Carvana posts smaller Q1 net loss; revenue falls 25%

Carvana Co. said Thursday it sold fewer used vehicles in the first quarter as a result of a continued pullback on growth initiatives and reduced inventory size, but it reported improved total per-vehicle profit and a slimmer net loss.

The online used-vehicle retailer reported a net loss of $286 million for the quarter ended March 31, smaller than the $506 million it lost in the first quarter of 2022. Revenue fell 25 percent to $2.6 billion. It also reported an adjusted loss of earnings before interest, taxes, depreciation and amortization of $24 million, significantly smaller than its adjusted EBITDA loss of $348 million a year earlier.

“Given our strong start to the year, we expect to achieve positive adjusted EBITDA in Q2 2023,” CEO Ernie Garcia said in a statement.

Carvana sold 79,240 used vehicles, down 25 percent from 105,185 in the year-earlier period. That sales figure was slightly higher than a preliminary estimate the company gave in a March 22 regulatory filing.

The company attributed the first-quarter sales decline to a “strong pace” of inventory reductions from the fourth quarter of 2022. It also said it cut its advertising spend by 64 percent year over year, which impacted retail vehicles sold. In a letter to shareholders, Carvana said the trimmed advertising spend drove the company to its lowest customer acquisition cost per vehicle in its history.

Higher interest rates and wider credit spreads, plus prioritization of profitability initiatives, also drove down sales volume in the quarter, the company said.

Carvana reported total gross profit per vehicle of $4,303, which it said was a first-quarter company best.

Carvana shares were up 23 percent to $8.86 in after-hours trading Thursday.

First-quarter earnings highlights:

• Net revenue: $2.6 billion, down 25 percent from a year earlier
• Net loss: $286 million, an improvement from a loss of $506 million a year earlier
• Retail vehicles sold: 79,240, down 25 percent
• Total gross profit per vehicle: $4,303, up 52 percent.