Carvana scales its auto purchasing amid triple digit Q3 growth, partners with Lyft
Carvana said it is scaling its used auto marketplace as purchased 32,000 vehicles and sold 46,413 as revenue in the third quarter checked in at $1.09 billion, up 105% from a year ago.
That revenue was the 23rd consecutive quarter with triple digit growth rates. The company reported an adjusted third quarter loss of 56 cents a share and 78 cents a share under general accepted accounting principles.
Wall Street was looking for Carvana to report third quarter revenue of $1.01 billion with a non-GAAP loss of 40 cents a share.
Carvana CEO Ernie Garcia on data science, technology investment and disrupting an industry
Carvana said it will deliver 2019 revenue of $3.85 billion to $3.95 billion with retail unit sales of 174,000 to 176,000. Adjusted gross profit per unit will be $2,825 to $2,875. For 2019, Wall Street was expecting Carvana to report revenue of $3.77 billion.
In a shareholder letter, CEO Ernie Garcia and CFO Mark Jenkins said they would invest to smooth out the business model and buy more cars. To that end, Lyft is launching a new pilot of its Ditch Your Car program in partnership with Carvana. Lyft is prodding city dwellers to sell their personal cars on Carvana's platform in Los Angeles, San Francisco and Chicago. Lyft is giving car sellers $250 of Lyft credit and three months of free membership to Lyft Pink. The Lyft pilot may give Carvana more car purchasing throughput.
Garcia and Jenkins said:
The 249% growth in Q3 led to purchasing over 32k vehicles from customers which equates to 69% as many cars as we sold to customers, up from 37% in Q3 2018. We are also increasingly sourcing our retail cars from customers. In the third quarter, we sourced 31% of our retail units sold from customers, up from 17% in the second quarter, and 7% two years ago.
This exceptional progress in buying cars from customers is significant in two important ways. The first is that it fundamentally strengthens our platform. Used car sales are simply customers swapping cars with one another through the elaborate mechanism of all of the institutions associated with automotive retail. As we build and integrate more elements of that system, we can create efficiencies and deliver a continually improving customer experience through a more robust platform that also has better unit economics.