Carvana Shoots Higher After Q2 Earnings - Here's Why

Carvana Co CVNA reported a second-quarter FY23 sales decline of 23.6% year-on-year to $2.97 billion, beating the consensus estimate of $2.59 billion. EPS loss of $(0.55) beat the consensus loss of $(1.15).

Adjusted gross profit for the quarter rose 24.2% at $538 million. The margin for the quarter expanded 698 basis points to 18.1%. Adjusted gross profit per unit (GPU) increased 90.9% to $7,030.

Adjusted EBITDA for the quarter was $155 million compared to a loss of $(216) million last year. The adjusted EBITDA margin was 5.2% versus (5.6)% a year ago.

Retail units sold totaled 76,530, representing a decrease of 35% year-over-year.

Net loss margin was (3.5)%, versus (11.3)% a year ago.

Outlook: Carvana looks to achieve a positive adjusted EBITDA for the second consecutive quarter in Q3FY23.

Carvana also agreed with noteholders representing over 90% of outstanding senior unsecured notes to reduce total debt, extend maturities, and lower near-term cash interest expense.

"Our strong execution has made the business fundamentally better, and combined with today's agreement with noteholders that reduces our cash interest expense and total debt outstanding, gives us great confidence that we are on the right path to complete our three-step plan and return to growth," said Ernie Garcia, Carvana's Founder, and CEO.

Price Action: CVNA shares are trading higher by 23.10% at $49.00 premarket on the last check Wednesday.

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