Carvana beats Wall Street’s second-quarter expectations, guides toward record year

Shares of Carvana jumped as much as 14% during after-hours trading Wednesday as the company topped Wall Street’s expectations for the second quarter and disclosed expectations for record adjusted earnings of at least $1 billion for 2024.

Here is how the company performed in the second quarter, compared to average estimates compiled by LSEG:

• Earnings per share: 14 cents vs. a loss of 7 cents expected
• Revenue: $3.41 billion vs. $3.24 billion expected

The beats were driven by Carvana’s retail vehicle sales of more than 101,400 units during the quarter, up 32.5% compared to the second quarter of 2023.

Concurrently with its earnings release, Carvana said in a separate filing that it would make an at-the-market offering worth approximately $1 billion in stock, 35 million shares or so.

The company’s gross profit per unit, or GPU, which is closely watched by investors, was $7,049, up $529 from a year earlier.

Carvana expects 2024 to be a record year for the used-car retailer following the results, including projecting adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of between $1 billion and $1.2 billion for the full year 2024, an increase from $339 million in 2023.

Carvana’s guidance signals expectations for a strong second half of the year. The company said it expects a sequential increase in retail vehicle sales during the third quarter compared to the prior three months.

“Looking forward, our business still has a lot of untapped potential. And our team is still unreasonable. We see opportunities to improve significantly from here over time,” Carvana CEO and co-founder Ernie Garcia said Wednesday in a joint shareholder letter with Chief Financial Officer Mark Jenkins.

The company’s previous guidance for the year included a “sequential increase in adjusted EBITDA” for the second half of the year, but did not supply a dollar amount.

If Carvana meets its 2024 earnings target, it will mark the company’s third annual EBITDA profit, including 2023’s record of $339 million.

Carvana’s second-quarter net income was $48 million and net income margin was 1.4%. Adjusted EBITDA was $355 million and adjusted EBITDA margin was 10.4%, both company records.

The second-quarter results continue a massive turnaround for Carvana following Wall Street fears of bankruptcy for the company in early 2022.