Good morning. I first talked with Mark Jenkins, CFO of online car dealer Carvana in July about the company’s turnaround strategy of which the final step was a return to profitable growth. On Thursday, we had a chat about the company’s Q4 2024 and full-year results.
In Q4, Carvana earned a record net income of $159 million, a turnaround from a loss of $200 million in Q4 2023, the company reported on Wednesday. (In 2024, Carvana’s stock price was up almost 300%.)
“The number of cars sold in 2024 was up 33%, and then 50% year over year in Q4, so I think that the plan of ending with return to growth, and profitable growth, was a great success,” Jenkins told me.
Carvana, No. 377 in the Fortune 500, earned annual revenue of $13.67 billion in 2024, up 27% year over year. For Q4, revenue reached $3.55 billion, up 46%, year over year. And for the quarter, it had a record adjusted EBITDA of $359 million, above analysts’ $330 million estimate. The company’s earnings report beat analyst expectations in almost all metrics.
The e-commerce platform for buying and selling cars, which had a meteoric rise, landed on the Fortune 500 list for the first time in 2021. It was positioned for big growth in 2022, but then interest rates began rising along with car prices. CVNA plummeted to an all-time low of $3.55 on Dec. 7, 2022.
‘The growth story is not over’
Carvana said in its guidance it expects “significant growth” in both retail units sold and adjusted EBITDA for full-year 2025, including a sequential increase in both retail units sold and adjusted EBITDA in Q1 2025, “assuming the environment remains stable.”
But a lack of specific guidance for 2025 rattled Wall Street analysts.
"CVNA reported 4Q24 results that beat sell-side consensus expectations on the top and bottom lines, but fell short of buy-side expectations on key metrics including retail GPU and adjusted EBITDA,” Wedbush Securities analysts wrote in a note on Thursday. “At the same time, CVNA issued vague guidance."
However, the Wedbush analysts also noted: "While CVNA shares will sell off this morning, the growth story is not over." Carvana’s stock price fell about 12% on Thursday to $247.72.
Despite some reservations about operational limitations, Wedbush raised its 2025 retail growth estimate to 27% (from 20%) in line with incremental unit growth in 2024 and gave Carvana a neutral rating.
I asked Jenkins for his perspective on the market’s reaction. “We're very excited about the results we delivered in Q4 and about our outlook for 2025,” he responded.
The company is focused on three big goals for 2025, Jenkins said. The first one is driving significant growth in both retail units sold and adjusted EBITDA and other profitability metrics, he explained. Secondly, the company will stay focused on driving fundamental gains in unit economics and customer experience, he said.
“In 2025, we want to maintain that operating intensity and that push for continuous improvement that really drove us from 2022 through 2024,” Jenkins said.
The other big area the company is focused on this year is developing its foundational capabilities for the long term. “That includes expanding ADESA Clear, our digital wholesale auction platform,” he said.
Does Jenkins have any advice on maintaining a strategic plan? “Constantly check in on how you're executing relative to the plan that you set out, on a day-to-day or week-to-week basis, and then adjust anything that’s needed,” he said.
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
