Carvana Co. (NYSE: CVNA), the foremost e-commerce platform for pre-owned vehicle transactions, showcased its latest advancements and developments today at the William Blair 44th Annual Growth Stock Conference. Key highlights include:
Operational Progress:
A year ago, Carvana initiated an internal plan aimed at bolstering unit economics over a 12-month span. This initiative spurred advancements across all sectors, yielding:
- Growth propelled by efficiency: Despite prioritizing profitability initiatives and unit economics, Carvana saw a 16% year-over-year increase in retail units during Q1. This growth was fueled by enhancements in conversion rates and customer satisfaction.
- Substantial improvements in unit economics: Q1 witnessed significant year-over-year boosts, with non-GAAP GPU climbing by 42%, non-GAAP SG&A per unit dropping by 17%, and Adjusted EBITDA Margin rising by 860 basis points.
- Industry-leading performance: Q1 marked a milestone for Carvana, with the company achieving its strongest financial results to date, boasting an industry-leading 7.7% Adjusted EBITDA margin. This achievement underscores Carvana’s ascent as the most profitable auto retailer, as per this metric, for the first time.
- Notable cash flow progress: Q1 Adjusted EBITDA amounted to $235 million, while capital expenditures and non-PIK interest expense stood at just $48 million.
- Continued momentum into Q2: Carvana reaffirmed its anticipation of a sequential rise in year-over-year growth rate in retail units and an upswing in Adjusted EBITDA during Q2.
Carvana is now embarking on its next 12-month plan, which entails establishing fresh, ambitious targets for each department with the aim of driving further substantial advancements across all facets of the business.
Capital Restructuring:
Carvana’s robust Adjusted EBITDA position furnishes ample financial flexibility, enabling the company to gradually reduce its leverage over time. The company previously disclosed its intention to commence cash interest payments on its 2028 and 2030 Senior Secured Notes starting in 2025. In Q2, Carvana executed the repurchase of $250 million (approximately 24%) of its 2028 Senior Secured Notes and raised $350 million in equity capital through its at-the-market (ATM) program.
These collective measures are anticipated to result in approximately $55 million in interest expense savings by 2026 and a reduction of $620 million in outstanding debt by the end of 2026. Furthermore, Carvana plans to persist in its efforts to further alleviate leverage in the future.
