Carvana loss grows amid aggressive expansion

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Carvana posted large gains in revenue, retail sales and inventory acquired from consumers, while reporting a bigger loss in the fourth quarter and for all of 2019.

In the fourth quarter, the digital used-vehicle retailer’s net loss grew 46 percent to $125.7 million. The company said in a letter to shareholders that ongoing efforts to acquire more inventory from consumers had some “operational efficiency impacts,” which were “most pronounced” in the fourth quarter.

During the period, it bought 43 percent of its retail vehicles from customers, compared with 17 percent in the year-earlier quarter.

Carvana’s total gross profit in the fourth quarter jumped 154 percent to $142.5 million. Its gross profit per unit was $2,830 vs. $2,023 in the same period a year earlier.

Retail vehicle sales in the quarter rose 82 percent to 50,370. Net revenue increased 89 percent to $1.10 billion.

For all of 2019, Carvana’s net loss widened by 43 percent to $364.6 million, on revenue that doubled to $3.94 billion.

It sold 177,549 retail vehicles last year, compared with 94,108 in 2018. The company’s gross profit per unit rose to about $2,852 in 2019 from $2,090 in 2018.

“In 2019 we had the highest organic growth year of any automotive retailer in U.S. history, driven by the quality of experiences we give to our customers,” CEO Ernie Garcia said in a statement. “In addition, our offering of buying cars from customers saw even faster growth, more than tripling in the year.”

Carvana said in the letter to shareholders that it bought more than 104,000 vehicles from customers in 2019, compared with just over 31,000 in 2018. To support the growth, it spent $60 million on sales, marketing and other general outlays last year, most of which was for advertising.

It opened in 61 new markets last year, giving it 146 by Dec. 31. As of Wednesday, Carvana was in 161 U.S. markets, covering about 69 percent of the country’s population, the company said.

Carvana’s 2020 outlook calls for more strong top-line growth, albeit more measured than recent years. The company is forecasting retail vehicle sales to grow up to 49 percent to 265,000 in 2020. It’s calling for revenue to grow up to 47 percent to $5.8 billion. It forecasts total gross profit per unit of up to $3,400.

The company had an earnings conference call set for 5:30 p.m. EST on Wednesday.

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