Carvana (CVNA) 22 Feb 242023 Q4 Earnings call transcript

Good day, and welcome to the Carvana Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please also note that this event is being recorded today.

I would now like to turn the conference over to Meg Kehan with Investor Relations. Please go ahead.

Thanks, Joe. gentlemen, Quarter you Earnings and and on joining Conference ladies Fourth Carvana's Full afternoon, and for thank us Call. Good Year XXXX

on the of that Investor quarter at shareholder note this also will fourth simultaneously Please posted is on call investors.carvana.com. The Relations website. company's the webcast section letter corporate IR website be the

& we website. be found can posted QX, for which IR a Additionally, our the set Presentations Events tables of of supplemental financial page on

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

involve like here. Before I meaning cause may remind start, laws, following financial discussed to, we to risks the results federal opportunities actual that discussions the forward-looking would including, materially and the to within uncertainties market from you limited those not future Carvana's statements that that differ but securities contain and of results

or material this discussion recent Carvana differ conference can and forward-looking statements of current as result upon expectations call detailed results section as or actual Carvana's A new in Factors based to the forward-looking them, are today, a that of statements from XX-K. Risk The developments in to of found whether no factors be cause the Form of revise obligation assumes risks update otherwise. and most

be include letter IR between can of non-GAAP our in our Reconciliations All EBITDA. found metrics. references Our a non-GAAP otherwise issued found specified, will metrics. to website. the to on results SG&A today, copy and will financial adjusted reported commentary all today be and metrics Unless to non-GAAP be shareholder our references to which can will GPU GAAP be for EBITDA

Garcia. to said, call turn that over to I'd Ernie? Ernie the And like with

from exceptional XXXX. nearly previous everyone, year, financial call. Thanks, was a GPU Full our for year perspective $X,XXX year best joining an our best better the Meg, Carvana. in a by way. It and long was for was XXXX thanks, than

than our higher as and have over adjusted in unit we further year per EBITDA our Our clear outlook. previous visibility was $XXX see full improvements, can to best, you

wasn't have years one quick for X from to was early right. statement transition That to little signed a a a have off anyone. of able for we negative massively to wrong public was because each continues. is is letters generally in march last initially to a do principle. reduction simple The that fun a the since perceived took perceived a of 'XX, underappreciated to we believe company that important been In be as trip characterized able this do reason In with, we The little went XXXX Carvana. we our and

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success deserves reflection, of of 'XX the of to truth a is do. still lot marching have While moment we the a

where I here, this how are Where are Our would we are ever goals each for get And we have there? the this. Today, are evaluate and come big. sits going you that yourself. position we Carvana in ask going? been Where to back for X the are First, From reasons. questions are we? we? to strongest key in element

one, customers better. simply is even income for execute, significant every our improvement. opportunities becoming we business unmatched. them. differentiated. power there every and Across experience get highly item additional of financial getting plan these is line experiences model deliver. we Number the three, our Number are love many is remain statement, to our infrastructure clear our Number We And the quarter of two, as

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we The gap market $X is that have currently share. And we a market, As potential bigger. continue we in obvious. getting trillion five, execute, compete is and X% approximately to number

we and From how on the So become the most flinched get are and goals. sell automotive early buy profitable and going been retailer have going? largest our days we and per to of And cars Carvana, we remain never millions to of to there? finally, They where are have year.

to to going march. We're continue

with still dreams group hustle. an ambitious and big are We

as goals always our as we as we can possible to as in as sprinting keep quickly much will positive drive We have. changes

in lessons journey and We learning. toolkit. are constantly adds also new is group a that Every stage to us teaches our Carvana's

long always get and Mark. is we long The back As that march best as up, day is true, continues, as as today. always our

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

improved to company positioning records highlighted further set progress EBITDA and in quarter which EBITDA fourth for made XXXX. our sustainable path and by quarter adjusted for We growth and nearly adjusted adjusted fourth GPU a year on year billion total us $X.X and we the Our significant well full profitability. completing in have EBITDA, we

As year our of quarter materials earnings we I'll a start by at results. full this and quarter, X fourth takeaways. look provide our detailed part summarizing key

industry to for to Based online future our million XXXX results we and levels above unit carrying retail remain that ability EBITDA, resoundingly significantly $X,XXX our vehicle costs of outlook First, of growth. XXXX and adjusted capacity pre-pandemic sold, our outlook, FY equating generate of $XXX used significant declining model per prices, QX QX volumes adjusted on below demonstrate expect to significantly above the generate sales despite sizable EBITDA.

signs early not for growth. Second, data Based in a also gained basis in retail and to our are year now growth year-on-year industry market profitability in sequential and on a full share on beginning unit we sources, outlook record while XXXX. also adjusted QX we EBITDA QX only sequential but basis calls demonstrate of showing a basis on on

of a existing retail support we excess Third, footprint unique infrastructure powerful growth. significantly and our scaling have multiples to for and in with unit profitable capacity volume efficiently

costs. growth this as leverage underutilized leverage paired we to expect operating We overhead with significant our be

our to fourth now quarter Moving results.

team net are expense and generate As set significant on profit, into we remains that cash including of on of long-term metrics is adjusted goal, GAAP key this flow. our a free progress goal non-GAAP to previously focused income discussed, our financial long-term non-GAAP non-GAAP service this SG&A In financial gross EBITDA. driving inputs management and goal,

with changes XX% will sequential our these in on sequential to the units of environment, remaining outlook our sequentially. Retail than remarks current a on by in a we revenue better Due was billion, line dynamic the focus basis. the sold Total and declined nature $X.XXX sequentially, of metrics. decrease industry X%

retail GPU QX QX $XXX, non-GAAP GPU a in $X,XXX driven total quarter, sequential by was fourth company positively primarily a absence seasonality. of which of was the $X,XXX in and record. QX, impacted nonrecurring $X,XXX, versus new In the benefits, decrease Non-GAAP

services, strength value be sales, in Our vertically-integrated by the sourcing, and retail fundamental cost model. our GPU revenues driven from additional higher-than-normal depreciation times nonvehicle highlighting fourth in gains turn to despite of continues inventory of and customer came business quarter

non-GAAP for the QX expect We with to potential QX, similar GPU in to retail be upside.

changes $XXX were fourth driven Sequential in primarily by versus GPU wholesale Non-GAAP QX. QX was GPU wholesale $XXX seasonality. quarter in in

a GPU wholesale QX. in We increase in sequential expect

in selling a higher our versus by Non-GAAP primarily $X,XXX other than passed loans lower expectations QX. in as was loss industry-wide have loan since in $X,XXX resulting GPU pricing. Sequential GPU to from QX volume sales driven were QX relative QX, well that of lower in units changes on other through sold in premium we as retail to

sequential GPU a QX. expect in other increase We in

nonrecurring expense by benefit changes were incremental versus Non-GAAP million QX the expenses million of SG&A impacted a absence QX. small was non-GAAP $XXX and $XXX in QX expense driven in primarily SG&A small in QX. that Sequential in

$XX was fourth in million quarter a company Finally, QX, record. new EBITDA adjusted

outlook. I'll turn now quarter to our first

industry uncertain, above up slightly macroeconomic continues XXXX, expect units on we adjusted year-over-year the environment retail we and of be the first stable: expect the the a environment and significantly as as we sold following While remains long basis; expect quarter two, EBITDA looking $XXX to one, toward million.

driven any material this driving results adjusted not EBITDA so quarter. above QX. by anticipate Our confidence costs of our onetime or significantly outlook $XXX far is million This about does in benefits

we XXXX, adjusted XXXX. EBITDA compared units sold to grow and FY retail expect For FY to

of forward becoming take to and making the largest the and your path auto now about Thank most We goal questions. continued we progress retailer. are excited you on, our We'll attention. we for profitable toward look are

first from with we [Operator this Instructions] will time, At Blair. come which William Sharon will take Zackfia question, our

a guess I of couple questions.

bulk are that that question and going did the on when of As increases of curtailment longer that tax curious kind rate and season? then what a of Because refund the credit when happened ahead kind we year-over-year I'm to you that And of here? might sold, above you you about in the how from about got into of the factoring coming typing any you're as -- itself, trends think quarter mean that the up and slightly you. kind with units I'm I for well of quarter see the kind you term. you're ask But assuming something quarter

Sure.

So unique tax think season. I about we're making don't any assumptions

is there's most But of read money I of be probably and bit tax the went think pretty larger. as out a an result average probably little will year a the of information taxi slower, strong less probably that this started think I timing season if refunds you is holidays. the expectation season it, there, a be will out that

of and we're significant making of don't chunk our super anything roughly kind I that's of kind And I think think normal. just outlook assumption believe, driving first is hit there. yesterday for assumptions Really QX money, the we night. aggressive our last

super there's to notable think anything don't discuss. I So

X months. relates a as rolled that lot rolled think that to over more then last of we We've recently. I more And it credit the even of out out tightening,

think taken so is -- largely in as well. that that's And our I or outlook completely into account

Okay. say where years, car. X of now of at potentially a the know your I you gross more targets. we're than different of the to what And going next if margin more profit a is that SG&A you think Or point kind long-term can margin you XX% look then, to there's X within looking margin? years as thought Ernie, is the nicely XX% you're per do gross ago? driver to gross on do this few leverage we at target you're But

what know going but to think say, to anyway. say you I it I'm I'm going

opportunity our is I everywhere. there's view -- think

expenses. of kind fixed a break is think down way I variable expenses and useful to it

I there think to then to that variable we be lever still fixed expenses, are that expect roughly to we as in we're that think turn holding that today the range, we And expenses, the I in gains and absolutely believe way managing growth. had. is

job. think doing an I teams have the been incredible

I left. strong. have think we about trajectory if it's that you think look numbers, of we're a of those lot at I And initiatives the excited very still

on and that think many of trying initiatives at given prioritizing of take is at those still doing a in internally, those our just time. much too to areas, not making bigger time issues one any we're I sure thing one

in think price item. be also kind there's to opportunity line those rates opportunities, I a every that's I And the meaning efficient of per regardless those as basically fundamental vehicle, would I choose believe probably gross more think or areas. can we there. characterize profit perspective, true like things from of we all where in unit we

individual and innovations take And continued in pricing, and more been credit that can that recently credit allow enhancement I form -- our that credit pricing us precisely to of structuring we've those how to kind out and we're internally number assessments evaluate of scoring loans. It that think about of cars, we're structuring form biggest credit connect the the a of risk point cars that of of getting cars, receipt then can value that of the things losers. buying we're to the out take we're make to taking the doing sure smarter at those the data cutting that the rolling

number So there I as exciting. initiatives think there's well pretty of a are that

think looking remain I in this both efficiencies. of forward QX to strong from in to little make and then we very perspective for we're obviously that, sure that I from despite And growth the a driving we're And first trying bit of period think showing a financial while. time a a

think just way years. of last couple the has about the I are responded excited So in very we overall, team the

years was where I imagine we're pretty ago sitting think it -- to of perspective the X today. hard from

a think a feel improvements, and continue got of think I where it of to hard room that make continuing to today. year we're we forward ago we make I was sitting to those we've from improvements. And lot to look like to the perspective imagine

board, So for gains. across think I the fundamental looking we're

And XXXX. congrats great on a

Thank you.

question And Jonas come next Stanley. our will from with Morgan Adam

you're for odd-million [ loss the definition ] quarter, your EBITDA to above a loss and million year. $XXX that to So prior compares obviously, small first guiding on substantially

I'm quarter. So just full that year, asking at to growing kind of I million I'm not you for your of of you in statement first the $XXX the comment see already the ahead million EBITDA. what of all you're guide mean specifically -- just $XXX with or year rest but

could you of at year just grow answer Of to express to the course, you QX if remainder confidence the you're So there. that willing to from EBITDA you the wanted my QX? question least don't have to question. could is, I see the go

the question. the we to appreciate us I that Yes. think want stick We our that. of with to it. on But out I at handing sure No. stay appreciate got you make Well, disciplined guidance. I end

extremely where excited about are. are We we

the think I of the strong. are business trends very, very

EBITDA those trends obviously trends I And sum and perspective, the 'XX also great QX. a of think an that what see the from into we I were and had we heading hand, now we pretty to execute. year underlie the think kind positive but the of update keep in we'll and our things there's every remain, to if very continue got I in just and is happen, us, go we things go got And executing, to quarter. front you we exciting those but ball of think make that's

the as Ernie, Okay. be -- of you're just reason I even appreciate EBITDA able guide. That's to you're that. the though me year, that. interpret out not giving giving my not any formal that Well, I'll of any you're in a calling wouldn't why remainder interpretation you grow not

headwind, there You felt you interpretation. was would something to call beyond prudent just my quarter was out if out that felt you something the of call the

met your on this fast. mean comment then get and to we if Well, interpretation, I really starts really

marching, keep excited. going You've interpretation. We're got to your we're

Our from next Northcoast Research. Healy question will with come John

about sales Is love and be margin? guys. payment to same-store be for real payment to customer get of what for grow thoughts ideal you'd I where do a good hoping couple affordability. to the you and would if guys? would looking on your that theoretically, be I interest talk would spot show would Ernie, to And little today at. where and the sweet affordability environment your sits we on you'd you kind rate able by spot of with would sweet monthly to what bit for cuts for there get the you say be like see the the for monthly a just just was us Fed, I they're could love the comment a that you

with a we'll start of maybe data of couple points. Well, sort Sure.

think if roughly order or you are using economy. goods in the like other car -- probably adjust than themselves against prices prices I car all other inflation speaking, So of, just XX% the higher take, CPI, on goods give still

to potentially for time. continue So room I level, there's price on think that that moderate over to a suggests

more I monthly on higher relative XX% the other at like Again, interest order probably that than payments, they like and compound payments swag, think goods moves were if pre-pandemic. rates. in which are you the of to look high-level monthly

think see. points direction moderation. the little also But kind a bit I we'll of So that for in room of

I prices goods. probably of that usually shortage, so a and to normalize think far, model glut there's car post relative other should

the predictive So been X for is hard, the pretty far, kind The always least last at of that's that's years. predict speed but direction.

bit aggressiveness I right now, hard to little thing seeing think the we're that and points probably direction support but incentives that right. get more new for a kind a more in future, lot exactly of to car that's which a

better. us, I'm to to. we're for there's lower speaking, sure level a probably get generally not that is trying think, I that

think makes I customers. back more pulls market. for it into It affordable the people cars more

speaking, market. as we generally sitting our and -- discussed And between is the exist business do wholesale we've the past, I market think in retail the

probably so spread. that best which I wholesale over made but also that pretty of years, seen also the X say, expected the stable. and kind affordable, cars anticipate is we've scenario, saw scenario us kind market last case depreciation you margins And would the so what the really have matters case have where depreciation, you've but more been And of had for we

be I having upside X area in we similar you retail for we've last the to think a near margins, quarters, in look spot at expect in the X,XXX-plus maybe if been and it our QX. to even

customers, that in margins steady. fact making cars that been our has that, our held think pretty depreciation this the and occurring I despite affordable more so And have for suggests been and there

to. it way think we out like and have we it way the to playing the that's I probably overall, would expected so for And should that that

your been chatter active mean about about talk flow playing business what or in P&L helpful. how you are an role of you moved might in follow-up. then might of That's units competitors market liquidate. for the that through some out There's the there those helping the just Can one guys you guys? economics really QX former And it. being Got for one

I take from We is in impacts industry their about acquiring one. was simple competitors. can in units. material did don't Sure. units that player any selling acquire portfolio we units The January bulk from an that expect answer from of X,XXX a

of those us sell expect I'd units acquire the couple the in to so next And X,XXX full. over them quarters. We did units,

profit of and would revenue be acquired, So expect be they a given material units combination when have of including or we sell. on quarters. the that portfolio on of the retail those to GPU size But either not gross over will those the small sold units they gross quarters, it retail generate impact sell. couple in There'll retail either the sold QX next retail when

Our next with question will Nick come Citizens. Jones from

you One, Two, I and algorithm Phase as economics of to kind of level X growth and consistently where line can. and from to X a more the growth? long-term for start approach unit of of really blending top you focus about drive growth hold is top if maybe the your and goal we the economics Or unit there targets? here, kind maybe as on is line think

think the I goal get is to everywhere. continually better

really think simplify lot make the simplified I a pieces business goals it the the the are efficiency just benefited X we're fast. many of on is trying a internally And us moving because the we throughout and there's from years issues do a That still make form think has a kind in just said, taken our trying one of progress kind exciting. kind of earlier, with projects allowed too of I as of lot deal number the bit And and focus off improvement. that to I biggest to able think to has business. a just last benefit not I is of of sure for way pretty primary remains over that said we that room projects in we've being to improving think that of there bite lot

we to profit. and drive to efficiency gross on absolutely we expect projects that So I variable across think work both continue will costs

that's on as expect kind little a into to are do exciting. also focus We transition that bit supportive obviously head more of projects we to growth, that and of start

ever place business is think of think think is ready infrastructure very think the that. than is the We positioned is to work been. the grow growth. is, where it's in to incredibly than in I stronger meaningfully ever business We how that We that our support is well model powerful given less it's for we're the it past. customer offering think the it's financial We our model this it's the we been been. takes think strongest the to business. clear And that

when scheduling integrated XX% I to XX% ago. better on were car some more a pairing there. our to inspection and we miles intelligently are we're picking facilities, even in-market we've up cars there. activities, another centers, these cars choices throw Outbound, efficient. a the to into Today, ops, deliver more of we're On out miles. get of we moving our now almost just we moving back, systems customer, means That's XX% stats inbound fewer year we're make to way mean we've which than approximately a to because car got fewer

we we systems I up density there's better to more lot make overlap. likely network get and smarter year-over-year make XX% in and to customer there, care. building we that of the gets them see more improve and That to across still those think put building scheduling effort into systems as time that's as a room it the

of past of are sales better performance roughly with is period. per advocates high twice metrics in efficient same type as registration quality. now as advocate in Our group are number extremely terms The they in of the that per that were true with

do of to of now But a got and everywhere. do we good we over manage of to optimization last efficiency. a the when that head how effectively simple complex And opportunity So into that the I a think out got keeping by what is figure accountability as into the do as more we to both couple equation we can maintaining we're just is job growth had how we've time. years think company things transition, well really positioned head I growth it's can we've

The where The question is is well going. how we execute. not we're question

for We the do selling been out can we along We've it got we've it, be of intention to But how quickly do. what efficient that way. absolutely positioned never figure and is every have to better we millions intend cars. we and of how now can

a maybe on that. follow-up just And

you listed of think out off letter I delivery, platform your kind highlighted transport, buckets inspection and with sourcing, X the shareholder in do efficiency? biggest whether one the reconditioning of stand And than of one the drivers? from of as of the those others customer distance inbound those in technology-driven you driving vertically-integrated, kind are terms there to any wood chop it's of more of

that can I one. take

feel So in all I areas. of those like opportunities those. we're don't we with any I of actually think done think there's

think transport clear various at transport inbound opportunities where cost we've we're days the on and we but types doing inbound expand points, the inbound things number hit inbound side. these of which of sites in on brings as I down reconditioning,

processes standardize not locations, and made the implementing team processes in set across sees they've tremendous nationwide out our execution reconditioning Carli that our our across new opportunity and centers, nationwide is system standardizing further still team our develop technology, refine drive new gains locations. meaningful our done. across think That to of rolling I technology, processes, infrastructure. proprietary

yes, single point, story, and their made tremendous same area the today, think sourcing look the at. where been see others optimal algorithms That's we excellence. further also other transport, And every again. technology I the refine day, looking pull saying, process just putting got our opportunity then business for it's are we every I to teams more that sources, the valuation to still focused gains. area, like outbound side, every with think just this at day teams we've they're to And up -- that the in working the like in on pairing have of car data

that think, and every day. on see millions are data collecting And of I that's, cars single we

from takeaway main those on is there meaningful the opportunities here. that gains, are teams of for we've see areas but think gains each I made So tremendous the working

will question next come our with John Colantuoni And from Jefferies.

Great.

are First of to mentioned in on one Can Mark you and to the detail GPU the of additional services. contributing of services could you drivers sort the comment from retail of GPU. services as quarter. much And how revenue additional sustainability those they're just on GPU? XQ XQ extent one the those what additional strong and

that's operational per or And noticed sort EBITDA of of greater your start you that's KPI on externally a focus recently business that reflection people if documents. sort of assessing second, just nudging on your profitability unit if into the public Curious I've started incorporating to more.

those. Sure. Yes, take can both I of

let So retail start me GPU. with

So the that take our allows that to the we main model country markets unique idea a think business have reconditioned, make is them plus to here I in nationwide. cars us available and are and acquired XXX stored around customers

distance customer shorter shipments so for that's And that's a finds where car perfect for them nearby to them.

of most have operate based the data. our shipping in on we and free We markets

inventory shipping we at. markets, free that the in of availability largest ones the have have those We looked

customers. the -- we've the to services long that longer use do available making opportunity been for also from However, shipping generate of shipments, additional revenue, distance, we to just selection provided

wider our result cars long I the think of make distances to customers so around move revenue And additional really available a from is much as and services efficiently additional country selection from where ability that's that. the to

through in a retail little around calling Now moving X how that's to X much the steady, down or bit, quarters. say, terms of been nothing been last it worth flows I that's hasn't would maybe sequentially, really It out. GPU, but actually up or over fairly

sort compare as are network revenue having as from weren't model. pre-pandemic of I today. that to generating We you think we more much it's our nationwide logistics when

So that's the answer to question one.

of for I integrated a vertically significantly didn't idea above to for online the where more it On or the to model of QX. adjusted in it being per EBITDA drive now question are mentioned think adjusted I think even I first an we're work. And highs, time adjusted more two, people think we're impressive. unit $XXX EBITDA quarter. a in remarks, significantly could saying long they -- and very I at per was unit that And million didn't that we're quarter sales than in believe, here we just the so bit environment confidently And mentioning think than that prepared the doing significantly of more my rates EBITDA also first in I of a candidly, makes my in multi-decade say motivation XXXX, expect $X,XXX e-commerce which sitting

notably benefit while excess a view for it the even is far from vehicle of that used support an we're whole generating think huge Moreover, still now EBITDA to doing we're an a doing fixed as industry where our look also that levels, us which forward at makes EBITDA cost that relative volume infrastructure it below as We're what carrying as perspective. adjusted capacity in impressive. because environment I we generation can of more lot overhead cost pre-pandemic adjusted is significant capacity a a we and down

start think can each model top of on And when just so the I you other, us it things all go. about where layering gets very of excited those

business I think is or about it sustainable a model, whether profitable this this whether resoundingly answers long-term a the model. business is questions long-term not not or

out prepared point feeling about that one just why the think that's we're that think I and as really mentioned, in I my I good things, remarks. data called -- of one I -- we're

Jenkins takes the level is Prof. Who does Carvana right mic. celebrating now. of the

Seth from And come our Securities. will here next Wedbush question with Basham

earlier framework for want an Just retail question, the forward. about thinking GPU to moving up on follow just

in expect growth that there in efficiencies But associated really units. cost as Very retail the you're costs retail line? ramp, you you as continue all growth. the grow, the some be GPU will of you growth outweigh terms signaling to for the to quarter beyond that, of first XXXX get start will limited to within So obviously, with

Yes.

growth costs incremental So on sales. retail let's with cost in in associated of focus

So sales. with growth and some retail rates do are higher of think costs cost there I associated

of form some think I the just hiring spending as up them expenses direct staffing, and new take employees. of training building on hiring, you're training money you're

and more I take speed takes it as to think up a as of newer get time form a little little become of tenured employees. bit typically employees to the efficient

And so a impact. have I think that small can

services as a I period think you ramping more is outsource may another of up. dynamic you're for time

take to is you expect that. would in the on looking anticipate full basis, -- form that. select XXXX. of But forward, a not smaller case, Now by we services in did car on more do our reconditioning I could partners, something outsourcing services, Don't I which

list some associated the detailed the ramping view have so really X buckets. incremental and of we that clear you give it's costs I a So as those just of what with view

fixed a little getting in facilities Putting significant all in let's Now centers. view fixed story. talk for some those centers, other bit those offsets, There a we about particularly the as those part retail GPU expenses sizing. being and overall example, leverage of do expenses together, inspection are on reconditioning not

that's offset some the partial I So of a that things mentioned. to

main the there think is takeaway frictions. I so And are some

base progress However, having we've we do broad a processes, to a expect not and in be made which just our improving particularly large of the them centers on that of from inspection technology, based existing build. size, to our improving reconditioning

And so thoughts set that question. that my of would specific full on be

your for pure would competitors, And as to forward? helpful. you That's from to expect going without improve -- purchases wholesale margin metal you work inventory more acquire

So question. caught I'm I that not sure

Just near getting within probably the acquiring them prices the the and of selling spread GPU, retail buying other some inventory what you're a cars hike thinking in about for as just you're you're core term. we nice benefit component between from your

Beyond continued the expansion you would near expect there? term,

Got it. Yes.

There a some be from But next purchased a from units expect portfolio, just hit a the majority a impact. we of about We meaningful the impact purchase expect not couple in do the of not given January. point that do X,XXX retail So could impact competitor We size bulk quarters. material that. that. to small the of GPU about expect the from we we I of -- made bulk over sell the vehicles

about to call, -- margin quarters generally. or this I called more substantial question close QX, Ernie that's with the levels metal X consecutive in mean outlook of the to the out in upside be level. QX upside early a the for but with on potential Then at GPU pretty retail our being going

lot good network. we're level, feeling X way from quarters We driving about fundamentals retail the very really executing with obviously, GPU about that. that are So a of perspective. that strong from talked logistics We the job full at for turn We're talked inventory revenue reconditioning We the a a -- we're of great generating national services, times. advantage customers. doing about really obviously, additional in sourcing We're the progress normalize our taking centers. a cars all

very record think XXXX GPU and QX. established track we of outlook retail obviously final our And a strong for on so with quarters have X I our

from next question Rajat come will our And Gupta JPMorgan. with

Great. I'll well. as take a couple

Just large up obviously around to rightsized you've It growth. follow looks the degree. your cost on a like a to couple questions of structure previous

gross so press prices profit of the little meaningfully? a pedal You've on look low least where long-term the on at unit And exceeded because model, per wouldn't why obviously, the your here a margins more basis. are, growth comfortably company

backdrop but how come in Even willing back little factor you're or industry the GPUs you in did that's is a to cost responding. slowly and consideration, the fixed to if just a testing and go somewhat from your leverage decision keep business able

there, on of business. the curious a the I and follow-up finance Just have thought process quick

kind Sure. underway that to we today drive we thing is of Well, want complete to first have And number the efficiency. we of we've to think projects underway projects expect to continue we I I think want got today. that a do the

think to I want through. So that we see

think I largest, retailer where profitable provide and to be earlier, cars sell place frame because this most to the we're goal reason millions to automotive hanging. we of that's our had is the the

then I question get how is fast are going think to we the there.

be rates execute able in, are that. we go faster the have that the to given And and reasons how fact be efficient but and believe just there we efficient grow to much that that at I be do is think today there on business to filled is to infrastructure more sitting should very

possibly transition to of will intelligent to growth. we think we be we a as the the I so efficiency be try we as always of about goal between much rush But make can. in progress goal will how And and to we're going clear, We less both think And is we're get that's to speed we're had place that clear. still that areas. there a The that why transition be in is headed the there where labeling are period. gains

to And to clear giving believe that make transition, we any so at make point as you in we'll keep it we time. feedback start what

Got it. Got it.

a the fair. in expect you couple undersold first million the in letter finance of noted that fourth just That's business, shareholder onetime the you hundred And the I quarter any mean And you Okay. don't benefits in quarter. here either. on

likely driving that what to mean level on run balance does receivables you're the at elevated was on? decision? So And that of this sheet then from here

I can hit that. Yes.

-- anticipate million significantly That is of we loan would above adjusted think sales outlook I the the say the -- being in doesn't above called So us originations. any $XXX EBITDA. I out what

point in don't terms we'll I The QX it's of just we possible adjusted baseline the the that million is our important think more And the the no. of expectation. base time expectation. feel my to is levels originations points not the necessarily I then do various overselling about at good -- -- to level? over EBITDA by be -- would normalized transition back need time originations. from And also think it's $XXX answer significantly year could that think really That's most to course oversell is we it's not a above I outlook. toward

will from with question come Baker next our And Davidson. D.A. Mike

not Anything $XXX of quarter in future that unique into maybe. similar real couple quarters quick first something in translate significantly asked, it ask but A the about above shouldn't and XXXX? Okay. another way million I'll sort

our We in did outlook. address this

costs. anticipate So not does our benefits onetime outlook any or

Anything in of kind Or would isn't quarters? suggest of profitable number other or sustainable? market? anything first externally that than is the more terms the Or that, quarterly quarter that anything usually

No.

-- are think nothing is that abnormal earlier assumptions. normal tax hitting today. Nothing QX season I in for we our beyond our seasonality, discussed but that that there's expectations

makes That sense.

is and competitive Okay. -- much the on understand uptake of We've on same I part advantage How is efficient standpoint? a that the seen from the announcements that of lot is on what's a customer you more advertisements for of being backhaul But a that of day. that? sort becoming your backhaul.

I extremely do. Well, an offering. first, to mean, proud of Yes. That's not thing we're that easy

do the get as need you and they system, have which think because integrated quick terms to of that's sort vertical up integration very and your that to those into transaction customers I kind it's platform connected flexes deeply that's is most of and our your financing to easy, system think financing getting to muscles thing are have well, through a get I their logistics that. unlock verified of verification that

So intelligently does I speaking of to that's together vertical require complicated and a a lot to one integration think put that systems offering another.

able normal what at for on And been is think than function something at pop generally basically something in reasons. to up there by different capabilities, I gains And But that now. that times that of we driving by think fill course, for more just any we've gaps gaps kind that's bit been same-day many are pointing as we've mean efficiency just to a calendar with given building we've in working always customers. volume then it's been available of making I additional by a growth. those

we've giving delivery. while been able cost efficiency so basically customers And simultaneously in faster our to drive

a of the into we to One, you do. can a because you into kind lean more more time. does something over that two, of choice. model of we're something extent that underlying tool in those kind sort rolling That, something start notable can that makes have that something bit that that density capability growth is to with separate is slots. that to is customers of to a your uptake say, easier we're enable want have I out, we more Now flex just like. built, about, to would scale of do But extremely little that that The really and excited staffing

a are think positively we surprised growth. lot that that's reviews speed of you commentary or And think I it that the in drive online, going can if choice of what kind of as direction direction the find in on where customers transition, separately, of a direction. probably it, or just very lever are of And kind over around using have this by I time, it. search see our we it you goes to we'll to we but are will the balance efficiency And in more push go, we then

Okay. Makes one more. ask If sense. could I

that's more inventory guess stronger your to although to has track growth? because pickup Your discretionary Or inventory Is consistent, My decision competitor. units start been about your we available up did anticipation the a is as of of lately that? for that. taking am liquidating we of from sale wrong that on see I bump your in website a pretty

I -- data. what a from you're in There you're think referencing -- that Yes. bulk most there think is most the acquisition likely concerted the vehicles a likely effort. referencing sale competitor what bulk I or been hasn't is

next will question come our And Ron Josey with Citi. from

this follow-up, one, quick just Ernie, on shipping. Maybe as same-day a

markets. seeing the about hear to then market how it, in think but efficiencies I the on tell implement, your still coming something this conversion but the I process. That's question also maybe, in from is Mark, it the is to improve range have like now the of you're And there? business. XX a the realizing it, changing same-day it's just shipping. early, Is And that early perhaps is impact hear bit, live to one. AI little across about call see efficiency, wanted to too that's to the in sale? on this than Carli, that benefits an process just comments it's, now reconditioning Rather I we talked to to call rates impact on just wanted say, focusing conversion it Or

Sure.

and So elect or delivery, drives -- same-day no same-day conversion that in delivery well. -- same we'll think delivery I see as speed not as quantify that the impact, but question to on we're well we there's absolutely, that

our lever footprint, ability of ADESA many as do to It for the leveraging think same-day also think growth can exciting. a That's into to more that as And we then feature markets. discussed lean delivery So in I a feature. earlier, expand more choose and is we over more if powerful that sites as unlocks a we use reconditioning. I it's our time, that

integration. unfold it's enormous story that's for only I a it's hard over possible probably is pretty a So that think exciting I an think a story a will many but years, only replicate. think possible story It's It's and very with story. that's footprint, to we that

So you Carli? want excited hit very to something then And we're do Mark, about.

I Yes. hit Carli. Sure. can

gains excited the and the gains in very Carli. lot lot reconditioning we've technology was operational rollout obviously, of the of that A a about by led we're nationwide think I that centers. was made, of progress that

getting non-vehicle talked over I than year many more -- we've things. the other sales at $XXX at And of and by think parts reconditioning, so driven that's ago. sources managing And I since and procurement step-down better think of been getting efficiency retail a peak process our we a better cost have seen of about number

big a been success story in that's think IRCs? I the So

then it about And is looped about. widely an area you also that's And very but it's in certainly talked a that question about, more AI broadly. something excited we're

think large advantages to we of I AI. significant take our is we advantage scale. in position see of several what as the our One have rapid development

have able we and day, very every that we on a customers, that cars we're or number points the every interactions So of to enormous that scale. do communications all large whether have are customer -- the in with at website the on year, we're things. it's our collecting And numbers a of data with single day-to-day of all other evaluating a basis,

can I think technology-centric, We're important connecting also which think to which along AI the integration gains having quickly with one as powerful chain AI even as integrated various driving scale and is vertically further because even vertically also makes another, of parts more highly we're on AI. the large obviously, vertical from integrated, making And use possible. of and be learning most we

examples, positioned particular, in handle And takes already gains time of at up quick we're given We it, that certainly in We've -- I think to kinds come couple care in something and our seen that our the technology vertical getting automatically focus. our structurally all we're about. a to very documents, think excited speeding customer calls integration from our fit better significantly is scale processing but it customer to are care, of this those large centers.

something definitely that so about. And we it on work

and in a because as of well. couple I points fun just that's a would jump love And one, to add

a get answer can just unique negotiation. meaning The totally our coming means is believe site about other is a system deterministic, And by that driven -- our instantly customer logic. is to is that that there thing that we us a complete

they very get our because hard there a think that can customer And like value much demonstrated I experience is so means think are few I worked And it a to that on simple can have a tools answer history these vertical more that the very, in are to complete. of tools integration what feel it clearly we've the through question. very more

to answer. you're question answer if all result have an policies me you deterministic organized month? impossible that, will any to if hard a and And similar question answer if a integrated do -- data if it's that calcs in per extremely that vertically and with way your ours That's not and enables in to the to you're cost $XX Do of do. that don't cars sunroof not less you hard drive it you're

It's think an rolling at anyone is I attention kind that where paying who's area when exciting. really week is -- your mind all out. So is every any new blown of it's this constantly things are the you see

don't I So this where exactly to go. is we yet know think going

take well I think of we to do advantage positioned know that it. we're

We're positioned kind there's think to And close of how also any a got always well is think I attention. it function of pretty play, a there's value versus great those another you I of differentiated given with. team. which We've technology story are you use the compete paying is here. a very fundamental at

outside results excited not some but on we'll time. it customer of about where yet that seeing things so in sure it, care, us. where could and driving see go we certainly I'm we're And it's you're are working over numerical takes

John question from Cowen. our TD will And last Blackledge with come

Two questions.

year-over-year. down XX% ad First, spend over the was

we in now, And and and how And XXXX. that a then in it's available same-day. XX typical first the over of Just same-day but in think right curious inventory Recognize the time? given how mix follow-up a quarter kind on spend is should of markets trend about it's market? just what days, ad early then could

question by on spend. ad start hitting could I the

QX we tick the QX first So roughly where we ad maybe the in from were range. lower, quarter, in spend down toward expect more in QX, slightly slight a but QX to QX, levels,

to few quarters. relative story is the QX spend past the So ad in stable there overall

are in order as rolling markets day, offer right of think is availability relates kind speaking, markets usually of same in vehicles generally customers the nearby available day, out generally it are where to to that then way centers. the we inspection about and it closest are first the it And inventory that are where we we to same

over And able to. we'll open out what we is that's continue locations, which as be to of so And rolling ADESA choices that that at time, our is to governing capabilities markets further. that more why expand

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

through the joining we team that keep every really for done mean we in feel work here. always way do everyone thank like coming this by way call. We're it, you. do phone it's no thanks call. Well, always to think the done. there's And you've been work We don't that the we Carvana and to excited we've has say positioned but guys I it that feel about the year now. was extremely that And perspective and the I the team, we Great. hope of it the of made understand we're year charging. a that I if reasonable that unreasonable you think I progress from the we impact expect another that hope And ago. the do all to appreciate have the

quarter. all. keep marching. So to talk you next We'll you Thank guys

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

disconnect You lines. your may now