• Adjusted EBITDA: $1.38 billion for FY 2024, with a margin of 10.1%.
• GAAP Operating Income: $990 million for FY 2024, with a margin of 7.2%.
• Net Income: $404 million for FY 2024, with a margin of 3.1%.
• Retail Units Sold: 114,379 in Q4 2024, a 50% increase year-over-year.
• Revenue: $3.547 billion in Q4 2024, a 46% increase year-over-year.
• Non-GAAP Retail GPU: $3,331 in Q4 2024, an increase of $361 year-over-year.
• Non-GAAP Wholesale GPU: $857 in Q4 2024, a decrease of $24 year-over-year.
• Non-GAAP Other GPU: $2,728 in Q4 2024, an increase of $849 year-over-year.
• Non-GAAP SG&A Expense: $432 million in Q4 2024, a 15% increase year-over-year.
• Adjusted EBITDA (Q4): $359 million, a $299 million increase year-over-year.
• Cash and Liquidity: Over $1.7 billion in cash and $3.6 billion in committed liquidity resources at the end of 2024.
• Net Debt to Adjusted EBITDA Ratio: 2.8 times at the end of 2024.
• Adjusted EBITDA to Interest Expense Ratio: More than 2 times at the end of 2024.

• Warning! GuruFocus has detected 9 Warning Signs with CVNA.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Carvana Co (NYSE:CVNA) achieved the status of the most profitable public automotive retailer in US history by adjusted EBITDA margin while being the fastest growing.
• The company reported a 33% year-over-year growth rate in FY 2024 retail units sold, significantly outpacing the industry.
• Carvana Co (NYSE:CVNA) set new company records in several financial metrics, including adjusted EBITDA of $1.38 billion and a net income of $404 million.
• The company successfully integrated 6 of the 56 ADESA sites in 2024, with plans to open approximately another 10 mega sites this year.
• Carvana Co (NYSE:CVNA) improved operational efficiencies, resulting in a $1,165 reduction in non-GAAP SG&A expenses per retail unit sold.

Negative Points

• Non-GAAP wholesale GPU decreased by $24 year-over-year, driven by faster growth in retail units than wholesale vehicle and wholesale marketplace units.
• The overhead portion of SG&A expense increased by $9 million, primarily driven by nonrecurring items.
• Despite strong performance, Carvana Co (NYSE:CVNA) carries many expenses that support retail unit sales capacity of over 1 million units, which may impact future profitability.
• The company faces execution risks in achieving significantly more scale, especially with the integration of ADESA mega sites.
• Carvana Co (NYSE:CVNA) continues to operate in a highly fragmented market, with its largest direct competitor holding about a 2% market share.

Q & A Highlights

Q: How does Carvana manage inventory growth and balance it with depreciation? A: Ernest Garcia, CEO, explained that Carvana believes in offering a wide selection to customers, which increases conversion rates. While more inventory can lead to higher depreciation, it also serves as an efficient customer acquisition channel. The company plans to continue investing in inventory, especially with the upcoming tax season, as it benefits both the business and customers.

Q: What are the key drivers for Carvana's Gross Profit per Unit (GPU) and future margin improvements? A: Ernest Garcia, CEO, stated that there are still significant gains to be made in variable costs and GPU components. While Carvana achieved a 10.1% EBITDA margin in 2024, the company aims for the high end of its long-term financial model (8% to 13.5% EBITDA margin). Future gains will likely be shared with customers to enhance conversion and customer experience.

Q: What is Carvana's strategy for loan sales and its impact on liquidity? A: Mark Jenkins, CFO, mentioned that Carvana will continue using a diversified funding strategy, including whole loan sales and securitization market transactions. The finance platform performed strongly in 2024, and the company plans to maintain this strategy, ensuring strong demand for its loans.

Q: How is Carvana addressing its credit rating and balance sheet strength? A: Mark Jenkins, CFO, highlighted that Carvana is focused on delivering strong credit metrics, such as reducing net debt to adjusted EBITDA and improving interest coverage. The company aims to achieve investment-grade credit ratios over time, allowing it to focus on growth opportunities without balance sheet concerns.

Q: What are the operational challenges and growth limitations for Carvana? A: Ernest Garcia, CEO, noted that the entire operational chain, especially reconditioning, is a key focus. Carvana has the real estate capacity to scale significantly, and the company is working on hiring and training to support this growth. Other areas like logistics and customer care are also being optimized to ensure efficient scaling.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.