Carvana Co. (CVNA) reported Q3 EPS of ($2.67), $0.91 worse than the analyst estimate of ($1.76). Revenue for the quarter came in at $3.39 billion versus the consensus estimate of $3.91 billion.
GUIDANCE:
We made strong progress reducing SG&A expenses in Q3 2022. In May 2022, we outlined a stretch goal of $4,000
SG&A expense per retail unit sold, excluding depreciation, amortization, share-based compensation, and ADESA
expenses in Q4 2022. This equated to a stretch goal of $4,350 to $4,450 including ADESA expenses. We are making
strong progress reducing SG&A expenses on an absolute dollar basis, but due to the current volume environment,
we do not expect to reach this stretch goal on a per unit basis in Q4.
In Q4, we expect a sequential reduction in retail units sold and total GPU as the impacts of reduced used vehicle
industry demand, increasing benchmark interest rates, higher used vehicle depreciation rates, and our profitability
initiatives flow through. We also expect to continue our progress reducing SG&A expenses through our efficiency
and cost initiatives.
Our goal is to manage the business to achieve >$4,000 total GPU and significant Adjusted EBITDA profitability at
current volume levels, while also building in flexibility to achieve profitability at higher or lower volume levels.
Looking toward 2023, we are not providing a quantitative outlook at this time. In light of current industry and
macroeconomic conditions, we believe forecasting the environment over the coming months and quarters is
difficult, and we plan instead to provide more real time color on how certain key dynamics are likely to impact our results.