahead. Adam Morgan will go come final question Please Stanley.

is online Carvana used time to describe upon So today an used people dealer. as a retailer, online Amazon an Ernie, car described once book as

to guys one look, from think constrained Now, demand. as themes really of this meet the you call are I

question or call, long-term. cetera? new and software addressing logistics markets used integrated you've break cars, not related platform management and so this fleet new that Could auto on have Carvana quite I'm could built right. – obviously But management/rideshare, are to to in mega specifically And this And or major that a is information vertically beyond asking the et you just growing? use fleet

that's So a question. big

start this. with me let So

opportunity and are I know blocking constrained clearly do. unbelievable what of have tackling we clearly in and an to how of kind front and think today doing exactly just we we us,

more X.X% from share. per There's year ton buy customers. It's of have to market We cars a year – million room a unit. $XX

when I that I assets. we any customer, I other, to think have assets. compelling to doubt way customers a of is ways probably no then of But market kind also think transaction And there of each you rate really larger. our useful brand, the it one do requires think at turn lots a requires a accelerate think think I and it built theoretical the a I is lot of But is in we're cars it's better in now kind about exceptional making automotive. between to about itself think of which And pretty the the one think room that through customer I it, to there's maybe that over of kind there's brand requires Carvana the that's business that's the And we've think that our lens room a and customer still there's known then think for delivering ton great investing about experiences. brands transaction customer vehicle. known of grow while which

I think, so, exciting. And that's

I all vehicle easy. makes think purchase it that simple complicated I when the we things for and by you into car transaction, and of transactions takes technology a a a look customer the think built that taking lot a that at the of just surrounding very go kind purchasing making and

chain car a to to holler the a supply we think member end a we've hope side, with of tool when of population year. that's got the to we've U.S. so us to be the then that supply team XX% this you a door what customer's Carvana built. enables deliver And that branded uniformed by about and a And a set

So the I that that or automotive important the those customer about do various I be at there think that And may next extremely so, decade an many part you value way combination chains. of very as highly these think very, industry think over assets those evolves places or are think some differentiated opportunities, many of the of and about those we where I assets large assets. are interesting think – as automotive

really, front a creativity want that of doesn't balance to in large. And one take looking that ambitious that to position think continue that the ourselves. things is this do making and that being so know ability ton enough manage between which the and that well, the problem that that. as the we're we fast full a I to that put well continue opportunity others find space sure think reiterate I to to equation on but is problems to are quality of and And And very between focused extremely think face, at I the our to see great of think us trying Again we of it problem take advantage and move is really really us I find to this set. same that I we high

it's end going the being story over next the Carvana decade. to think up I of

we're forward. as and make of decisions move trying smart that we aware So we're to all

there number. they count Okay. not to to a all have direct to dealers, new new Ernie, I'll to if consumer. no the open-ended to want in XX and And XX use to next common. five years, just I counting out They significant U.S. go by all bust are three end I EV OEMs right, want and that's as They X I all. the and one very thing decade entering and XX at a I'm the mean, the have of a market here. manufacturers could then in doubt, franchise lot you're, aware, don't of follow-up

they're teaming So to I'm as partners. these with guys and just of coming market, – up they're kind

give me sisters using [ph]. Lordstown, think I Manheim a think, using I Cox or break. Glovis I Camping World mean, Lucids

need the they and and you're they discussions could flood kind to high level at to highly – care players customer? serve preliminary entertaining not with So Are is when preliminary, but you will would advanced at even to this capacity constrained, this customer confirm a of that team but the discussions of support products, super care support again logistics way and your discussions have question? even I avoid you Or advanced that no time? new

that in with previous I are the are. that just supply center. to answer probably to constraints And gave reiterate then we would That's the they reconditioning the question. think generally we're our generally smarter stick I you where

that XX between appreciate are there. I the something question. the balance finding job the anyway, ambition. said, So And over years and is of think got a good next really recognize we've there I I out many I do as opportunities to focus

We're, good. Ernie. you, Thank

Thank you, Adam.

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

thank don't And team for for year that think as be year. ever you more out the We to really And the threw feel as have joining I because way prouder. result. imagined. you a unbelievable in team. there it. same together the did. stuck could us much This entire will than great spot we everything I We're did a you And incredible Well, an Thank We Carvana everyone year you possibly appreciate you call. a so Great. walk of job. a hope all at

so to thank So next Talk much. you you quarter.

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