Carvana Co.

Good day and welcome to the Carvana third quarter 2024 earnings 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 touch-tone phone. To withdraw your question, please press star and then two. Also, please limit yourself to one question and one follow-up. Requeue to ask additional questions. 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, Dave. Good afternoon, ladies and gentlemen, and thank you for joining us on Carvana's third 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 third quarter shareholder letter is also posted on the IR website. Additionally, we post a set of supplemental financial tables for Q3, 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 within the meanings 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 Forms 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 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, 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 third quarter was another exceptional quarter for Carvana. We had record performance in virtually every key financial measure. Our net income in the third quarter was $148 million. Our operating income was $337 million. And our adjusted EBITDA was $429 million for an adjusted EBITDA margin of 11.7%. Excitingly, when putting those numbers into broader context, in the third quarter, we also broke last quarter's record for the most profitable quarter among automotive public retailers ever. And this is being achieved in what most are describing as a challenging environment in the industry. Over the last 11 years and $10 billion, we laid the foundations of a highly differentiated model that delivers highly differentiated customer experiences at scale. Over the last two and a half years, we have learned hard-fought lessons that led to rapidly driving operational and financial efficiencies across the business. And over the last nine months, we have paired our highly differentiated customer experiences and highly differentiated financial model to simultaneously become the fastest-growing and most profitable automotive retailer. A simple way to think about this is the gap between Carvana and our competitors in growth and financial performance is equal to the gap between Carvana and our competitors in customer experience and business model quality. If you take a moment to reflect on that framework, what does it imply for our ultimate market share? We find our answer to that question to be very exciting, especially because we aren't done digging our moat. We continue to see significant opportunities for further improvement in every part of the business. With the creativity and ambition of our team, we don't expect this to end anytime soon. In addition, we have already invested in and built the most difficult to obtain and expensive infrastructure required to enable scaling. And that infrastructure unlocks efficient growth to a significant multiple of our current size. We currently have built out reconditioning infrastructure to support over 1 million retail units per year. Beyond that, we have enough physical real estate to support over 3 million retail units per year. And our path to unlocking it is being illuminated as we have built and executed our integration playbook at five of the 56 ADESA sites already. Underscoring the value of these investments, as well as the efficiency of our operations, completing each of these integrations required minimal capex and approximately 90 days of lead time. In the past, building reconditioning centers was generally a one- to three-year process requiring significant capex. Continuing this rollout over time will drive positive feedback in our business by reconditioning more cars closer to our customers. This will improve unit economics through more efficient access to large pools of inventory, as well as lower inbound and outbound shipping distances and costs, and will provide customer experiences that are even better through greater selection and faster delivery. All of this is happening in the context of an industry with 40 million used vehicle transactions per year. The opportunity is very big and largely untapped. As a 1% market shareholder, the opportunity in front of us is still 99% as large as it was on day one. Accordingly, we are continuing to apply day one intensity to tackling our opportunity. Building Carvana was always going to be hard. Our business is complex, demands many different functional capabilities, and is capital intensive. Doing hard and valuable things is the ultimate competitive mode, and we have done many hard things over the last 11 years. As a result, we are in a stronger competitive position than we have ever been. From here, the degree of our success will be driven by our ability to maintain our intensity, our ambition, and our focus, and will be governed by the quality of our execution. These are all things we are in control of, and that's an exciting place to be. We are energized and remain firmly on the path to buying and selling millions of cars, to becoming the largest, most profitable automotive retailer, and to fulfilling our mission of changing the way people buy and sell cars. The march continues. Mark?