Carvana Co.

Good day and welcome to the Carvana second quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specially 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 questions, please press start and choose. Please note this event is being recorded. I would now like to turn the conference over to Meg Kehan, Investor Relations. Please go ahead.

Thank you, Brenda. Good afternoon, ladies and gentlemen, and thank you for joining us on Carvana's second quarter 2024 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 second quarter shareholder letter is also posted on the IR website. Additionally, we posted a set of supplemental financial tables for Q2, which can be found on the events and 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 with 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 to 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. Our commentary today will include non-GAAP financial metrics. Unless otherwise specified, all references to GPU and SG&A will be to 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, a 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. The second quarter was another landmark quarter for Carvana. In the first quarter of this year, we were both the fastest growing and most profitable public automotive retailer for the first time. In the second quarter, we did it again. And this time, we extended our separation in each category. Historically, when those two things are true at the same time, it bodes very well for an extremely successful future. We have every intention of working hard to validate that pattern. And in this case, a promising pattern is paired with tremendous room to run. We are a company with just a 1% market share in a trillion-dollar industry with highly fragmented competition and barriers to entry that have recently been proven to be extremely hard to overcome. Our position is unique, and it is important to remember why. We are in this position today because 10 years and $10 billion ago, we set out to build an entirely new way to buy and sell cars. We thought through everything from scratch, starting with what our customers wanted and then pairing that with what we believed was possible with new technology and new operations. We also discarded what others told us was impossible and all the reasons they provided us. We were stubborn and ambitious. I'm grateful for both. And I'm also grateful that we had no idea how hard it would be to get to this point. Being right about outcome and wrong about path may be the most productive combination there is. From here, we believe the outcome is clear and exciting, and we are weather-worn enough to know the pathway harder than we think, but we are still ambitious and stubborn enough to keep pushing and to never accept anything as good enough. We are a team of fighters, and we're going to keep fighting on the good days and on the hard days, just as we have in the past. As a result, our visibility into additional scale and further improvements in unit economics is also very clear. We are currently carrying the physical capacity and associated fixed expense of being built for approximately three times our current volume. In addition, through our ADESA acquisition, we have the real estate to handle vehicle reconditioning at a scale approximately eight times our current run rate. Importantly, we also have very clear plans and high confidence in achieving further fundamental gains across each area of variable cost and gross profit. In the last year, we improved in these areas to the tune of approximately $2,000 per unit. Given that we improved that much that fast, it is obvious that significant gains remain. Our team is using the same operational processes we have for the last two years and is currently working on a very clear set of well-defined, specific enhancements to each part of our offering that we believe have potential to materially impact the customer offering and the business as a whole. We will work hard to unlock them as quickly as we can, and we will do the same each year thereafter. As we unlock these gains over time, we anticipate passing more and more of the value we create back to our customers, further differentiating our offering and driving additional growth. The combined benefits of constantly improving customer experiences, incremental sales with our strong unit economics, additional fundamental gains, and the leverage that comes with filling in our footprint paint a clear picture of the company we aim to become, a company that is the largest and most profitable automotive retailer, and a company that achieves its mission of changing the way people buy and sell cars. Now we have to keep our heads down and keep doing the hard work that will turn this picture into reality. We are up to the challenge. The march continues. Mark.