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

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In an aerial view, a sign is posted on the exterior of a Carvana car vending machine on July 19, 2023 in Daly City, California. 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 with average estimates compiled by LSEG: Earnings per share: 14 cents vs. a loss of 7 cents expected 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 with the second quarter of 2023. 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 with 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 cofounder Ernie Garcia said Wednesday in a joint shareholder letter with CFO 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 would mark the company's third annual EDBITDA 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.