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Carvana Co - $CVNA - Earnings Analysis: Record profitability achieved in 2024 with Adjusted EBITDA margin of 10.1%.

By sagebytes in Business —

Business Model

Carvana generates revenue primarily through online retail sales of used vehicles, wholesale vehicle sales, and other revenues including financing and ancillary products.

Revenue Sources

  • Retail vehicle sales
  • Wholesale vehicle sales and revenues
  • Other sales and revenues, including financing and ancillary products

Revenue Distribution by Channel

  • Retail vehicle sales accounted for 72% of total revenues in Q4 2024
  • Wholesale sales and revenues accounted for 19% of total revenues in Q4 2024
  • Other sales and revenues accounted for 9% of total revenues in Q4 2024

Income Statement Analysis

  • Revenue increased significantly due to higher retail vehicle unit sales.
  • Gross profit increased by 89.8% year-over-year.
  • Operating income improved from a loss of $38 million to income of $260 million.
  • Net income improved from a net loss of $200 million to net income of $159 million.

Balance Sheet Analysis

  • Improved balance sheet with increased cash and reduced liabilities.
  • Stockholders' equity turned positive, reflecting improved financial health.

Cash Flow Analysis

  • Strong operating cash flow indicating improved operational performance.
  • Investing cash flow decreased due to higher capital expenditures.
  • Financing activities shifted from cash outflow in FY 2023 to cash inflow in FY 2024.

Capital Allocation

Management is focused on deleveraging the balance sheet and investing in growth initiatives, including integrating additional ADESA sites. The company does not currently pay dividends or engage in share repurchases, preferring to reinvest profits into business growth.

Management Commentary

2024 will always be a defining year in the Carvana story.

We became the most profitable public automotive retailer in U.S. history as measured by adjusted EBITDA margin.

We returned to significant retail unit growth.

Overall Sentiment: Optimistic and confident about the company's growth and profitability prospects.

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.