Online used-car retailer Carvana Co. continued investing in its rapid growth in the first quarter, resulting in higher revenue and a larger loss.
The Phoenix company’s net loss widened to $52.7 million from $38.4 million a year earlier, even as revenue more than doubled to $360.4 million, the retailer said in a letter to shareholders released after markets closed Wednesday.
“We believe that underlying demand is growing even faster than we can currently convert into unit sales,” CEO Ernie Garcia said in the letter. “Accordingly, we are focused on relieving the pinch points in our operations that have emerged over the last several months due to rapid growth in order to satisfy this demand.”
Sales: Carvana’s retail sales more than doubled to 18,464 vehicles from a year earlier.
Records: Vehicle sales and revenue were records. Gross profit more than tripled to a record $34.2 million. In addition, total gross profit per vehicle, including retail and wholesale, more than doubled to a first-quarter record of $1,854. The company’s launch of 12 new markets was also a quarterly record, bringing the total number of markets to 56 as of March 31.
Funding: The company also closed a follow-on public offering of its Class A common stock on April 30, generating proceeds to Carvana of $173.3 million. “We believe these proceeds provide additional cushion and flexibility as we execute our operating plan,” Garcia said.
Carvana also said it was opening a car vending machine in Charlotte, N.C., the second of its kind in the state and its ninth in the U.S. The company said the coin-operated machine is eight stories high and fully automated, allowing customers a unique way to pick up the vehicles they purchase online. About half of Carvana’s customers in markets with a vending machine opt for pickup over delivery, which saves the company on logistics costs.
“We have opened 18 new markets already in 2018,” Garcia said, bringing market coverage to 46 percent of the U.S. population, “and are on track to serve 57 percent of the U.S. population by the end of the year.”