With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

<p>During the COVID pandemic, this used-car seller thrived as supply-chain problems made new cars hard to find; today business is booming as inflation makes new cars hard to afford. Carvana sold nearly 600,000 cars in 2025 at healthy profit margins, and its revenue rose 49%, helping it leap ahead 94 spots on the Fortune 500.</p>

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-483-Carvana

Breaking into the <em>Fortune</em> 500 for the first time this year is online used car retailer, Carvana. The company is known for its multi-story, coin-operated car vending machines, where consumers pick up vehicles after finalizing their purchase.

This year's Fortune 500 marks the 66th running of the list.

This year's Fortune 500 marks the 65th running of the list.

Key Financials (last Fiscal Year)

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Profits ($M)

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Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

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Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Founded by Ernest Garcia III, Ryan Keeton, and Ben Huston in 2012, Carvana set out to “change the way people buy cars.” The company operates an e-commerce platform for buying and selling used cars in the U.S. and, with its subsidiaries, offers related services including inspection and reconditioning, financing, and auction sites. Carvana debuted its distinctive car vending machine in Nashville in 2015, and now operates almost 40 of the glass towers showcasing its cars. Since launching in 2013, more than 4 million customers have chosen its automotive e-commerce experience to shop, sell, finance, and trade in vehicles entirely online.

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Q4 2024

Carvana (CVNA): Company Profile, Stock Price, News, Rankings

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Carvana

carvana

Good day, and welcome to Carvana's Fourth Quarter twenty twenty four Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Meg Kehan, Investor Relations.

Thank you, Asha. Good afternoon, ladies and gentlemen, and thank you for joining us on Carvana's fourth quarter and full year twenty twenty four earnings conference call. Please note that this call will be simultaneously webcast on our Investor Relations section of the company's corporate website at investors.carvana.com. The fourth quarter shareholder letter is also posted to the IR website. Additionally, we posted a set of supplemental financial tables for Q4, which can be found on the Events Presentations page of our IR website.

Joining me on the call today are Ernie Garcia, Chief Executive Officer and Mark Jenkins, Chief Financial Officer. Before we start, I would like to remind you that the following discussion contains forward looking statements within the meanings of federal securities laws, including, but not limited to, Carvana's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. A detailed discussion of the material factors that cause actual results to differ from forward looking statements can be found in the Risk Factors section of Carvana's most recent Form 10 K. The forward looking statements and risks in this conference call are based on current expectations as of today, and Carvana assumes no obligation to update or revise them whether as a result of new developments or otherwise. Our commentary today will include non GAAP financial metrics.

Unless otherwise specified, all references to GPU and SG and A will be to the non GAAP metrics and all references to EBITDA will be to adjusted EBITDA. Reconciliations between GAAP and non GAAP metrics for our reported results can be found in our shareholder letter issued today, the copy of which can be found on our IR website. And with that said, I'd like to turn the call over to Ernie Garcia. Ernie?

Thanks, Meg, and thanks, everyone, for joining the call. 2024 will always be a defining year in the Carvana story. In 2024, we became the most profitable public automotive retailer in U. S. History as measured by adjusted EBITDA margin, while simultaneously being the fastest growing.

There are many quarterly and annual numbers that support and punctuate this point, but the simple reduction is the most important. The most profitable ever and fastest growing is very powerful. We also did this with 1% nationwide market share. This is a very unique long term growth opportunity. And we are built for scale.

Our inspection centers that were in operation before we began integrating our ADESA megasites had capacity for over 1,000,000 retail units, about 3x our current volume. Fully integrating all ADESA mega sites will give us capacity for approximately 3,000,000 retail units or 8x our current volume. And this isn't conceptual. In 2024, we integrated six of the 56 Adesa sites. We expect to open approximately another 10 megasites this year, two of which we have already announced.

This reduces the execution risk of achieving significantly more scale and that extra scale will come with the positive feedback inherent in our model. Our business model took us $10,000,000,000 tens of millions of hours of effort and over ten years to build. It is hard. And the difficulty of building it is very clear through the simple exercise of looking at the outcomes and difficulties of the many companies around the world, including ourselves, that have attempted to build something similar over the last ten to fifteen years. In addition, our market enjoys unique competitive dynamics.

We compete in a highly fragmented market. Our largest direct competitor has about a 2% market share. The largest 100 direct competitors combined have about 10% market share. We are a team of builders that have stuck together through thick and thin and accumulated the lessons that have been learned at every step of our journey. We imagined the business.

We designed the customer experience. We built the technology and operational apparatus that was necessary to deliver it. In just eight years, we had scaled that complex system quickly enough to be tied to the third fastest company to make the Fortune 500 in history. We faced hardship together. And most recently, we did all the hard detailed work that is necessary to prove that the machine that we imagined is the most efficient machine in our industry for buying and selling cars.

The team that did all of this is still here, and we are still hungry. And importantly, we deliver an experience our customers love. It is faster, simpler, more confidence inspiring, offers greater selection and better value that is available elsewhere in the market. And we aren't even close to done. There are fundamental gains left to be harvested.

We will go get them. There are many opportunities to make our machine more efficient and add new foundational capabilities to serve our customers and partners better. We will build them. There is room to make our customer experiences simpler, more efficient, more delightful for our customers. We'll make that happen too.

We're at an exciting moment in our history. We are firmly on the path to buying and selling millions of cars to becoming the largest and most profitable automotive retailer and to fulfilling our mission of changing the way people buy and sell cars. There's nowhere we'd rather be. The March continues. Mark?

Thank you, Ernie, and thank you all for joining us today. 2024 was a monumental year for Carvana and solidified the long term earnings power of our vertically integrated business model. We entered the year focused on driving fundamental gains and enhancing customer experiences while also beginning to layer in certain growth initiatives. Throughout the year, we maintained that mindset and achieved additional fundamental gains, which resulted in significant improvements in unit economics and meaningful enhancements to our customer offering. This enabled us to once again leverage the three fundamental drivers of growth that we have benefited from in the past and expect to continue to benefit from in the future.

One, continuously improving our customer offering two, increasing awareness, understanding and trust of our brand and three, increasing inventory selection and other benefits of scale. Positive feedback created by these drivers resulted in a 33% year over year growth rate in FY 2024 retail units sold, significantly outpacing the industry, while simultaneously driving material operating leverage and industry leading margins. We set new company records in numerous financial metrics, including adjusted EBITDA of $1,380,000,000 adjusted EBITDA margin of 10.1% GAAP operating income of $990,000,000 GAAP operating margin of 7.2% net income of $4.00 $4,000,000 and net income margin of 3.1%. Moving to our fourth quarter results, where unless otherwise noted, all comparisons will be on a year over year basis. The fourth quarter was again an exceptional quarter for Carvana that was driven by our team's ability to achieve further fundamental gains and operating efficiencies while also pursuing significant year over year growth.

Fourth consecutive quarter, we are in positive net income and we set new fourth quarter records for retail units sold, adjusted EBITDA, adjusted EBITDA margin, GAAP operating income, GAAP operating margin, net income and net income margin. The strong demand we experienced in the first three quarters of the year continued into the fourth quarter. Retail units sold totaled 114,379 in Q4, an increase of 50%, a significant acceleration from Q3, leading to the second highest quarterly retail unit sales in our history, despite Q4 being a seasonally lower demand period. Revenue was $3,547,000,000 an increase of 46%. Like the full year, our growth in the fourth quarter was driven by our three long term growth drivers.

We believe as we continue on our path of profitable growth, each driver will improve, creating more positive feedback in the model. Our strong profitability results in Q4 were again driven by sustained and fundamental improvements across all GPU components and operations expenses as well as levering our overhead expenses. Non GAAP retail GPU was 30 threethirty one, an increase of three sixty one. Year over year changes were driven primarily by lower retail depreciation rates, reductions in reconditioning and inbound transport costs and lower average days of sale, partially offset by lower spreads between wholesale and retail market prices. Non GAAP wholesale GPU was $8.57 a decrease of $24 Year over year changes were primarily driven by faster growth in retail units than wholesale vehicle and wholesale marketplace units, partially offset by lower vehicle depreciation rates.

Non GAAP other GPU was 27.28 an increase of $8.49 The increase in other GPU was primarily driven by higher spreads between origination interest rates and benchmark rates, lower credit spreads on securitization transactions, changes in loans sale channel mix and selling a greater volume of loans relative to originations in Q4 'twenty four compared to Q4 'twenty three. Non GAAP SG and A expense was $432,000,000 an increase of 15%. Q4 was another strong quarter for demonstrating the power of our model to lever SG and A expenses. Our 50% growth in retail units sold led to a $11.65 dollars reduction in non GAAP SG and A expenses per retail units sold. Carvana operations portion of SG and A expense totaled $16.96 dollars per retail unit sold, a decrease of $328 driven by our operational efficiency initiatives.

The overhead portion of SG and A expense totaled $159,000,000 in Q4, an increase of $9,000,000 primarily driven by non recurring items. We continue to see opportunities for significant improvement in per unit SG and A expenses over time and as we scale, driven by both continued efficiency and operational expenses as well as leverage in the fixed components of our cost structure. Adjusted EBITDA was $359,000,000 in Q4, an increase of $299,000,000 Adjusted EBITDA margin was 10.1% in Q4, a 7.6 percentage point increase. Our adjusted EBITDA margin of 10.1% was industry leading and is well within our long term financial model EBITDA margin range of 8% to 13.5%. We continue to see meaningful opportunities for fundamental gains to continue driving toward the higher end of that range over time.

Our adjusted EBITDA is very high quality compared to many rapidly growing companies due to our relatively low non cash expenses. GAAP operating income was $260,000,000 in Q4, leading to GAAP operating margin of 7.3, leading the public auto retail industry. As previously noted, we currently carry many expenses that support retail unit sales capacity of over 1,000,000 units and expect our GAAP operating income to grow faster than adjusted EBITDA over time. As discussed in prior quarters, we believe that pairing our strong financial results with the measured actions we have taken position us well to continue delevering our balance sheet over time. As a company that we believe has the opportunity to be a many year compounder, we believe in having a strong balance sheet with substantial liquidity and a strong credit rating.

In the fourth quarter, we took additional steps to further bolster our balance sheet, retiring $120,000,000 of our twenty twenty eight senior secured notes and raising $924,000,000 of equity through our ATM program. At the end of 2024, we had more than $1,700,000,000 of cash and $3,600,000,000 of committed liquidity resources, a $2,000,000,000 increase year over year. In addition, our ratio of net debt to adjusted EBITDA was 2.8 times and our ratio of adjusted EBITDA to interest expense was more than two times, demonstrating significant progress toward our deleveraging goals. We remain committed to further deleveraging through growth in adjusted EBITDA and plan to drive toward investment grade quality credit ratios over time. Our results in 2024 position us well for a strong 2025.

Assuming the environment remains stable, looking forward, we expect significant growth in both retail units sold and adjusted EBITDA in full year 2025, including a sequential increase in both retail units sold and adjusted EBITDA in Q1 twenty twenty five. In conclusion, 2024 was an extremely exciting year for Team Carvana. We achieved two very significant milestones of becoming the fastest growing and most profitable automotive retailer. The strength of our financial results and the strength of our customer offering position us well to continue to take market share as we progress in our long term phase of driving profitable growth. Thank you for your attention.

First question comes from Ranjosi with Citi. Please go ahead.

Thanks for taking the question. Ernie, Mark, I had a question on inventory and the overall experience. And so on inventory, I think the letter talked about production throughput improvements. And I want to understand as inventory grows, how do you philosophically manage balancing inventory as a lever to drive demand versus greater overall depreciation? And then having recently gone through the purchase and trade process at Carvana, with inventory growing, I just want to hear your thoughts on just how search and merchandising is improving overall, how you might use AI to maybe include natural language search and things along those lines as the user experience improves?

Sure. So first, I think we talked about a bit in the letter. I think we're big believers that selection is one of the simplest, clearest, most obvious to our customer benefits that we provide. And so we're big believers that offering them that selection is very powerful. We think that our business model is uniquely positioned to do that, not just because all the cars can be delivered to customers, so they can see everything nationwide, but also because it changes the cars that we can buy because we're optimizing a very large pool instead of many small pools.

And the math of that is meaningful. It means that we can kind of cover more demand space per unit than many other automotive retailers would be able to. So we think that's really valuable. I think there's many ways for us to think about what the right inventory size is. I think you framed up the trade offs.

I think very clearly as we have more inventory, we have greater conversion. And then when you have more inventory, if conversion goes up by less than the increase in your inventory, then you have greater expected depreciation. And you can kind of convert that extra depreciation into a customer acquisition cost and compare it to other ways to acquire customers with the knowledge that not only is it a way to acquire customers, but it's also a way to acquire customers that makes them happier, making it kind of all else constant a more efficient customer acquisition channel. So I think our general view is we want to keep leaning into inventory. I think the team has done an absolutely incredible job.

'24 was a year where our expectations for the units we would sell continually went up and that meant that the plan that the inspection center team and all the operating teams were kind of needing to level up to was constantly increasing. They did a great job doing that. They did a great job doing that very efficiently. And we're at a spot now where we're very happy with the inventory that we're producing, but we absolutely have big eyes and think that more cars is better and we're heading into very in very short order tax season, where we expect sales to go up again. So I think we'll continue to invest in inventory and we think that's great for our business and great for our customers.

you posed the AI question as number two. I think there's so much to say there that we'll try to stay a little bit high level. I think we'll start with this. I think first and foremost, we're enormous believers in the power of this technology. I think our view is it is unlikely that we will see another technology in our lifetimes that's this powerful.

It's for those of you that are using it all the time, I'm sure you feel similarly. It's just absolutely unbelievable. And the quality of technology exists today is so far in front of what virtually any company is actually already implementing. And so there's a long roadmap in front of us to catch up to the horizon where that technology is. And the speed at which it's improving is pretty unbelievable.

And I think there's clear visibility it's going to keep improving. And I think the number of applications are hard to imagine today, but there are undoubtedly many. So we think that's extremely exciting. I think the foundation of Carvana was the belief that by reimagining customer experience using modern technology, we could give customers an experience they loved. And I think a new technology revolution is an opportunity to continue to do that.

And so I think we're very excited by that. I think our business has a number of unique advantages that put us in a position to leverage these technologies in a more fulsome way than many of our competitors are likely to be able to. One that's very obvious is scale. We've now sold over 4,000,000 cars or excuse me bought and sold over 4,000,000 cars. That's a lot of transactions that we're able to learn from and we have very deep data on every one of those transactions because of the fact that we're vertically integrated and capturing all those clicks throughout the entire process.

Our business is built around making customer experience is simple and that means that the whole process is deterministic. There's not negotiation in between and that makes all the calculations easier and something that can be done ahead of time as long as your data is well organized, which makes the power of any of these AI agents greater or AI applications greater. We're vertically integrated, which means that the entirety of the transaction that to a customer feels like one thing. When a customer buys a car, they feel like they're doing one thing. When we think about it from a business perspective, oftentimes, there's a number of horizontal businesses stacked on top of each other that are providing that single experience, but that creates friction to fully implementing the most optimal technological solutions that are available.

We're vertically integrated. We think it means that we can give customers a simpler experience and we think that's accentuated by these stronger technologies. And then I think importantly, we have a tech centric team that pays attention to this and is really invested and believes. And so you can see kind of our first and currently most developed application is Sebastian, which is our chatbot online. I think that that represents the brain that we're building and it's us skin on top of that brain.

But there is opportunity for us to put that throughout the entirety of the customer experience and I think we plan to be very aggressive there. So that's something we're certainly excited about.

The next question comes from Sharon Zackfia with William Blair. Please go ahead.

Hi, good afternoon. Congratulations on a good 2024.

Sharon, is that the first time you've done that?

And it was a full year. That means a lot, Sharon. Thank you. Would you do us a favor and let the stock market know?

I won't ask you to define significant growth in 2025, so I'll let you pass on that. I do have a question on kind of GPU. Obviously, very impressive numbers in 2024 at 7,200. From here, kind of what are the pushes and pulls on GPU or should we really expect kind of leverage on that Carvana operations part of SG and A to really be the driver of margin from here?

So I think, our general view is that there are still meaningful fundamental gains to be had throughout the transaction. And I think, to define that again, that's kind of generally speaking, we're talking about kind of variable functions there. So those are variable costs, which would be the operations expense or it would be the different GPU line items. I think every one of those line items, we've got plans that we're pretty excited about that we think will drive additional fundamental gains. Now I think when you get those fundamental gains, you have to decide what to do.

And I think if you look at where our financial model is today, it's obviously in a very good spot. 10.1% EBITDA margin for the year is extremely exciting. And then I think even if you just take that and apply reasonable leverage expectations over the next several years to just overhead expense, I think the path to the high end of our long term financial model, which was 8% to 13.5% EBITDA margin, I think becomes very straightforward. And so I think we feel like we can see that very clearly. We're obviously paying attention to as we get these gains, what's best for the long term?

Is it best to share those with our customers and benefit in conversions? Is it best for us to use those dollars and invest in additional foundational capabilities that make our experience even better for our customers and further differentiate us and further vertically integrate us? Or is it best to have it show up in the bottom line? And I think that we're going to continue to march down the path of trying to unlock those gains. And then we'll try to make intelligent decisions as we go about where those gains go.

But we do expect the majority of those from here to be passed on to customers. And we'll update you along the way as that changes, but certainly something that we're excited about. I think you called out our operations expense back down to 1,700 in the fourth quarter where we're building capacity for tax season. I think we're extremely excited about that number. We called out in the shoulder letter, we're around $1,400 to provide all the core functions of getting a car to a customer, managing the return policy, finance verifications, delivery.

The machine really is getting very efficient and then the 300 delta give or take is our expected warranty expense. But I think we're excited where the machine is and we think we can make it more efficient from here and we just got to keep to work.

Thanks for that. And then I noted in your shareholder letter that delivery times were down more than 20% last year. Is there any way to kind of quantify what a faster delivery time means to you in conversion?

Forgive us, I think we'll stay away from quantifying that, but we do think it matters to conversion and we think it's material. And I think that that's another example of a team that's done a great job. And I think excitingly a team that has a lot of room left. I think we've talked a bit about rolling out our same day delivery capabilities that remain in its very early stages. That's an incredibly complex capability to scale.

We've rolled it out to a number of markets. But so far, we haven't staffed for maximizing the number of customers that can get that benefit. We've more leaned into having that be more of an efficiency benefit where we can fill in any underutilized slots. I think there's certainly the opportunity for us to lean into that further. There's a number of kind of technology enhancements that we can lean into to make same day delivery available to a larger portion of the credit spectrum.

And then we're working hard to make sure that we can always add more cars to kind of be available there. And then really that's kind of all framed in same day, but the same is true of kind of next day, two day, three day deliveries. And all of those kind of faster deliveries, we're just kind of shifting volume into those quicker deliveries. And we've got, I think long term plans to keep shifting into those faster deliveries. That includes efficiency and logistics and then it also includes kind of all these integrations with these ADESA mega sites to get cars closer to customers and reduce miles.

So I think that's also a long roadmap, but I think it's a roadmap that we believe will enable us to continue to materially reduce delivery time over time.

The next question comes from Chris Bottiglieri with BNP Paribas. Please go ahead.

Hey, guys. Thanks for taking the question. One overarching question and one kind of clarification. But the overarching, hoping you give us a sense for like what the go forward strategy is on loan sales. It looks like the fixed loan sales stepped up to $700,000,000 this quarter and the non ABS kind of fell off this quarter.

So I want to get a sense for like how do you think of this moving forward? Do you prefer to do fixed loan sales? Do you prefer ABS? Like what does that world look like? And are there any liquidity challenges today like in the market itself that maybe temporarily pauses that?

And then the follow-up was just the $9,000,000 looks like there was a one time item in other SG and A. It looks like you didn't adjust it out to add it back to EBITDA. Just hoping you could elaborate on that. Thank you.

Yes, sure. I can take both of those. So I think we've had a very strong year for the finance platform, delivered very robust other GPU throughout the year, especially the latter three quarters of the year. I think we feel great about that. From a loan monetization perspective, we expect to continue to use a diversified funding strategy.

I think that's been our strategy since very early on at Carvana, was to use multiple channels for loan sales, a combination of whole loan sales and securitization market transactions, and to maintain sort of those diversified funding sources. I think that's our expectation going forward. I think we feel really great about the way that the finance platform is performing today. I think we're seeing very strong results and strong demand for our loans. And so I think, yes, I think business as usual is the name of the game there.

Feel great about the way things are going and expect to keep executing the same strategy. I think on your question about SG and A expense and the non recurring items, the I guess a couple of things to call out there. One, we did do this thank you bonus in Q4. '20 '20 '4 was a truly special year for Carvana, and we want to say thank you to employees across the company. And so we did a thank you bonus in Q4.

In total, it was just shy of $9,000,000 across the company as a whole. Now that did not all go to overhead expense. Only a fraction of that went to overhead expense, but it did get spread out across cost of sales, operations expense as well as overhead expense. But the overhead expense portion was one of the small non recurring items. There were a few others as well that added up to that $9,000,000 but that just gives you a sense.

And then in terms of backing it out of adjusted EBITDA, we have not historically backed out sort of small miscellaneous non recurring items out of adjusted EBITDA.

Okay. Makes sense. Thanks. Appreciate it.

The next question comes from Danielle Rahigian with Morgan Stanley. Please go ahead.

Thank you. Mark, you mentioned your goal in achieving a strong credit rating. How are conversations going with the credit rating agencies to help improve from current levels? What do you feel is important to demonstrate in terms of leverage, consistency of free cash flow or something else?

Sure. Yes. So, I mean, I think our view is the most important thing that we can deliver from a credit perspective is very strong metrics. And I think we did that overwhelmingly so in 2024. And then obviously expect significant growth in retail units sold and significant growth in adjusted EBITDA looking to 2025 as well.

I think some of the metrics that we're focused on, our net debt to adjusted EBITDA is all the way down to 2.8 times. I think that's a strong ratio. We think there's lots of room to improve on that over time. But I think that's a meaningful reflects a meaningful improvement from where we were one or two years ago. Similarly, our interest coverage now above two times.

I think there's lots of room to improve on that as well. And that is our intent. And so I think the most important thing we can do is deliver on metrics. And I think the ratings will take care of themselves over time.

Thank you. And then you've also mentioned reconditioning capacity for 1,000,000 units. Shareholder letter said real estate capacity for 3,000,000 units. What are the biggest gating factors near term limiting potential growth in units? Is it rooftops, physical labor, logistics rate combination?

I think it's the entire operational chain. But I think what we've called out in the past is being the kind of most operationally intensive part of that chain is reconditioning. And historically, that included acquiring real estate, doing the CapEx to get that real estate ready, hiring, training and then executing. And I think given where we are today and given the real estate footprint that we have, we can scale to about three times our current scale with just hiring, training and executing. And then I think we can get to about eight times our current capacity with the opening of these mega sites CapEx, hiring and executing, hiring, training and executing.

And so I think it's a simpler path than it was in the past. I think there are obviously other parts of the business that are very complex as well, logistics, last mile delivery, customer care, verifications, title registration. But those are areas that I think we've made a tremendous amount of progress in. I think we've built system to be scalable. I think we've demonstrated that we can scale it.

And so we feel like our job is to just keep executing and the rest will take care of itself.

The next question comes from Michael Montani with Evercore ISI. Please go ahead.

Yes. Hi. Thanks for taking the question. Just wanted to ask, first off, when you look at the number of markets that you all are in, I think it was pretty steady at three sixteen. Just wanted to think about the potential cadence to expand across the country effectively for the remaining markets.

Is that kind of a multiyear journey or could you do that in the next year or two? And then I had a follow-up.

Sure. So I would say, at this point, we're in the contiguous 48 states. We're delivering to the vast majority of the country. And I think that the most important things that we can do from here are continue to improve our delivery speed and continue to grow our inventory and kind of grow selection as it relates to kind of giving more people more options. And then I think from there it's just continuing to see all the business.

I think most of our growth story from here will be about taking market share in all these markets. Historically for those of you that have been around for a long time, we shared our cohorts that we had in all of our different markets. I think in Q4, we got back just shy, I think a couple thousand units shy of our peak unit volume in 'twenty two. And I think we're back to a place where those cohorts clearly light the path to significantly more scale and are back on the path to growing very quickly. They're generally speaking showing all the same patterns that they showed back then and kind of at similar places where they were back then in terms of market share.

So I think it's at this point, it's more about just continually improving the offering, giving customers more selection, executing really well and taking market share and we think that that lights the path to a much, much larger business.

Got it. And then just a follow-up on the earlier question related to GPU. I was just wondering if you could describe a little bit the operating environment now. Do you feel that there's any constraints in terms of the availability of inventory out there? What do you see competitively?

Would you say fairly rational? How are you guys thinking about that for the remainder of this year? And then basically is there any benefit I guess to kind of pushing incremental units right now versus trying to kind of maximize profit in a constrained inventory backdrop?

So I mean, I think we try to take a long term view on these sorts of questions. And I think, generally speaking, the most important fundamental things about this market have been true for a long time. There's been about two two seventy million cars in the car park in The U. S. For a long time.

There's been about 40,000,000 transactions per year for a long time that can fluctuate 10% or 15%, but there's been about that many. Generally speaking, the supply is all there, right? Customers are effectively just trading cars with one another or other owners of those cars or are getting those cars to a customer. And we kind of exist inside of that machine. So we don't think that there's kind of a fundamental impact that we have on inventory.

We think it's about getting market share of kind of customer demand and then that leads to market share of supply very mechanically. I think that we also believe that the market has pretty stable profits. I think if you look at the various public automotive retailers out there today, generally speaking, their EBITDA margins, for example, are still a touch above where they were in 2019, but they're getting very similar that they're in a similar spot to where they were in 2019. And our best guess is that they'll probably hang out about that level. I think there are deep structural reasons why that's about the profitability of these businesses.

And we think that that's great news because it just provides more of a proof point and ballast that these are the economics of the business. And then I think you didn't ask this question, but I think we oftentimes get a similar question about financing, how will we be able to scale And I think the same thing is true of financing. We exist in a mature market. The various finance providers are out there providing loans to customers through different channels. If you have the customer demand market share, then there is demand to make loans.

And we are not creating new demand. We are simply kind of displacing those that were previously providing those loans to loan buyers. So I think to us this is it's the advantage of being in a very large, very mature market. You have very clear visibility what the unit economics are. You know the fundamentals of the business and then your job becomes just make sure that you're delivering experience the customer loves, the customers love that you're taking market share and that you execute well.

And I think that that remains the name of the game for us and that's the path that we're on.

The next question comes from Rajat Gupta with JPMorgan. Please go ahead.

Great. Thanks for taking the question. I just had one first one on the fourth quarter retail GDU. It was in line with the guidance or commentary you provided. I was curious if you could elaborate a bit more on the sequential move.

How much was it driven by just the pickup in the commercial retail marketplace? And just how much influence that might have had on that number? Or was it just the core business that had the typical seasonal or the non marketplace business that had the typical seasonal drop off? And had a quick follow-up on the guide? Thanks.

Sure. Yes, I'll hit that one. You hit it the I think our retail GPU in Q4 came in exactly in line with our expectations and our outlook. I think the sequential move from Q3 to Q4 in retail GPU is nearly exactly what we saw on average in the pre COVID years. Obviously, it can bounce around from year to year, but if you just kind of look at an average across multiple years, it's right in line with those historical averages.

So I think that and that indeed informed our outlook to a degree. So I think we saw what for us has been typical seasonality in Q4. On a year over year basis, I think we had some good wins. In particular, we did see reconditioning and inbound transport costs come down on a year over year basis as a result of those operational efficiency initiatives that we've been so focused on.

But nothing tied to the commercial marketplace ramp that would have influenced the number from 3Q to 4Q or was it not material enough to call

Carvana (CVNA) Q4 2024 Earnings Call Transcript

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