Carvana, the online car retailer, reported a narrower loss in the second quarter as revenue decreased but still surpassed analyst expectations. The company’s shares surged in premarket trading following the announcement.
Financial Performance
Carvana’s loss for the quarter stood at $58 million, or 55 cents per share, compared to $238 million, or $2.35 per share, in the same quarter last year. Analysts surveyed by FactSet had projected a loss of $1.20 per share.
While revenue dropped from $3.88 billion to $2.97 billion year-over-year, it exceeded analyst projections of $2.6 billion.
Increased Gross Profit and Decreased Net Loss
Carvana reported a substantial increase in total gross profit per unit, up 94% from the previous year. This was largely driven by approximately $900 per unit of non-recurring items. The company also achieved a significant decrease in net loss margin, reducing it to 3.5% from 11.3% in the same quarter last year and 11% in Q1 2021.
Debt Restructuring Agreement
In addition to its financial results, Carvana announced that it has reached an agreement with noteholders to reduce over 83% of its 2025 and 2027 unsecured note maturities. This deal will also result in a reduction of more than $430 million in annual required cash interest expense for the next two years.
Market Reaction
Following these positive developments, Carvana’s shares surged 34% in premarket trading, reaching $53.50.
