Carvana (CVNA) 31 Jul 242024 Q2 Earnings call transcript

Good day, and welcome to the Carvana Second Quarter 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Meg Kehan, Investor Relations. Please go ahead.

Thank you, Brenda. gentlemen Quarter you XXXX and on joining ladies Second Carvana's Earnings afternoon, and for thank us Good Conference Call. this section corporate that the note call simultaneously be Please webcast Investor Relations at of website company's the investors.carvana.com. will on

also The on website. the posted second Letter IR Shareholder quarter is

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

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

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

Ernie? be otherwise to non-GAAP website. turn which be today, that EBITDA. I'd will specified, And adjusted can found over EBITDA Garcia. Our and for references GAAP found on be to financial and will to Unless our in between and all our issued of non-GAAP will IR commentary Shareholder today can call Reconciliations metrics, Ernie like be references a all with said, include to metrics. our non-GAAP SG&A the copy GPU metrics to reported to Letter results

call. and Thanks, joining for thanks, the everyone, Meg,

it first time. In the the profitable year, were Carvana. another for quarter those well quarter, did we true future. X and was extended second we an The second time, time, very bodes extremely quarter landmark separation both Historically, are first of when the category. at successful the for In we this in the it retailer again. quarter for most automotive each fastest-growing this same And things public our

to We have working with is every paired promising pattern. in room run. intention a to of this that hard case, And validate tremendous pattern

are extremely been a to competition in We highly hard with trillion be fragmented a barriers company industry proven overcome. share and to to market recently have that a with just X% $X entry

is Our unique. why. position it is And important to remember

We are to this starting sell cars. an technology set customers with what then our billion in operations. out with years and We we we everything build XX position from possible because with way to new buy ago, new and what believe pairing $XX through wanted, entirely that scratch, and and thought today new was

still than clear no and we idea the path most are both. had here, get discarded path Being it this and We the outcome believe know enough be to is. reasons for also good told but the stubborn to the are how provided was think, combination all we the And and pushing never be ambitious accept we about is be and productive anything hard there enough. I'm we about to may us. impossible also enough keep and others From to grateful that outcome exciting. is grateful weather-worn will I'm We stubborn were And us to and what right harder wrong ambitious. they would we point.

keep good days just in hard fighters, we're as have going of days fighting, and and past. to we team the on a on the the are We

very also and scale additional economics is into visibility our result, a improvements unit clear. As further in

the We volume. current fixed capacity are associated currently of physical built approximately being carrying our Xx expense and for

have through addition, a scale reconditioning handle to run estate approximately at our Xx vehicle we the rate. real ADESA acquisition, In our current

Importantly, further gains profit. of and we area areas per clear In each achieving confidence the last fundamental have and variable to tune costs we of in across in high very also year, unit. the approximately improved $X,XXX these gross plans

Given that significant obvious that that we remain. much is improved fast, gains that it

specific offering using working the for we and and on the potential currently Our a have have of team each is a very of is business as we set believe our part the to X impact whole. offering the same well-defined years customer processes enhancements last to clear that operational materially

to do will we We quickly unlock hard will as as the year same thereafter. each we them work can, and

we As in we company achieves incremental the sales to sell the with a value our we footprint passing our we and customer profitable further clear more that anticipate and a driving unlock growth. most of benefits filling and that improving these The retailer, the differentiating to our and gains back and combined unit of company picture our gains, experiences, leverage a and more additional additional create mission cars. the of comes changing company offering constantly fundamental buy the paint people with aim over largest economics, customers, time, is automotive its become, that of way strong

keep will reality. keep the Now turn and hard our doing that heads down this to picture we into work have

the challenge. to The march up continues. Mark? are We

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

The phase we in second Carvana an continue quarter and make and significant for to was driving have profitable multiyear and progress current made reinforced growth. exceptional our of sustainable the quarter

second for adjusted the and and income. we margin new quarter, For operating GAAP generated records EBITDA, positive income net EBITDA consecutive we set adjusted company

long-term quarterly model for higher time, of opportunities see towards EBITDA to financial the margin to adjusted range time. gains X% range meaningful end our over margin drive and XX.X%, that approached we of midpoint EBITDA fundamental of first the the For

the selling sold model. declines in in selection XX% Unless Moving our focused customers. all production still but QX. their quarter, Revenue increase basis. initiatives differentiated otherwise increased website units the focus production strong results. vehicle we unit and our and on be the our will met In will increased targets a more Retail operational to remain prices. industry-wide the for we year-over-year demonstrated continue to QX term, retail The continued increasing In teams comparisons noted, teams country. optimal of on quarter second despite experienced below continued again Revenue strength continued in QX, demand. our wholesale to business into XX%. we to by across production strong to target primarily levels due to units, increase retail available our capacity profitability average near less economics inventory than on demand grew QX as the due

in $XXX fundamental meaningful the GPU retail $X,XXX, new in company Non-GAAP SG&A a results company profitability record. QX were $X,XXX, total $XXX increase increase strong record. of and a second and non-GAAP by driven GPU was was new an and Our quarter, of GPU improvements In expenses. an

leverage driven $X,XXX, a revenues retail in was to wholesale depreciation were GPU higher driven turn other be lower Year-over-year fundamental consistent in partially strength quarter $XXX. improvements, in by optimizations compared expense GPU prices, begun XXXX QX wholesale profit, additional and to impact QX increased from was continues holding originations storing volume in credit $X,XXX, XXXX tightening approximately demonstrating for loans a an the $XXX changes offset sold. retail primarily adjustment. $XXX, gross and was of while QX GPU credit vehicle QX XXXX. expenses. higher the retail relative continued partially improvement to XXXX, decrease offset $XXX, Non-GAAP customer and an Our units GPU in SG&A per sold growth to Year-over-year and wholesale QX X%. Retail SG&A Non-GAAP power growth units by drive performance units selling both wholesale increase driven a Non-GAAP by sold sourcing, market a offset sold. were continue including million, times of of other retail in SG&A an areas, which increased marketplace we was by of pricing leading $X,XXX exceptional model inventory efficiencies growing. $XXX operating by Sequentially, inventory changes Carvana retail SG&A of in and between per expense and Year-over-year spreads by demonstrating several to were which was also units gains cost GPU expense, by other by in allowance rates continued sources. retail driven and cost of sales, of non-vehicle by XX%, in $XXX. to retail operations decrease expense reduction changes by declined greater primarily that driven our of

It we expense was over new high compared adjusted margin well QX, EBITDA leverage in continue increase Adjusted low X.X that opportunities as improvement is and continued noncash $XXX worth record. driven in and of time million expenses our of $XXX for an noting Adjusted due our a in as quality in We a many a cost by increase new companies record. component point very and scale, the is structure. company relatively expenses. XX.X% fixed QX, to operational growing our as was rapidly both significant leverage percentage see EBITDA company to million EBITDA SG&A to

$XXX was in QX, leading public income GAAP of margin operating operating industry. X.X%, the million GAAP Our retail auto to leading

unit to grow currently EBITDA are over than carrying Xx approximately faster for noted, operating previously sales expect As our retail capacity time. we income GAAP adjusted and

QX well strong QX and results for QX. us a and Our QX position in

long stable. as Looking remains the as following forward, we expect the environment

adjusted second, units of QX from compared retail billion million EBITDA billion First, the year. last to a sold sequential $XXX for $X XXXX, in full QX. And increase $X.X to an increase year in

thoughtfully we results to to secured announced and our long-term pairing a expense. interest us on are XXXX senior with to our cash in XXXX time. well interest beginning our over We XXXX cash first, policy continued in notes includes, strong financial This disciplined intention May, reduce that pay financial positions delever

of QX the $XXX and, equity capital. $XXX notes over secured in time Second, we million repurchased raised million period, XXXX same our of senior

and an over time, focus to We're primary both our delever conclusion, In adjusted exceptional reduces ratios. with Third, buying We'll and driving auto Thank leverage we which the now was you of and most cars. pursuing progressing largest generates for Carvana. take intend phase growth, questions. further and excited QX cash millions and EBITDA selling about profitable quarter on of your growth long-term our in of goal becoming attention. our for profitable retailer

from [Operator from comes Pierce Chris The Instructions] Needham. question first

you Chris, there?

Montani next Michael from Evercore question from The ISI. comes Sorry.

the on Congrats quarter.

for who ask the that versus Just income seeing trends little wanted below? $XXX,XXX-plus consumer could. if those the Can a are you're to discuss you bit I

give And at around you some appropriate an you're then also, can feel insight now? here? Or from you level credit do thoughts into us like Ernie, tightening

Sure.

years. think think, I a of from over heavily affordability clearly, perspective, last couple pretty the demographics I was impacted

I there, though. news good think there's

of We have seen kind depreciation of X.X last higher over years. the levels

only prices I X% probably pre-pandemic. think were about CPI, they car relative are than to now higher

a we've think that gap. are of Rates I lot higher. closed So obviously

for a pre-pandemic payments car. you look payments, are higher XX% if than similar were at about So still they

bit And there's little to that, So course, than to of the the is of spectrum more income anything notable out impacting think improve. continue But for probably call end a that of end. higher I there's there. probably don't demographic lower room too to the

included, customers experiences. or And just group one those getting think we're and site, our a great tighten would is in right I cars much I focused see. the 'XX. up, in of performance think driving ourselves normal on pre-pandemic perspective, many parts them to far now was delivering success getting 'XX. a seen and our without think what's that's fourth credit kind I with 'XX of credit in 'XX, the continuing that's that moving that good bit are worse giving them another. clearly in very demanding probably so too and customers crossover slowly on hoped line started lenders, from we've was From to think we definitely back specific of focus have reconditioned, on I to buy What our And those toward little what quarter then to and 'XX after being credit

time, at it and be feel other are there we over So I that doesn't obviously, paying moves super we're this may would material. But that attention time. like think adjust

Jonas from from comes Stanley. next The Adam Morgan question

mean... say me, don't on me congratulations to. call. quarterly But I Ernie, never I want believe And a Thanks, you

we want do get actually we you think to I to if pick.

a you Wow, hard me, wow. right. All dude. Believe It's don't.

So Carvana with grew retail mostly flat units SG&A, XX%, right?

Correct.

the Or unit, question. X% CarMax per it had Carvana either how forward flat? SG&A gross but SG&A what's with, aside, the on dollars that units dollars can keep facts you SG&A you're the really a [indiscernible] or I Again, that and basis you mentioning, the SG&A XX% view per do rise think unchanged or impression want you're first Because year-on-year. capacity burdened that. don't that my like might much That's keeping I the to unit on to believe don't you? relatively us fell longer dollar while want can actually give amount, schadenfreude

is that excited think, broken expense. That's largely just past our all marketing And a the X overhead, And probably and separately. over future, this immediate categories: the moved X flat. On and that of something continue to that quarters. overhead, it's system. obviously, about, long-term to I into marketing down On from SG&A we're $XXX flat them kind think for to the average or that's across, reflects held plan We've lot X pretty a of quarter. we've expense, gains in parts hold that the extremely I for $X,XXX hit to that I of last many useful different operations think down we've

expense. part of that's dollars quarter, pretty operations We, several probably $X,XXX number numbers is think with number less pre-pandemic when happened a a their that hundred at a by I and we're SG&A perspective, the It's at the $X,XXX extremely seen up going long-term automotive But excited a with think that of good about. that's else. our inflation go other than I this exciting fundamental most kind we're on that what's that's time the were from retailers everything average have about at of time. debatably

So hundred relative and, think most I I over of out gains look the dollars $X,XXX. those are but I a think, think likely gains there, I inflation-adjusted to importantly, is couple else And what there, that think around operation and item warranty bit XXX rates there's lower. inflation was to of XXX think that XXX a line is kind then further, were today to I that pre-pandemic when closer quite of inside like a expense,

X a significantly. have costs very versus pre-pandemic industry the the more so you expense And up at when warranty, I look at when time of again, operations think are gains $XXX per kind like the gone across unit,

deep that's we're really So a that because fundamental. excited about

I are the especially objective like this see and is to you inventory what's think available basically measure time your that when most I And deep offering up a flat. time, point does in relative that marketing your any at flat we've customer of elsewhere. to growth how fundamentals experience stack dollars the think at got the relative

very I well that offering. think clear that it's responding our customers to are

third about. I building expenses? I very that's what are experience, I from variable then lot think to extremely how kind integration we're through an but a the think what number everything there, that And relative that two and able we've built we through you to just monetize is, excited of faring number walk a made to that, else the And your well vertical scratch that is out that and think are we've e-commerce of And serve transaction, there. I our we're gains. think is think

gross mean over believe or per profit unit, We would We use $X,XXX operation So term what said which in Largely overall, is fundamental excited. year. about that in we expenses sustainable gains. that expense. we fundamental we're of gains this made we gains be are by last the either that variable

are model hard in But left think about that think for unlocking that be future. there also think flexed. working the not going fully what and attacking means done we them. at to is significant we're and I being gains And going We're business We the excited had. still

Ernie. Thanks,

run rate Ernie, XXX would than million the did, about midpoint EBITDA you quarterly the half of mid-XXX number. $XXX rounding second million, Just a bear take maybe less I of a rather that me, your here, imply follow-up. kind than I'm guide, If a number what $XXX of with

you a that and of on maybe genuine little $XXX stuff lower using what's Is say beyond seasonality very then being is again, the and made kind a stupid and maybe embedded might conservative. including XXX there? is guide, have of just So would it the But -- guide, I'm the it for what midpoint your if million you're rate? run other was why a in baked and seasonality

Yes, sir.

see think And growth we going over importantly, get most continually the try and going in discussed, and that us, next them. in first going that's just of to years. I that fundamental the and areas do front we be to we're to something various go think to I out So and gains in several we're

most think thing. that's important the I probably So

I did doing all bringing appropriate quarter and to you're in We think it originated. think math bit sell I up a the as guide, this more all relates points correctly. production the the than we little loan

X.X%. So we provided probably Shareholder a about was the bridge Letter that that in

that about in more have a been have normalized dollars been probably $XX So about XX%, number million would or give would take.

positively we the excited I extremely And there the this of of And this the about we've to year. extremely results is was about into into trying that take to part the back probably what got, obviously, for just impacted I discontinuous then nonobvious and obviously, But year. had. think quarter we're excited we've heading obvious. is turn ever excited that with think extremely we we're it the So rest because goal that's something dream And importantly, is but making We're outlook building seasonality something the half quarter. of opportunity biggest the think just surely most very of achieve, slowly we're in the taken. that out step the this

about So it. very we're excited

It's impressive. Ernie. Thanks,

question Pierce from with is Needham. Chris The comes next

time? hear you Can guys me this

We can.

model. the $X,XXX a, But I type can frontier conditioning GPU as you might you I wanted kind in We of center's talk guess, the question. in was store the be? in was were CarMax that as previous mentioned Perfect. far the units. of of on of hey, was told bound the that just of touch-base in to reconditioning? retail the efficient GPU can about And upper kind just kind -- where retail stand-alone

And how far right where the even go? think what's as GPU as higher retail from pushing are retail way you excited to here? like GPU can about So

Sure. included. item, first, are to GPU would Well, gains had there line be say I in we GPU fundamental so believe significant retail every

think deliver we offering and to cause can retail to GPU the And we that customers up. so go quality of same

important might lot think a this warrant that maybe some have it's what revisiting of now. pre-pandemic GPU established versus I mean environment think to over in I And pre-pandemic. reevaluate time heuristics been

perspective so how last about spoke most unit on per that, go by up SG&A the dealers $X,XXX. seen I about in for have And question

plus. hand that, kind works cost generally right the kind cost I think model structure automotive they the a first mental and how price, order up auction, pricing are it's -- dealers many a of at for similar is speaking, they're share of they're to and acting buy industry Many at car their with in a holding it a in certain and profit mind, ways.

the like retail look So first a it's estimate. as retailers up across order average at automotive around many if GPU $X,XXX, versus pre-pandemic, you now also good

is also And from buttressed before, by And looking move that think of It about so debatably, by pre-pandemic. retail the kind all you're is think $X,XXX heuristics aggregate the was basically you more supporting looking than probably the GPU sum by is kind just I at today, of just of wholesale spreads retail that's in at could kind it which market $X,XXX. dealers. of impacted up that I

So I you from significant explaining think helpful first the I order, the moved us. roughly of And you've them think that I -- seen by changes $X,XXX. that's heuristics think all kind in

every every Now doing we centers reconditioning in our same fundamental, the to those inspection been kind and -- the part and gains business And I and that possibly areas. the cars lot them business can. we inexpensively we gains made of have efficiently all cars a part think as acquiring believe as and of in we've they've of have that of of been getting

the continue got the So in all projects, they're they're they've areas all gains all pointing same new largely at the and to same making here. but directions same from running teams are

it do we go So up. can think

to We what business more we we and we're sense means back model to of turning it it's And also a also here that a of as to now that getting Letter remarks, think well, that in as kind the additional than where cash well we've of gains customers, that pass more capable make not and prepared make now stated of to more will because gains excited scale. quite got we place from is we're Shareholder think out a or likely the in that likely that responds about bit additional back very customers. to

trying pretty intelligently. We invest to them we're keep overall, But make We'll room So we're I to going everywhere. to think gains. think there's those excited. try

facilities? shift you increase adding a like increase flowing the the what kind on Or production, then think you what to about that about staffing? as second adding that in capacity now? Should could the about Mark's And on in Okay. happen have Rocklin, comments. production we have X Or the to that what's you IRC talked as vehicles can right based shift way through you of think

Sure. Yes.

there a -- increase think to think of I I production. flexibility lot have we

I think takes forms. X primary that

different add have form adding I to say first, to capacity that we all production also you So during -- increasing the adding capacity layer third a shifts ADESA add #X to lines be where capacity. would suggested, and to shift a which day add at what excess that to is then can slightly in definitely more locations. would in second is is adding existing have you And continue continue production Carvana to are it's would which shift that. Category increase #X, category IRCs do facilities full, lines. production the lines, the lines of I

megasite, very City reconditioning which are site implementing physical a and lot effectively customers Kansas serve auction plan that We locations had systems. a is Buffalo to adding site, reconditioning processes the Portland. at Carvana we we've far, while and Carvana where continuing integrate also we success call in of So production so Carvana in third into X location in processes a to a software and

third that integrating for sites physical services, with is we're growth avenue more production about. combined the the excited reconditioning, Carvana so auction ongoing ADESA And with

flexibility. So us lot of all give of a those together

than right the at of growing phase think level before have we've I time. of at the cost, production we're one ever efficiently, of right we for this quality the things growth do in over flexibility had is more about next excited

Brian Nagel Oppenheimer. comes next The from from question

I do here. add Nice want my to quarter congratulations.

Thank you. it. Appreciate

understand I my guess understand So better demand have, trajectory to and sales better, the maybe the dynamic the I to for question Carvana. just first question,

talked sales. still, reconditioned supply of limited holding of a reconditioned guess, a I cars -- about You've lack a back

-- question much your number? the at? what were I as wanted at that So is look how If where reconditioning would what have, running [indiscernible] operating you be the you to, sales

Sure.

So talked I quarter kind this moving transition we about growth. of we think And think that remain. where last into that's I to

quarter sold be think the caused our we more I to in first we cars expected. than we inventory lighter anticipated. little than That a

up turned we the and operating than able more cars We and achieve would have were us expected that. did our did quarter. than great teams in That less production to. our to we inventory build we a plans, sell liked job But the second much to again enabled

lean So in direction. I that continuing think to we're

We our haven't There's leaves a marketing our -- marketing invested in of yet. room. gross expense lot relative to profits

growth the And in awareness, things Letter the believe we different put continuously been which think improving understanding differentiated, highly of we of since have Shareholder the And across time. in outline this driven so but trust. just customer weights experience, that's consistent have that beginning, our up of shown that's kind kind have and I increasing think we

where other and in pretty steps in were as gone we've growth. and were have so we shrinking marketing effects still as inventory still area X inventory then of step we to And over the couple we've brand, more a far, bit think beat place enabled were And last wins, second matters the but and exciting those investing that I third I selection from think of and those are the kind getting different little in of gotten negative benefits. years press, up increasing a every there. as to we to scale like levels wins still but less

think fundamental significantly where think of about significant we the grow that, there where gains believe this period has the and gains make been figuring fundamental because extremely had. healthy true. transition out we balance team's are saying and get that I continue be to also exactly but do be is that that proven come clear to way growth all the executed is last I can benefits with that we've still really to year, And for the So

from still if right? this I in And frankly, that more industry where a the position business. efficient think so and, turn just take We're of customers think go. is very, the We've back, be that I in to out now step back a we better kind I direction. and just to to we're And And serve in our we better run. exciting, I little to think us. that and further engines we're we're starting as position on a the we're moving decisions, a marching important X company stay in went we're very We of feeling relative a make prioritize, is lot through compounded prize focused very, at we and the But a think company a grew most a of big difficult we that a gone that and there's thing front to prior we because X% a very we see to for good lot way time market to keep a that XX% found room XXXX, that years get time, we to fast, difficult during grew a shareholder. just

going we're it. go go so to and And out we as be as we to as be can try intelligent tackle

be the or I one talk Carvana of we of questions just a for the to how reconditioning centers helpful. conversion respect My we think mean is timing you? to when to these type reconfigurations, I speak, clients guess, about about you we very with follow-up of the, the will, to just some should if That's ADESA, lot so get question, investments,

transition this figuring So in I we're think something that out that that's also period.

going done with far megasite. once. We've site be to almost I so think Mark site Kansas calling City, no at where have very the a it a all efficiently we're capabilities It's spoke next it to about CapEx. going is in which our

choose think more CapEx in to lean sites have that direction the of investment. CapEx. huge that of that more I integrate of these bit little the that the open, we But choose I more many think a to will not could we more that and the a are we open, there them

But offsetting of a lot other benefits.

to your a transport get customers, are get leads access higher are which you less, costs outbound your You inbound to to transport costs lot inventory faster, closer pools, less, more conversion. your your transport times are

think I sites right inventory balance those now and adding so trying pools efficient. between we're to being find and the capabilities And logistics really to

far, to capabilities Kansas so Portland and adding reconditioning of in And that's City. Buffalo led and

we we over think the And out we're figuring which think will do time, go I as certainly I do right at now. we speed that more. something that is

comes The from next Davidson. from Baker DA Michael question

Okay. talked of then to to giving faster above? And back any of Two quarter a second That speed how And some the you of sharper think choice, much? cyber forward? the you competitors back all does share bit your do questions. customers, pricing, of being question, you CDK the from impacted show so, giving little -- that One, by from about this be customers. more mean global gain going share profit attack? up in if service, would gained And some less

Sure.

give of gains be for fundamental think And fundamental I invest are an believe perspective efficient. were kind clear having try we got to as move be that are to we mature Shareholder then financial gives think the do the and some -- put areas I'm a to I not to we've to more. -- you between more all I will back. so we because we had. want much see back And pretty we're that very it's of as we the as of start we that long and intelligently. of without from that suggested, also model to there I most you I some in to could execute, EBITDA need couple anticipate high there's think too Letter, very to that to think there perspective intelligently on doing forward, And And to the walk that and try significant as them walk where think very a some ideas we long-term that gains. we marketing it a we'll bridge that learn where expect we we leverage think we how I that areas hand we I where from from creative then and provided give in we But where we do markets. -- as gains got lessons in our our do we've our a to as the end here the sure tip can. And gives think

As no relates there's broadly. impact was to think question industry CDK, that it an that the I

at I were but when that started, think you out, that us, was it it was that picked ongoing were muted. automotive Maybe when was I either directional on huge could have many it see little is best think The or nothing that things I warrants our impact didn't pretty impacts retailers. impacts We it guess alleviated. as there significant there mentioned. think to

I'm a So was sure not impact there huge there.

The next William Zackfia Sharon from from comes Blair. question

demand kind you're how think of questions one growth, kind much is as the unmet profitability table. just of the leaving on underlying I you're with balancing of

think demand to And it now, are you on and metrics does putting marketing Can like where of you in under-inventoried, below where doing underlying is relative greater to back you we kind your So I given to to So things non-commodity be you're about expect and the constraining of iteration some inventory just mode like like point, testing investments What marketing extent? assume when a I'd up. It obviously, there's conversion feel to it you at And again. bit sales? would like growth turning kick that's sales of items, that right? sales, in a selling things be. think about going kind you're is are like up talk recon. being sounds kind when to about

Sure.

going So my I'm -- to as you would answer not I be is think sure as like. satisfying

I your think are all correct. of observations

and I think this period think I in moving direction. we're in transition that we're

benefits As things to to able little growth balance continue of trying benefits stable discussed, and we're make the its being with to gains. a keep and more

amount kind very we be, compared we point what think frame because the demand that what that are have to in to question very, think is I complicated of you time, no means small of carefully. any want measuring at to exact even latent I there's

like with things more more kind business If of positive you up have faster unlock again. model feedback, as you you leads time demand, demand believe and to then more showing and that demand selection unlocks a delivery broader

on along selling aware intelligently as now, always our remain retailer, most we right exciting. and and quickly very eyes are automotive that bumps we way, think and We doing look But well. cars largest, the millions as of always it's things the being I very So there's as very, think profitable it and possibly good can. very,

and don't good. forward, to us. it where and very moving They Things we very And feel see so just I know. we'll good, keep think takes I got feel

was You're unsatisfying answer. Ernie, it right, an as

So maybe... I will ask something

Nice on to of call you that. me out

GPU set Seasonality keeping I you're was just quarter. and want typically, would level I Mark for of Is we mentioned instead. GPU with sequential expectations. in Maybe in kind lower that the expect earlier, third mean thinking? what to

the I seasonality, as first the to in an typically the and we then seasonality really being extent early and think foremost, of is on think fourth well. most So question about quarter in prominent where quarter, as first maybe

the softer market seasonality think demand is car takes higher that form well typically depreciation as used I overall rates. as that

of the And see year. fourth after see acutely year so that early most in And the industry sort seasonality we is think first of quarter that we where part the that's quarter. and I

from question comes next The from Securities. Basham Wedbush Seth

around My other question is GPU.

do helpful. get in be If you to could couple today a you key be where think but drivers could years, also you some of that there, the it give are and of us where would sense

that I take can one. Sure.

So half on I we've we've first a do had GPU. think other quarter had strong a -- strong

that made, well teams that, all our to monetization, as ancillary work over products are many there we've the well. some the as that pricing, time, gains of platform, nice as do in drivers optimize think think, I had the including scoring, I of internally part

opportunities, as opportunities forward make in fundamental do GPU. think to I gains we see we other look for

see I listed. some I the really we just areas areas the think opportunities that of are where

for our improve more always in We're financing attach rates the possible. develop algorithms. the and experience data take and Carvana scoring products. to and seeking on efficient we're easy most streamline sources always loans. to our continue make using to improve always to pricing our customer looking as We're ancillary So We're to funding working always improve as seeking to

but are on absolutely areas those continuing where fundamental areas so And are over we've gains the to teams time. focused where gains make historically, made

years? the Direction expect level some in helpful. associated here, That's from because higher could recently before we the much of see a get back step couple to that timing you with this you strength elements you experienced, of of a

QX, The timing rounded $XX I well, to a we up callout on as had effects, Ernie that just of impact loan think mentioned we saw X.X% million revenue. effect to -- favorable about due sale that timing

as So be thing would QX. that I the primary it out would call to that relates

comes Citizens Jones Nick question from next The from JMP.

lot You've delivered last year. the over of efficiency gains a

we consumer kind a ago? back to solutions? term? Analyst increasingly that's lot that going new to be delivers aim like differentiated, bigger, gains new talking today. as you volume opportunities larger if still or go As Carvana You're this sounds the is made of consumers additional balancing made progress get of the a try of bunch services of guess, it you Carvana than kind you you about a deliver this kind experience gets look potentially of sort to ambitions revenue you're that versus, factor maybe units you've are number the are focus for to long of a doing years on kind How to more unlock much Day And relentless given to had efficiency I to

Sure.

mean I over assembled one trying think we very is I of is learned lessons ambitious constantly that and that we internally, of number team sure And learned of and about things I last couple of we that I of think is the prioritize things we the seeks make valuable. that ourselves, years battles to think I face very the the one is take properly. one the that I think tackle we them on to So focus a a that think, lot of things. And right we've

right think the I in the that we're the order focusing what given on. make case. of inside have I just to think walls the on that we're as I things quickly the trying ideas. never is creativity focus most That's short the make can never think we sure as And progress we to that right of we possible Carvana,

that that are very opportunities those believe efficiencies, all areas. think extends we I growth X where of other exciting they are exciting areas, and to

to we we So because loud think try smart to to I this as there. ourselves think stay as we're Half saying be trying can to reminder out a which more and of be where should is I we we place we to about are a as we're there opportunities in how. on thoughtful intelligently on, and remain take can trying as take than focused,

competitors given capabilities, there for a times follow-up, that. And a guess a thanks urgency been up recent competitive CarMax might kind results? on, have in believers and on has maybe sustainable maybe be not your think the reaction come different I of sense couple Carvana's call, of do And you I historically, a

Sure.

always had too not that ourselves, I'll try mean and customers. I try think it as We focused be to mean relates generally. maybe on we So that to our to just be competition. focused continually is I we've view the that, we've to I respond tried share to on

the circles what to each of gets in that listening I customers. to easy other it companies chase just and continually doing smart, kind think follow is instead and is other then of believe very their each for company other

So do to continue what is we to That's do goal, and continual try will our customers. listen we our that. to

no I think in true going many results probably of industry. be are are that question And up will think that being fine. people I that notice. there's put are the high take to that's whenever that quality, And

be be anything. to I or handed think we expected alone never

compete to that's and what here out I our it continue come we try to build do. expected customers. And and intend for for differentiated think to something We to

is biased that something with and about on hats, think really lot things built lot think very extremely are that the and a that take just and differentiated time excited our of Carvana long -- of risk. associated we putting a effort a are we're something I that we've

successful I And there looked it. at in something think we it's success sought put and like do many the international think swings, and of pretty XX a us of middle this XX%. to that and point behind big dollars big I examples to by dozen very those that have away, to similar examples, are the are, clear down far most companies

which this lot it's takes alone. think us think we there's build. of But a there. never to think And differentiated effort lot are degree a separates -- competitively the time, I think I function And to that so a that difficulty. is and And you you're I competitively money,

And excited that. so we're by

keep and to will, shape for keep We're us or in trying our going more and be to put customers. delivering else complacent. form between we But everyone no way, space

from The John Colantuoni Jefferies. next comes question from

you comment? And more specifically passing $X,XXX what to wanted faster go this the GPUs gains talk Can about driving what to support whether -- and by then then back is you growth. Ernie's just help they comment you question, consumer. consistent for might what underlying to you please drivers about But wrong, think you the drive clarify detail I'm now meant and like be today, that just comment on comment are me probably about and maybe Just use any you sustainable? additional are supporting, higher GPU. additional transitory it about to but sounded with the gains those was, or can me. over can that the the efficiency time, industry industry was expect to it to that thinking second I Can

Sure.

first So correctly. I interpreted you I think think it on question, your

the will that we lower anticipate whatever the as portion price pass seek form and do getting define additional we as you rate do of And means their fundamental of $X their lower given the investment in experience do? from to see I that gains a the a form I to we back of anticipate of or have that opportunity think of And this we then fundamental we'll as that car, you is passed want profitability intelligently the higher significant same function. bids higher keep profits. that for obviously on -- here, to be customers. can. as or to more in up in any customers gain light have can scale back what efficient or in question you in that And think dollar you to or show more We

observed, of automotive of retailers you we've areas of have of I comment, And is inflation you to things simply years think spreads. make GPU many or I out if the out end mental that different the the a model way higher lot last the public have X many And there that just have point over think $X,XXX retail look the retail the volatile turned is trying we're the retailers they On X to predicted very been the at costs that cars given have the seen we a would GPUs. look largely that retail where approximately an and expect what $X,XXX get plus that what to are at in the cost-plus average today, are the order a mental of on do experience that the it? would deliver would the customer many or expenses is to are, best automotive there that at cost a cost car of wholesale wholesale reason that business. And all automotive retail, would what stand higher model it at with you operating if

EBITDA to And several gross somewhat that so it are margins leading costs seems or as the if margins. or then there costs operating higher has EPS last those being inflating passed inflating years, been and like over through are to similar

that that was trying to I the there. make so point we're think And

question Fong from Marvin from next BTIG. comes The

on Congratulations results. the

sequential you're talking to targeting? way. are gating I from on I I and about that from I we just days unit helped apologies And quickly that have second could lines? achieved XX,XXX ask more you then up? investors, quarter to last you unit capacity. you of how some just aware would that those And the limiting highlighted about, and if to I'd or that Or kind in thinking selling were was sale second preventing ability along better site, kind hiring But of your continue cars you of quarter? call that XX-day it's limit sell than selling there So Or kind any volumes, low quarter, the reconditioning the ahead personnel in normalized? thought the question, achieving sales to of factors, GPUs that's just do any or see think or joined well whether this the vehicles asked grow factor is there limited quarter-over-quarter that has depreciation throughput But late. you what getting the a mean go units before, growth

one. take I Sure. first the can

target to onboard QX. -- I below range as that below average think was again goal So think in It was sort our QX. do continues of capacity, sale we over range we'll in production I typical also time, our days think to for the a the be more prefer is in versus site tracking in QX selection available that And I our QX. below customers bit on than what to reason range to make we had target we and that.

you then mean, of many your gating And on I second listed factors. question, think the I

different we them they've questions transport That from go means our that them think digital from got centers. recondition got of. from resolve we as handling various up We operating of groups. We We're loan verifications to buy we long mile. We Customers reconditioning We answer we're That make got. tools and function process that every delivery scale through reconditioning that auction, one the to to and grow. sure groups, cars I customers, their financing. a phone everything there. a website. We've questions. means together Those partners. answering We've those calls. we our on through are associated the we our with taken the think have title And that care is last registration. I leg attach go

that, we to fixed thing down. went the direction. go We That was targets, again true we scaled And higher very our expenses that the grew started those but also delever but was got and given that out all to of were made earlier all more the of a cars the And same and in up. and same we see not did we point sold think, they in means for means demand were efficient than QX, anticipated. more variable started operating our all level leaning I the not second so that we groups quarter. positioned The way that done. only sales groups than expected. to in we allowed That they they that and in those expenses teams that saw, simultaneously

So exciting. I that's think that

time. the a space know that I of our a continual pieces and march moving and But demonstrated associated Took we've for months. do. company's with little I building that most we that we there really think that's that complex to how long do know But of a people of that's of lots life, machine physical think that's has something something pretty over I to how we've demonstrated for XX that period it. break think

So I period. to continue we continue transition this as think we'll do that

Huber The question next Research Arthur comes Doug from Partners. with

go the GPU number. retail to strong really wanted just I to back

over the I assume that And would And that question how guess, in you You around buying significant a equation? currently wholesale I and between is, -- much spreads market customers, time retail list market determine up. factors X X your you're from are or that price-wise? are moves pushing the know prices that lot can X as how that I higher the

Sure.

that I the prices dealers. auction as wholesale So discussed of specifically the $X,XXX -- the average figure supporting and market across approximately is that's relative think spread that offered which to more start do would same today kind retail. is prices earlier, I think many And we defined with between I at

and So gone I have cost-plus business. up, think our explanation for a that is that dealer it's costs

we also up those perspective. that having business business, of, think do as buy cars that where cars Now inventory. we're are many I gains well cross-channel possible. think to efficiently be try we in the kind And those nationally ways. majority. in can up from we go as buy those partners we in different And our And that's area and think the ways location buy. those way the to we across then be that buy breadth buy places. of show as like that in They we I model and of many a our as avenues many can cars getting I data mix have customers; about buy large across Hertz in the we auction. them there partner think channel space. that And can directly from we show inventory. with we show sort to buy we have channel we geography, we the from had. where then given up grow inherent that intelligent They show different are We We think we available are very to there That's many the another a They that ways cars up those benefits cars We in cars that we think price intelligently of see. inventory

that, has long continually a our just been different But speaking, very we over trying better a -- period And cost-plus sense. retailers think prediction far with lot of so of time I think predictive to of I those that get as automotive the as all we're think volatility, makes goes, generally in kind it also very areas. idea

be be I big over margins think profit dealer that on would And changes so available expectation in time. would our vehicles absent average expenses, pretty similar

comes next with Rajat from The JPMorgan. question Gupta

X had Great. I X question follow-up. just and

Firstly, on questions a seasonality, have been couple of earlier. there

at XXXX, of grown you've units, XXXX always here, excluding period you the from XQ, to restructuring, going when to were XQ business If through you XQ. a XQ look

seasonality, GPU seasonality understand in the but now, of at And curious, expect still I you're in a so we we seasonality, least for where should the I'm hiring units given here market, there And the why the you're should share a would why business, ops, have is your market lot hiring standard the technicians, mean fulfillment from on Carvana? and you're adding why I production follow-up. be like, given employees, units.

Sure. with so to our that. Well, provide going we're I outlook, stick we think

think have thoughtful how is obviously to I with at continually we're guidance an one. the transition then stick think I do focused to we on do think leaning speed try growth, industry-wide And be definitely growth we'll more thing. which our on this on into I we But to and we think and seasonality that through I it. that

on apologies not being question. that helpful for So more

or the cost-plus But experience the And worries. nature a around the lot X the target. might to discussion years want within areas with Maybe like another understand long-term $X,XXX. that GPUs, last have the are the inflation other one, advertising, longer SG&A, We the long-term are No there that you other targets fully areas relevant? informed that pre-pandemic where just you think Obviously, your around out the call on curious of areas no of changed? that. within business, might over

is the model I a order think inflation, is the is thing reasonable that kind like think -- of whole with I think think first business about just I simplest it. way to inflated,

expenses put long-term is or what could accurately at very reasonably were thought the X we X put we've build were that we And and able think and it's of to we ago, reason that been so to that the would there's a model is out fairly where out profitability. pockets look various that to years we because were I lot able accurate a see this up of industry data mature be.

think that And certainly perspective, most I'm inflated model has a so long-term specifically, inflated the from I that all much. changed and not think, in GPU. sure It's it's I retail

And I anticipated ADESA. next I vertically think that at the would what that further is we versus acquired thing time. say we integrated was

are similar. another of still still Consumer fundamentals change. Competitive options pretty I are similar. are that's dynamics otherwise, pretty market right? the But think the So similar, pretty

to remains So that that think about way a we reasonable think it.

think of years have really, in I been exciting terms I you very, able I -- the this well, to the X our has last own tend execution, of see been every think been time just last in terms we've you think, to I see more a opportunities speed you forward, additional opportunities. at the step execute. couple And think of take which a also year

think but on of margin And level, of that if we the the of I changes. there's think high to opportunities think to that should a But at not don't and a is too We'll long-term that our sure updated ton future. have model. where view like long-term expect an provide. a lot for change we we're kind attainable exciting we you I we that keep so what place much think us, EBITDA at spot, I of remain than that I'm in end be our front But in similar now updates high more a

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

quarters and hope Carvana, us over been cannot we've the incredibly couple of prospects I years. excited we results that forward Great. that some internally, our We think inside one to fun for you to Well, fun be of thanks, that that stuck this you there's for meaningful. out enough. just are everyone is To pretty the I put the of about shareholders you about been there. This and time know this proud that you're I many thank are I one and here. I team -- and you to guys forward. it's a a And of taking hope hope ups call. But all the downs. that last from get everyone, the with fun have is many to have Thank the going excited the don't here. able on we're for shareholders that results these have

hope always because that always hope remember wrong, I I it's the and spot. getting think it's can the fighting we the been we and and I we And whole coming by people that. really we associated this fighting together that I is way that to thing stay with, and all bad should. hope think fun, been ever And think keep that beat I in back coolest stance. then up proving I we that just world I've

Thanks, proud. Take all to to see moment We'll We'll be you a you tomorrow. everyone. back of thank be you. it. So at

conference now has This concluded. Thank--