Last Thursday, Carvana completed its second-quarter earnings call between the company, shareholders, and analysts to discuss performance and corporate activities. According to an official report from the company, Carvana sold about 117,564 retail vehicles, which calculates to a 9% increase from the previous year. These results are better than expected but not surprising given Carvana’s recent business strategies. However, Carvana also announced a net loss of $439 million in Q2.
Carvana’s second-quarter revenue was $3.884 billion, an approximate 16% increase from this time a year ago—likely because of the company’s acquisition of ADESA to gain access to its wholesale auction locations. They now control their inventory by offering trade-ins for discounted prices with fewer sales taxes.
Ernie Garcia, founder and CEO of Carvana, responded to the financial updates by stating, “We made significant progress in Q2 across many fronts. We closed our acquisition of ADESA, outlined a new operating plan to quickly adapt to the changing market, and drove sequential improvement on all key metrics. We also continue to deliver car buying experiences our customers love and are rapidly gaining market share as a result despite several industry and economic headwinds. We remain on the path to becoming the largest and most profitable auto retailer.”
Carvana executives are satisfied with the results and believe they are heading in the right direction, regardless of the rising inflation rate and the cost of materials for new vehicles. Carvana primarily sells used cars, which has also helped the company stay afloat.
Carvana went into detail about its full financial summary in the letter to shareholders. The total gross profit was $396 million, a decrease from the second quarter of 2021. Carvana does have a long way to go until they hit pre-pandemic levels of buying and selling, especially as fewer households qualify for leftover COVID government relief programs.
June and July were quiet months for the company as there were only two significant events and results reported. The first was a $30 million leaseback on the second phase of their Indianapolis inspection and reconditioning center (IRC), which occurred in June 2022. One month later in July, the company reportedly launched a new program, Carvana Insurance, built with Root to enable coverage in three clicks. However, the most significant event happened in May 2022 when Carvana acquired the ADESA US Physical Auction business from KAR Global for $2.2 billion.
An official statement from Carvana reads, “Our growth in the quarter reflected significant market share gains versus the used vehicle industry as a whole, which was down ~15% year-over-year according to industry data sources. These market share gains reflect the desirability of our customer offering and came despite several headwinds related to our changing priorities. These headwinds included the disruption of our reduction in force that we completed in May and the adjustment to our priorities to elevate expense reduction as our number one financial objective. For example, we reduced our marketing budget by 15% sequentially and reduced the size of our immediately available inventory versus peak levels, both of which created sequential volume headwinds with an eye toward future profitability.”
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