Carvana Co.

Good afternoon and welcome to the Carvana first quarter 2021 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Mike Levin, Vice President, Investor Relations. Please go ahead.

Thank you, Gary. Good afternoon, ladies and gentlemen, and thank you for joining us on Carvana's first quarter 2021 earnings conference call. Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website at investors.carvana.com. The first quarter shareholder letter is also posted on the 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 meaning of the 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 that differ from forward-looking statements can be found in the risk factors section of Carvana's most recent Form 10-K and Form 10-Q. 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. Unless otherwise noted on today's call, all comparisons are on a year-over-year basis. Our commentary today will include non-GAAP financial measures, reconciliations between GAAP and non-GAAP metrics, where our reporter results can be found in our shareholder letter issued today, a copy of which can be found on our investor relations website. And now, with that said, I'd like to turn the call over to Ernie Garcia.

Ernie? Thanks Mike, and thanks everyone for joining the call. The first quarter was another great quarter across the board. In our shareholder letters, we always lay out our financial priorities of rapidly scaling the business, of growing GPU, and of demonstrating operating leverage. In the first quarter, we made tremendous progress across each of these priorities. We grew units and revenue by 76% and 104% respectively. We grew GPU by over $1,000 year-over-year and almost $300 quarter-over-quarter. And we levered EBITDA margin by over 10% year-over-year and 2.5% quarter-over-quarter. Even more impressively, these results were achieved despite meaningful operational constraints across the business and the significant investments we've been making to alleviate them. In the first quarter, our average weekly production was up 26% versus the fourth quarter. As a result of the relatively low inventory levels we are carrying throughout the quarter, unit volumes closely track production up 28% sequentially. Importantly, the investments we have made in ramping up our ops capacity in general and our inspection center capacity in particular are starting to pay off. As a result of ongoing focus, weekly production levels have been up closer to 50% above the fourth quarter more recently, which positions us well to begin growing inventory and increasing selection for our customers again for the first time since the pandemic struck over a year ago. Getting this point is the result of a lot of careful planning and hard work across our real estate, inspection center, logistics, market ops, and advocate teams, who have all put in tremendous efforts to catch up to demand and to fight off the pandemic-driven ops constraints of the last year. Great job, and thank you to those teams. These efforts and the ongoing execution of our plan have positioned us well for a great 2021 and 2022, and the foundation is continuing to be laid to enable us to continue scaling rapidly in the years beyond. Eight years ago, we had a dream to change the way people buy cars, and we've made a lot of progress. When we look back at what got us here, it is just a list of simple ideas that are easy to say and very hard to actually put into action. It all started by imagining a new way to buy a car that was better for our customers in every important way. The excitement of that dream enabled us to attract incredible people who made our dream their own. From there, it has just been ambition, hard work, perseverance, and constant learning. And with a critical mass of enthusiastic, customer-focused, ambitious people, we've built a self-reinforcing culture. Those simple ideas have taken us a long way. In 2013, our first year, we had $4 million of revenue. Today, we're over 1,000 times larger. Looking forward, we're just as excited as we were then. We are delivering to customers the best experiences available when buying or selling a car. The quality of the unit economics that emerge from the investments we have made over time are showing up in our results. The scalability of our model is apparent, and our business gets better as it gets bigger. And we're still dreaming. The ambition that underlies our dreams burns as brightly today as it did at the beginning, and with every step we take, we can see further down the field. While we're extremely proud of what we've built and the team that got us here, we're nowhere near where we ultimately want to be in either scale or scope. We're still at the beginning. To get from where we are to where we want to be, we'll maintain our customer focus. We'll keep surrounding ourselves with exceptional people. We'll remain ambitious. We'll stay disciplined in prioritizing our efforts. We'll keep working a little harder than those around us, and we'll have fun along the way. In short, we'll traverse the path in front of us the same way we have traversed the path behind us. We know what to do. We just have to keep doing it.