Carvana (CVNA) 30 Oct 242024 Q3 Earnings call transcript

Good day, and welcome to the Carvana Third 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.

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

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

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

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

start, statements of we but contains securities you involve to market like that detailed the remind of and materially that Before recent results Carvana's here. including, forward-looking that risks differ I and material to within factors statements discussed opportunities those the uncertainties Forms would discussion following laws, section financial may XX-Q. Carvana's and in actual not found to, the discussion Risk the results results forward-looking limited differ A meaning cause future from Factors can the most cause to from federal XX-K of actual Form be that

The as forward-looking whether Carbon of today, developments risks statements no call revise assumes of or to or obligation update and as on current a this are them, conference based and result otherwise. expectations new in

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

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

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

every was quarter for We in another performance record virtually financial third measure. exceptional Carvana. key The had quarter

net income million. third in quarter the $XXX was Our

most broader and adjusted Excitingly, context, EBITDA putting those EBITDA million margin our into was public Our was last numbers when automotive quarter, retailers also quarter's quarter third million, adjusted we $XXX XX.X%. for among of operating ever. broke income profitable the in $XXX the for an record

being describing environment is achieved in this And what a most as the challenging in industry. are

last the of years at that we differentiated model highly highly delivers scale. foundations laid a experiences differentiated the customer XX and billion, Over $XX

profitable X.X over have and hard the model experiences led and the financial become have Over the last business. learned to operational most simultaneously the lessons differentiated highly to And paired months, retailer. that X we efficiencies differentiated years, thought last automotive driving across financial our rapidly we and highly fastest-growing customer

think our quality. model customer our gap this to simple and and the Carvana gap to Carvana competitors the way is between growth between and experience and financial in about is A competitors performance in equal business

share? that you our imply market be done we to take digging aren't a our reflect to on does it ultimate If find that answer exciting, for very question our what moment framework, to We because moat. especially

business. see We continue for further the opportunities to in part of every improvement significant

this With the we soon. of ambition to expect end our don't creativity and team, anytime

retail to infrastructure efficient have required out multiple the already enable built reconditioning and to and current obtain expensive X unlocks to infrastructure difficult we invested have addition, currently infrastructure built We to a over In our scaling and size. per growth in support that of most year. million significant units

being already. built have XX And over it our is million path illuminated have we ADESA X as and Beyond executed integration our at to X real unlocking retail per to enough that, sites units support of we estate playbook physical the year.

as will drive past, this lead approximately X-year X- centers In significant requiring to time XX these Continuing days time. investments as value a the experiences business CapEx the in that efficient more customer the building completing operations, delivery. of better and to our and will efficiency of greater positive are integrations access as required as more even minimal reconditioning large CapEx. and well of to closer provide well each was through these faster selection shipping costs by customers. process pools of reconditioning inbound feedback will Underscoring and inventory of generally rollout over unit This our through and economics lower our cars outbound improve distances

of All transactions The largely $XX industry the in is used this and an is happening context vehicle big untapped. million opportunity year. with very of per

large on shareholder, continuing to opportunity X. market be going in hard. Accordingly, always the day we our still day as X% opportunity. of as Building apply X a was is front us was to Carvana As to tackling XX% are it intensity

functional Our done many moat, have XX many last business is Doing the over hard valuable the things and demands hard years. is competitive capital-intensive. we things and different complex capabilities is and ultimate

a quality that's driven the focus a and governed be to place will be execution. As These and been. are stronger competitive our will exciting than be. ambition of, all ever to we are have degree our in by position by of are of we result, the control our an here, maintain things our From intensity, and our success our we in ability

We way path and and sell to cars. becoming our changing of automotive of are buy to profitable energized mission march largest the remain selling people fulfilling millions cars retailer The the continues. buying firmly and most the on and

Mark?

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

Carvana for focus also while our quarter continued quarter pursuing growth. enabled operational team's driving operating extraordinary identifying third on was that by efficiencies gains fundamental further an excellence and was The by

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

toward we margin midpoint see X% EBITDA meaningful XX.X% fundamental of to model driving and margin end of continue higher for our range time. EBITDA opportunities to the gains adjusted that continue XX.X%, of to range long-term financial the of surpassed Our over

year in all QX, the and and XX%. first XXX,XXX third totaled of basis. units year-over-year demand increase an increase demonstrated was differentiated of achieve will Moving strong quarter. otherwise billion, $X.XXX again in to to an both strong experienced growth unit our results. XX%. our our on comparisons business be quarter continued the noted, Retail QX The the Unless strength a model Revenue profitability. sold half ability of third of the into

strong results quarter is year-over-year drivers. in of driven our quarter being long-term in accelerating Our by expectation third growth and fourth the X the growth

offering. improving One, customer continuously our

process transaction the to While and efforts driving on leading our focus we to experiences. seamless more and shopping, experience and efforts continue also people, product are in through these fundamental economics, meaningful gains improvements delivery unit customer

Two, understanding trust. awareness, increasing and

spend. quarters to $XX our year X first accelerating more the and growth, shifts million million QX, raise along increasing awareness through from e-commerce offering. advertising to between advertising growth and $X to toward in of QX the has benefited flat brand of on In with approximately expect invest compared awareness we further consumer Our our

times. scale. to and Inventory are more inventory selection inventory better quarter. selection model, increasing in have X more sources doing positive of match year, inventory our we focused and teams business locations made output Throughout delivery increasing benefits production in and the progress pools better Three, to our of faster been leading the so feedback third key on selection other demand, in and

below near-term more remains returning However, our to available key focus. and inventory website levels target optimal a levels we still remain

all between were by new marking company our spreads turn again GPU be driven of to nonvehicle improvements retail fundamental Non-GAAP levering also GPU expenses. continues driven with $X,XXX, by sales, including customer Strength additional sequential performance a strong fundamental was wholesale were retail sourcing, profitability QX retail sustained sixth quarter our as prices and lower results Our several cost $XXX GPU depreciation across changes inventory record. well expenses components and overhead as an rates. higher in in and revenues by gains market areas, operations and consistent and Year-over-year from driven retail of across times services. and increase

unique to more gross in by of seasonality Non-GAAP an XXXX and the similar marketplace by X internal to wholesale factors. QX, in were profit. growth wholesale XXXX retail with Looking Year-over-year years both $X,XXX, we our our $XXX through both vehicle increase seasonality wholesale be and seasonality latter ahead driven was XXXX, in GPU to GPU expect primarily changes than in XXXX average impacted

interest $X,XXX, wholesale was profit in to to XXXX. increase Looking in expect seasonality GPU driven through be The was dollars XXXX increase $XXX. GPU ahead similar gross in Non-GAAP an other our to we QX, primarily average other seasonality of between of and rates relative interest the XXXX. originations in to and spreads XXXX changes hedging QX selling rate benchmark rates, origination, impact benchmark a partially QX of to loans offset by compared rate, higher by amount smaller

of our that QX We SG&A generated quarter of approximately unit in was equal. to per expense loans origination $XXX $XXX estimate other SG&A of unit strong lever being things in than another in XX%. between increase other the QX that decline was a QX, other benchmark demonstrating GPU a volume power for of we GPU selling interest approximately greater sale And and of and generated Non-GAAP loan originated $XXX million, an expenses. model incremental per incremental rates

units retail an in per to growth XX% expense sold non-GAAP in sold. retail Our unit SG&A $XXX led reduction

a expense totaled an efficiency million, operational you XXXX overhead has retail this members benefits year help The nonrecurring initiatives. for of reality. of of make The an portion Carvana in to driven SG&A our million primarily per unit $XXX primarily sold, leading year, QX, been to by team say a last by unit $X $XXX million $X,XXX in totaled our reduction $XXX driven operations $X decrease portion increase expense SG&A of thank per to QX Carvana, of sold. retail incredible that of a

thank announced adjusted a across of that approximately bonus thousands will QX. Carvana million cash impact EBITDA have by We you in to employees $XX

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

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

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

EBITDA our have to strong taken measured senior secured us prior quarter, which, liquidity far, we coupled we the in quarters, million an delevering thus repurchased In $XXX our position third XXXX that financial adjusted over sheet well strong further ratios. the time. when improves with additional with of our leverage discussed our our continue actions our we generation balance and results pairing As believe notes, position

us for Our well results to a XXXX. through position QX strong finish

the quarter, as environment as expect following toward fourth we long stable. the the Looking remains

EBITDA significantly of adjusted year-over-year the of sequential XXXX. for increase our billion communicated $X.X range $X.X growth units high previously retail a end sold above to year second, in of First, full rate and billion the our

income cash XX% Carvana U.S. forward, assuming we expect generate term term including receivable approximately an of Looking and as payments income rates. tax effective current tax agreement tax and XX% Co's profit, approximately in we longer tax the near income, corporate the in on rate

QX our largest goal of for remain phase excited was progressing millions We auto and buying long-term conclusion, Carvana. profitable growth cars. of quarter driving becoming our of the very most an pursuing In in and profitable retailer exceptional and selling about and

for you attention. questions. take your now Thank We'll

first Blair. Our William comes Zackfia from [Operator question with Sharon Instructions]

talk to about wanted I integration. ADESA the

same-day have greater maybe per when site. I delivery And corollary, I you percent of What kind a million as IRCs integrating under for of was the coming kind guys relative think a ago? of It part roughly of that a little right remember Could than like like growing your a are I bought address you domain. maybe the it, in about sales know less now population. same-day sounds that. then been you to year $XX excited CapEx that's So contrast to

Yes, perfect.

going our That reconditioning board I the we're well. that They've across at to these extremely by use been seen our well. excited going Carvana exceptionally conversions. ADESA think means integrations. The that recondition and systems cars. kind those of we been about means we that's gains We've integration sites. basically very And processes -- So unlock making capabilities reconditioning

of we're those can each And ultimate doing That it a version get very us then portion quick We be of CapEx of is the I unlocked inventory today a to generally that think to down. inbound to can a way. routes. kind doing capacity what We We can in sites. capital benefits get allows unlock we're closer light costs can at of of We times have lighter many drop. more get have and customers. the delivery can

get sites can more to we'll lines. do a probably a that benefits additional the CapEx to then over a up there's and lot certain of we So unlock little back And time, circle scale. around

unfold. how that that's will So

of now, sure footprint capabilities. joint sure our have make of I our Right importantly, fill think that unlocks ADESA we exciting in capabilities are we're think that pretty a important number And a at capabilities the well. important that that we think We number as auction reconditioning business maximize and to for are trying that, that we that and we exciting us for of capability these think and we make sites. for

delivered, it relates delivery, delivered, up to day population of which of et to where system limitations same-day credits they market fraction inside the on our As cars of be same-day or of can which a in cetera. it's now can could get U.S. a the to still delivery, all same has sites. be same-day customer based are small XX% there but We're kinds our access

a still fraction. it's relatively So small

X I X unlocking Phase capability ultimately, combinations or more Phase about the more delivery across cars our available. and and is X more customers into then all the out sorry, be more diving same-day will customer And car have think to geographies. -- rolling that and then will of be Phase

obviously I we hard reflects incredibly value a early any think we're replicate, That's capabilities. other is in to So vertical very of as and we that exciting capability think that. integration consumer-facing unlocking think much as our of very the

that we're unlocking extremely time. about So excited over

the CapEx discussing ADESA point, Sharon of integrations then utilize buildings. to And reiterate and we're land that the all

limited very required that's these CapEx amount a for of it's integrations. So

We are structures sites. and existing ADESA the infrastructure the using at

question next Adam from And with Stanley. the comes Jonas Morgan

to Well, break going congrats. am and outstanding I my say execution. rule It's

well So team. done to the

quarter-by-quarter, it to you the mentioned, there and others, So contribution contribution bonuses Because over margin margin. other just your to or from grow but the kind calculating of like hold to from other why XQ? is reason out was than anything XX% obvious. including is vary looked wanted just to $X.X that you above a I XQ of XQ XQ give know the doesn't reasons employee chance because EBITDA point EBITDA guidance that can a million any

Sure. hit that one. can I

in business and So whole. is industry do think our there I seasonality the as a

demand QX. aware well think of typically is drivers you're used lowest some the I think there. I with of fundamental of dynamics in some the But seasonality are car

Now year-over-year to accelerating we did growth. point

seasonality, for But that's used general, think I So in trend. in lowest a QX positive lowest. cars demand when volume used is consumer car it's

addition, QX. typically rates see In we the depreciation highest in

some I So I think out there prepared are some seasonal factors. We called that in seasonality out -- remarks, called about we're or ways year. the of thinking my this

retail, were and unusual. bit a think I in XXXX XXXX

seasonality and wholesale on we more to So we're along average. wholesale in the high that's of seasonality what then lines level, And of at average a terms thinking in XXXX saw profit similar profit that's 'XX. gross of dollar more the XXXX XXXX there through seeing to we're in we're seeing, what gross

seasonality. profit gross wholesale typical dollar pretty really So

a out. call of are things those couple So I'd that

letter was think in remarks, In addition, there GPU loans approximately did sized I things $XXX. bit of receive but $XXX when between what of rapid didn't about were that other unit we prepared down a lot so little and the quarter. $XXX benefit And other from originated we sort did from get a sell And the hedge quarter, benefit per my had third quarter. we rates when net the a and We I moving we third we benefit them. we that that We than we sold in move in that, rate the and estimate time we originated. that talked we benefited loans third in in a the couple where impact full more GPU pretty estimated we in the at think about of addition, a the

some things is This are industry. in those So a mind. keep to seasonal

the very progress are seasonal pleased to And that obviously, in we're with But a the we're of so those strong some QX. patterns expect then pointing and QX.

Just of as the the integration IRCs. into ADESA a the on assets follow-up

versus post the before XXX And from you're how had You the that about able miles much does would -- you kind out the would the pace center, market converted in ADESA markets what the shipping to you productive you your forward? of gauge reduce same IRC like-for-like call to highlight the letter, savings from in other by capacity just mentioned save? to in free distances of IRC, going

Sure.

think I to very I getting those X inventory customers. that in try examples many. So of stats to of closer there were of the that's And give think benefits to pools tangible

to and cars on time about lot we we're cost and I more think as just time cars sites That's I full simultaneously customers think some partially we these by partially down do down like more both XX%. is that. for closer improvement I system average in room a done to higher put while materially our it, think like level driving And stats customers, of closer I continue getting delivery cost. maybe year-over-year, think efficiently. company to And our ADESA to unlock there's that continued running get and to by

hard It we're the think got a quickly. continue of turning I but to excited keep So work foundations late, requires the that. we'll to lot work. wheel, unlock and about are it to We've

Lick The with Stephens next from comes question Inc. Jeff

start offer still demand the to -- -- them if behavior Or is this gone I where was still things fantastic we are was the XX,XXX a it in customer as month on the you marginal over maybe of part can say, whatnot is beyond, wondering we the the track curve we XX,XXX I similar? site. that terms pricing customer quarter. that just to sale? the the we are you the of on as Congrats difference the a to could comment any get there site, offers, units you've you units see month a curious incremental And have per in customer, that of and entice --

with start Let me this.

to in which little doing doing inventory and up which our capabilities reconditioning great way, bit is right a both things now, a are their time, I grow teams it job the think we to but driven scaling same those hard by cost-effective beginning job. they're very doing a a is at it's great do

in cars We're well from we ultimate release consuming I we of what get part away that target think and coming any that's think selection, these think similar mean, weeks of from more to scales, out generally big kind just I to million-plus We to we're are higher us. X have I then may perceived now the would our public. differences working couple think below is for expressed excited like to back we've little moving be that bodes million up, be there continually we And And put demographics. what kind see I have starting think bought cars our hard necessarily We've as of pretty so total. we a I some customers big obviously think to sold the now but in I a as to early that be customers, probably We think we I adopters levels. customers are remain numbers. and that that. we very of press see a we're people levels like X So those sales. And extremely well. don't But seeing. about inventory customers different higher, higher always meaningfully our as will inventory grow a think I in exciting that

simpler, that different hear think way to more I more and faster We friends we experience continue had to to experiences, a customers more deliver car. continually to great that customer is family we new a buy continue they that penetrate be make segments. this the able and into it and continue selection efficient, from we'll think And great as customer to deeper

think we an that in that's made X% it's shareholder huge. unique we're It's that, enough extremely So think industry. a to over trillion unique. there's we've We today. market that approximately be of extremely car X%. this early. This to market point where used build industry the lucky years, a be We able is of last the be $X just year. million at but build XX per a It's to to $XX business scale been still the transactions scale

our the try able. to think customer -- as growth means our performance very big, that very think preference a separation as fast to they Those go headroom it is basically we And us pack. think as able that, to business is experiences. to the can. So we'll that very, excited clear. we're headroom responsible is is have large. but that manage just fundamentals very, our are create for as get that financial demonstrating also unlock the we the customers that And We model that fundamentals that hard I we'll and can, We the enable are think work opportunity real from be best as balance we're we to demonstrating

a on or curious follow-up in I a metric? into was from sequential about way just QX just down operations movements $XX.XX, uptick quick and sequential was which And how that any feel little you any in that year-over-year per unit was read

take Sure, one. I that can

So initiatives over more the it sequentially that's out which really we've said, it efficiency as small per is component a variable down up, $XXX number just or of I of to on, and so you that taken there, unit, all operations items. a quarter-over-quarter. cost by reflection our think year-over-year, expense of picked just structure, was Nothing call $XX the

most that time. importantly, opportunity drive down think I number we over still see to

teams years, that the over focused are move they've past that opportunities that but time. gains down the all see over -- we the all continue think made metric, to I operational of great to on couple

. the as Awesome. That's pretty team Well, to bonus congrats congrats and the on well. cash fantastic.

you. Thank

Bottiglieri from Paribas. comes question next Chris with the BNP And

of there. X turning since a seems couple really you're asked key corner this topic, like marketplace I years Been the

revenue like in questions clinical is I of the or are X -- the with it. question? to in used related the of decided accounting, other I X GP first guess to So the showing fee kind income

of of doing in kind probably today, can up I expected like sounds to penetration elaborate, step just maybe you it units QX. single think And you digits then you're second,

with partners? Just partners? marketplace? curious expanding or what kind a can XP is tell are of of to Like it you smaller combination you about this this expanding is other Like Or Hertz us large partners? growing other

can I sure. that one. take Yes,

revenue an site. I So another sellers on commercial sell think the similar then foremost, it source. at via particular, -- the in retail price we offering to on And of retail cars acquiring there's differences is marketplace are some first as there the or revenue. offering It's channel. recognition auction But where transaction, is wholesale acquisition sales marketplace we and the another of cars we when gross the behalf we view as have way a record car don't very and

about the so don't record think thing gross the we does it impact have that channel notable on sales And revenue that's as acquisition an I most price. because

your great a -- of revenue. of in most is but in small to there retail The program, it other, been There's fee sellers really retail shareholder Carvana reconditioning we of out as is centers. of the are I up in terms years it And do In portion making historically. of of small relatively for it's the commercial revenue the overall at ADESA of be to yes, active expect fee progress, into tended I pretty sales. increase of question. of think extent share other to that least that think had the it's reporting revenue now, small and some sort most incorporating We something revenue. sales shows earn in from terms in a in we've X then And genesis called QX It's a scaling share letter. we of we the

opened and great platform And our opportunities at centers efficient inspection opportunities really platform think the have retail reconditioning. to make simultaneously. making more to access to that a both I available commercial has making progress and sellers also highly We're reconditioning up to wholesale

that's that, think we I in QX. grow expect to yes, So something

sales that cars. with come for the connections some reason think of the think our there's deepening by We of it. We I gains fundamental and from a doing that. think that we're lower other improve there's commercial with gains speed vehicle and things that as associated to auctions the opportunities or in cut like speed lot of as and and significantly well process intermediation transport costs opportunities

of those but percentage said, to small a some So units, we are in total expect like it historically of it's the pretty increase QX. mechanics, been I

And Michael America. McGovern Bank comes from the with next question of

of your have wondering Congrats on just in or marketing the is it get inventory view? selection kind if it quarter. your impact to if want where on we And that today inventory you willingness isn't. strategy what dollars marketing be could I your to stands on does was spend where thoughts or

Sure.

to the a car as looking it to because for So has more We and of starting to a are customers more likely to it's bit. they're for marketing very growth conversion additional making inventory inventory just efficient We for. effect grow see channel the that you basically of your like can dollars marketing driving we would are efficient is higher. think it be similar by think or marketing marketing, as

scaling entire place that, investment So that the we operational great It's that's a for think an requires investment. chain.

that takes investment a it's of So little time. an bit

recognition accelerate to to building bit year it we're in sales. in us We've great QX of a to obviously that, starting in But team QX. the been our expect spot, now. right little been job team with accelerated doing despite inventory this a growth a bit, the also sales growing begun and we bit and up has keeping But a has able a get

hard get are So carrying we working fast. today. we than be think bigger would we We're to to that's a there inventory and that, like exciting,

And Chris question Needham. comes from the Pierce next with

here? GPU this other guess just I on sense you model a $XX.XX $XXX it, that's of you I benefit want happened going forward would how want of guys a be call to onetime regular what's it's above to Or guys years On call ago. were sense has you kind of quarter. the that and get something I to where changed kind multiple because get in tailwinds this out? well $X,XXX, just the of line beside

can swing Sure. at that one. a take I

the line of working the streamlined gains. that's take like the gains where make in of or think products. places the So fundamental whether GPU GPU, areas includes algorithms, which I sorts more business, unlike fundamental experience, just wholesale -- not are gains data, it's else, ancillary -- those financing of I of think of all and the do anything or areas to the make other we customer better customer data business, form to for scoring constantly experiences, items X all retail GPU in the driving technology other finance platform kinds better of And

to make do that's to We'll an But think on you fundamental from it. opportunities area high-level over we've be my And for progress so would see I over continue more look commentary where time here. good time made that progress. gains and

Okay. guys marketplace then that selling down? you had past, in the cars as on I you the the avenue marketplace. again you listing are other future? remind an Is that inventory. thing Perfect. me, the an dealers a in that was went In go Can down would And well avenue believe you

where can we and relationships. That combination we easier large focus of to ADESA not where capabilities Today, benefits commercial was that focus it's both on together Carvana our an is where more sellers briefly. it avenue scale Carvana benefit and think those and today. ADESA went our and down the is That from

integrations that, and that's think we partnership simpler. efficient. requires Every specific special some It's more So capabilities.

relationships dealers. we that the are marketplace earlier, so well. are as different was this it than retail through more then more importantly, And past, flowing believe very larger cars can of the also quickly I these them, we Mark move. in And the especially the And reconditioning of we but majority can that's kind of with have said fewer and

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

planning exceeding advertising My fact in still comments, on increasing My quarter, is despite the first fourth on just advertising supply. congrats is your as that well. demand the question

why to the despite Just it's through think help that into us advertising time right fact. lean

Sure.

of the think, in when are plan quarter. time fourth especially And relatively unit there's that investments demand less all, advertising nice on drive bit we I we to got make at levers we've performing basis. it's per to first a start it's overall small, the that the is traditionally, growth, understanding well. I a the little And in incredibly business time various get a think of to that practical a

flex Dax a to to that channels. We've And do bringing Kristen to advertising and fun interesting time is potentially which we're excited and got year, kind back about. and what understand we've made. again so of also different and we and investments some sensitivity start it the this We're also that those powerful think natural

make So is good of think is when we'll time uniquely and start at, of a investments how quarter for And we'll that sales the fact levers us it's to because those are. powerful does. us be planned to that a understand we exactly a to how time we the see But that traditionally slow. some good it those fourth for think time

in time And power simpler levers this. like operationally the so of those to a it's understand

be doing So we'll testing a little the edges. around

see. going about I optimistic we're what we're to think

standing is likely earlier meaningful no I think in we've customer think the us that's between marching. in as chain I marketing, thing it's that to of and contribution there's where whether unlocking a said growth expanding this there's we there. we like various just through to over channels. plan, that good call, to got continuing and that doubt And execute. operational relative given costs margins gaps and incremental keep discussed acquisition customer we sales the are got benefit And just acquisition inventory things the

and That's the that you And a source to directly from are helpful objectives support sourcing, can retail remind you business marketplace by X in is able with the retail vehicles inventory from to as more to sourcing us it's getting key it color. to self-sufficiency your customers. where do then of be growth And more when standpoint? difficult relates

Yes.

acquisitions think say would is which entire a hard where we that, from great. that's think deep capability. capability. of to fundamental coming still significant in our are I our It's We So of a majority replicate. customers, place kind It the just reverses we're retail very

experience And do offer and we business. do, we've same to that everything have so basically side you'd the retail for out the of that build to customer the built

benefits very moats. from that large something So it's

definitely that's an of area So focus.

a relatively undoubtedly, cars relatively times are channel it's think I probably in is times appreciating, when depreciating. on that weaker when are channel a probably stronger vehicles

very are place very, that X other vehicle I or And -- similar last cars in for environment to spot great at give good they're also now take. a a think CPI. the years, years, probably is of is depreciating on very we've X.X average, similar been where at the news a kind on CPI

just here. it's less we direction So go obvious to from depreciation I think versus will think But it's all have access which channels. depreciation normal seasonal important to the various

for And purchase. can that point thought be a retail auction then marketplace the made I of Mark think substitute the as

it. are from where And the also ADESA. plus joint that capabilities the point to place the is think way I that think that right then focused most he the is us about made think we of I benefiting

a in buyer about to channel know I the same by is important reasons and a great and we really we're the wholesale great their we think or for or and a put way car in bid we're of a wholesale standards, don't that that we've got them of great retail differentiated it's retail consumers disposition why front channel the think consumers got X able much we've is past, our if reason in years regardless. -- that disposition talked that

think And big we with seamless absorb we're those movement that fundamental share long that programs advantages customer we inherent differentiated to the looking we more think so quickly, and have think sources in that's continue can cars wholesale deem experiences that be that, we're -- think on mix are similar unlock differentiated of can getting of that's of costs demand. And lot where us a commercial the better that that, and deem run, our between the highly think to partners. be to cars to And built need be split unlock place that I can and we and the leverage want of continue a need I we generate to side. the of ways, in does to cars that associated we've we we satisfy to they to And have these -- drive that ways gains going supply great up to get it even those disposed order a the to able retail. the we I will forward will very of a deliver those supply when in way sellers minimizes supply of cars and more that market machine we the in to demand, in kind exciting. and

with The comes from next question Nagel Oppenheimer. Brian

Congratulations. quarter. Great

put questions. I a So of couple

First, business, as at it's the we clearly reramping nicely look here.

in as the to or centers. have But continues You a other reconditioning still prepared capacity business are about to ramp, that as from standpoint underutilized they're come the there far in you expenses significantly going support talked elsewhere the as comments labor growth? to

Yes, take I can that.

item. sort operations is expenses, those item way There's to think labor in easiest that rates, expense categories. overhead our that -- some about with the there's of line And seen cost the line then reconditioning. of well. some big there's of think we've So as I Those associated today's I sales expense down. some come in seeing at think growth we're are even And what

costs. make to continue transport progress We in and amount of reconditioning

small expenses. in We make had quarter continue very a tick We progress operational this to sequentially. up

very movement meaningful the very, a many very quarters have little downward trend. significant steady with on over our that's expenses past growth. overall, overhead And then despite But been very

our in continue answer in of been goal to answer, think Obviously, our period see still to improve is there terms. dollar as to some the I down a And opportunities metrics operational them in growing. efficiency. So continue expenses I alluded is we to labor we've across efficiency grow drive actually improving previous but while terms, simple to

the the blocks here That's at sort drive the very to the with I building are climb from what what are the GP, regard I question just again, guess to second But nicely. -- higher. have, of you as to it continues retail then And the helpful. it kind it, look of say,

associated are But is the goal consumer entire system think efficient. a was minimizes a basically car about car, then some customer I ways, think that And it's car some car is providing another that machine experience so consumer going for that reconditioning that of and that from very I that cost the used ready somewhere kind an they love there with with many a our customer trade the X that's customer new has to to of building transaction in somewhere many. to else. moving

I that's goal the system. like the think entire of

And smarter on time point I location, think bid which we cars getting is important. at in which from which about so

consumer additional with our our reconditioning them merchandising to efficient costs important, well. facing is reconditioning commercial cars with associated out those that building moving and cost think minimizing have I centers to get cars so the really important, about around intelligent more cars we to being lower centers is more access

interesting the So different cars important, for features credit have we cars differently. is about various get intelligent that being

understanding customers' various reflects on it those important. and pay cars So is to willingness

simpler. can it think I like feel it's

it a creates thousands of opportunities just get for for You're thousands across I buying but price are car of to think, distance, you're lot tens price, there tens a a geography, of distributed enormous then of enormous those better. a and SKUs selling and of SKUs

touches opinion, improvement. suggests room very our got teams goals that credible ambitious inventory our that teams, touches we've So and with touches multiple for in our that very fulfillment various there's are That teams teams. additional projects that that specific have

and sizing But and doing exercise and want you're like distance collapsing think to between you tomorrow another what the and opportunity is going anything, what activity. I then do is today X

so it customers for great today executing very think giving last X very And have we've is hard would still foresee well GPU our where been been quarters. while the to deal. And I a retail

would have we the the think hopper. in that but still I quarters have from to been unlocked that X of see it by it's sort same hard ago, been projects

that executing got to I still keep opportunity. at there's we we so same think that think and level, And

comes Gupta from question And next the with JPMorgan. Rajat

question follow-up a the marketplace have I economics. on Great.

of accounting But economics think revenue the I is we about to are know marketplace source should curious, how set? units. You buckets GPU, sale retail auction unit? per GPU you versus these the Like understand SG&A reporting. like the retail different around like mentioned or traditional the other just similar the the the

I past, think source those are units. you So said in than lower the consumer GPUs

And follow-up. So calling forward? And I those like would curious the going line like a I be have trickle that through was just out you how different items?

sure. Yes,

customers the get all transactions that let operations can fundamentally purchases We interesting as operation we difference economics the sellers. is we seller. The wrap think sellers them more in the in cars roll dollar auction bulk get efficient between cars for with probably And at it of best be different us that have way we we're They're to same us the for occurring. to fewer what the substitute customer of same. same. The a take the is between across accounting. sees this. think sum more that sites, are in as we as The operations and and same. reconditioning is those We we it and we would then if the aiming about have the subset But the the structures like the the the out about same. are I general are cars. it. the advantage way of the and the has the are the in is about particular, is kind are thinking way. per just is capabilities same. different of to still obviously start The thinking been think cars Everything without The is the think we're vehicle quickly do me that capabilities that reason there. move it moves same cars Well, think seller merchandise combination to And that I the around of on a ADESA because these same, with transaction

think is you those kind of many I structure of structures X that this structure could so that a And wrap fundamentals. is around possible

don't really structures the underlying economics transaction. We various the think of change

retail way is probably about kind the think best accounting think they We we how the if normal then of have that the And units. long-term revenue because we've still to best change financial units, major work think way so that they financial out as put core being for it, same portion this that's about is units were we accounted works. our less have think the about model. through the were we marketplace units goals think all And will of model. as If it to for long-term whatever as are here

on ADESA the your is And it. directly new from it. just like I customers? I'm customers past. impact in sourcing in helpful. those like the to That's trying products essentially or terms know stand-alone the curious of Got understand know Got business, that about the talked today, marketplace what this like this the pretty work using, it like you've the interplay has I like EBITDA ADESA EBITDA. how for business? what it's versus context ADESA you're for of but would means just using just small in of stand-alone your base overall supply between

costs I the exists ultimate bit to interested across dealers a wholesaler. about to commercial dealers simpler between of the think I are hopefully but trying cars cars to consumers, abstract, want an of varied in, we because that those group of sell. is these it. market helpful of a they're that that A because of to they're lot way in subset a think a exist conceptual a proceeds to sellers are and make to have sellers and structures the think that going a scaled retailer scaled and the The that maximize sell goals

discovering exist that get scaled right, sure we car system. speed them can costs the right, properly. and our sort reduce we to in which cost cars locations, to But of it's average our unlocks less not right average so at which need then reductions. individual because the need we and get And kind and every We make important we fundamentally that to that

fundamentally we're do seeking with structures. so that's these new And some what to of

with the John Northcoast And Research. question Healy from comes next

wanted growth how there's The the growth. at But I more this I an consumer, you much amazing Obviously, year Because source picture. you grow? even do turnaround business allow this you you offer want thoughts big amazing. been as the you value inventory rate the have. business, just been to like the how with obviously like inventory, has of what to feel kind your here interplay get the has look to than growth of the Ernie,

at saw a units is year? want it year-over-year the add another look year look like X? this at So of you basis. as in that do to rate of of model, in or the terms growth we you like amount replicate the Or you on Can kind you

business just I your help year? economist help next points ultimately, hat then business. just How year, could us about growth really was actually performance next does rates just your lower year-over-year too, and thinking say much and put going hoping So are you that And you're in to interest on let's basis the or govern year. next how XXX the

Sure.

think are I those questions. big

scale very Importantly, think reaching. the that will ultimately we we're of I we to compared that be capable think small

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So stronger it better, business. us makes a just

And that work of the group limited. do any think then of to is ability I people

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it they of right? the in show to They that so makes sort gains bottom doubly And line. make valuable, top easier up more go fundamental line and get

things. I to so balance got And a very think find ambitious group. We're we've between those

keep to many level we our we plate that the and to to on things I as trying think too internally it where right narrow trying don't much don't struggle our we the as get done at should. focus, have is we have

today. And as so active find speak. I balance to in That's discovery we think we're that trying

are And then economist economist our you our hats hat, about think broken. asked we

go would check suggest So people. we to other

lower, being rates think helpful. all constant I else is

helpful in way. a order it's think kind I of second

matters First offering relative what order, is both that and we we the from our benefit rates. with compete to others of offering

So order, I really first think a change. it's huge not

are that means it and can more affordable, cars into bring that the order, Second more people market.

performance. beneficial. think And a central so of -- wouldn't it we that I driver that's But like call our we

question next from Nick comes JMP. the with Jones Citizens And

that is guess the maybe The age like the outperforming to I has growth mean the And volume ask Carvana industry rates little road maybe a the come? on I large question. the business share, normalized competitors. a little guess quite normalizing I average first and is cars I about of down, rapid Great. still gaining to kind bit if handle higher. could things more start bit differently. algorithm, do guess I'd the question of been becomes potentially a is then pace, that's as come prepared the

well the maybe perform the backdrop. And and going drive advertising extent guess tough business testing can do that things a to how some seeing potentially the is the spring you've second quite question much a how growth in further. to I is, you over you're few and next coiled to been normalize years

We the of But it's we're the that out Love the seems that, it hope case. inside that coiled think Carvana here that meeting carries to case. lot for to that we're going work that, that's prove that's spring that, Catapult. case a it deep analogy of the lot I people for a demonstrate results -- hard certainly is likely a

easier more is we're growth means ever think efficient we've That it's than been. than ever I been.

that of sum our and quality big the spread the versus the I competition. of got think a performance, we've the way the customers responding financial our to means are offering

think think shares that attainable, market just I it a I X that suggests -- creates I are flexibility. large creates lot think of and that very

so fundamental to gains had. we've like feel significant been able financial there's yet we We than think better performance visibility deliver have be We to to that far.

have think get ramping our run centers opportunity sites We to we sum up enormous ADESA reconditioning units additional the of at capacity of current X unlocking can Xx year, us already that latent and rate. we million which is this that up have these per that approximately

think an Xx mean, what's that scale all it's it's enormous our is right? I exciting. I daunting. from very missing can I So sound current And market, just, mean that

for And a would feels then it's a share, achievable which worth X.X% remembering that leader space. be that, market very in

And I we're excited. so think

team our unbelievably think is well. I executing

of execution and I think I set gear and new years a years, our we're think hard X.X And learning of learned to maintain. going new new tricks that a level the us team X the to completely those are of of last a a of new discipline, result lessons. work results

be but pedal eyes big. and opportunity I think want are specific our got And stay big, And way, the to excited. to think I down just you the I and promises keep we along on we so we're because the too don't is promise focused our

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

listening have X people a is just appreciate work outside keep crushing row, outperformed now entire so This reasonably We lot lot for going incredible head, this in to of they everyone. thanks, are fun perform. and got going of it it, have. been is, just let is expected. let's proud you absolutely call to smart And Well, Thank what we you've a of but whose work. job. quarters Team figure out everyone. we're go your how call. that that you on all do people be of it very the and could job much Please are a never Carvana, you've it. to you joining still that's Thanks, And to really because because Great. for to forever another to it

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

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