On July 19, used-car retailing giant Carvana released its second-quarter earnings and announced an agreement to reduce the company’s total debt by over $1.2 billion.
In a statement, Carvana said the agreement will “eliminate more than 83% of Carvana’s 2025 and 2027 unsecured note maturities and lower required cash interest expense by over $430 million per year for the next two years.”
In a separate public filing on Wednesday, Carvana revealed its plans to raise capital and restructure operations by selling up to $1 billion in shares.
This strategy “significantly increases our financial flexibility by reducing our total debt, extending maturities, and lowering near-term cash interest expense as we continue to execute our plan of driving significant profitability and returning to growth,” said Mark Jenkins, Carvana’s Chief Financial Officer.
Q2 Earnings Highlights
Despite a decline in revenue from this time last year, the company demonstrated notable progress in its financial performance. The company revealed a net loss of $105 million in the most recent reporting period, equivalent to $0.55 per share. This represents a significant improvement compared to the net loss of $439 million, or $2.35 per share, recorded during the same period last year.
Investors might be particularly interested in the company’s total gross profit per unit (GPU), a key metric closely monitored to measure profitability. During the second quarter, the company achieved a remarkable GPU of $6,520, marking a substantial 94% increase compared to the previous year. This outstanding performance exceeded expectations and surpassed the company’s previous best quarter by an impressive 27%.
Retail units sold: 76,530
Revenue: $2.97 billion
Loss per share: $0.55
Total gross profit per unit: $6,520
Elaborating on these results, Ernie Garcia, Carvana’s Founder and Chief Executive Officer, said in a statement, “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.”