Carvana Co. said Thursday it recorded a net loss of $806 million in the fourth quarter, bringing its overall financial losses in 2022 to $1.6 billion.
The company's growing tide of red ink caps off a year of inflationary pressures, rising interest rates, reductions in profit per vehicle and fluctuations in consumers' used-vehicle demand — all a collective blow to Carvana.
The online used-vehicle retailer reported revenue of $2.8 billion in the fourth quarter, down 24 percent compared with the same period a year earlier. For all of 2022, Carvana reported revenue of $13.6 billion, up 6.2 percent from 2021.
The Tempe, Ariz., company sold 86,977 vehicles in the fourth quarter of 2022, down 23 percent. The profit it made per vehicle retailed tumbled 51 percent to $2,219, down $2,347 from the fourth-quarter 2021 figure.
For the full year, Carvana sold 412,296 vehicles, down 3.0 percent from 2021. Its yearly per-vehicle profit was $3,022, down $1,515 from 2021.
"From a short-term perspective, it was clearly a very difficult year," Carvana CEO Ernie Garcia and CFO Mark Jenkins wrote in a letter to shareholders. "After eight consecutive years of annual improvement, it was the first year we stepped back on the key metrics of retail units sold, total GPU, net income margin and adjusted EBITDA margin."
During Carvana’s Thursday earnings call, Jenkins said the company expects to sell fewer vehicles in the first quarter of 2023 than it did in the fourth quarter of 2022 as it normalizes its inventory size, optimizes marketing spend and works to make progress on its profitability initiatives.
Carvana reduced its inventory by 27 percent in the fourth quarter, and it expects to continue slimming inventory in the first quarter, according to the letter to shareholders.
It doesn’t expect to see “meaningful gains” in retail gross profit per vehicle sold in the first quarter, though benefits of reducing inventory size could “become apparent” in later quarters, according to the letter.
Carvana said it is aiming to reduce its selling, general and administrative expenses by about $100 million by the second quarter. Those reductions will be “broad-based," but the company does not expect a workforce reduction as part of that plan, according to the letter.
Carvana shares fell 3.8 percent to $9.69 in after-hours trading.
The company is No. 2 on Automotive News' most recent list of the top 100 retailers ranked by used-vehicle sales, retailing 425,237 used vehicles in 2021.
- Q4 net revenue: $2.8 billion, down 24 percent from $3.75 billion in the year-earlier period.
- Q4 net income: $806 million loss attributable to Carvana, compared with an $89 million loss attributable to Carvana in the year-earlier period.
- Q4 retail vehicles sold: 86,977, down 23 percent from 113,016.
- Q4 total gross profit per vehicle: $2,219, down 51 percent.
- 2022 net revenue: $13.6 billion, up 6.2 percent from $12.8 billion in 2021.
- 2022 net income: $1.6 billion loss attributable to Carvana compared with a $135 million loss attributable to Carvana in 2021.
- 2022 retail vehicles sold: 412,296, down 3 percent from 425,237 sold in 2021.
- 2022 total gross profit per vehicle: $3,022, down 33 percent from $4,537 in 2021.
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February 24, 2023 at 04:59AM
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Carvana Q4 earnings: Losses widen to $806 million as sales plunge - Automotive News
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