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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Another stock that I feel like if we had thought

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Speaker 2: this was going to happen, we would have been surprised.

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Speaker 2: A couple of days ago, is Carvana Yeah up, whopping

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Speaker 2: multi dig to percent.

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Speaker 1: This is an amazing turnaround.

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Speaker 3: I mean, remember, there are a lot of people that

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Speaker 3: really left this company for dead just about a year ago,

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Speaker 3: and they've really bounced back both in terms of their

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Speaker 3: revenue growth and I guess they're improving as well on

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Speaker 3: the bottom line too.

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Speaker 1: So it'd be interesting to see whether they can continue that.

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Speaker 2: Yeah, sales profit way above what the street was calling for.

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Speaker 2: Apparently they saw about sixteen percent rise and cars sold.

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Speaker 2: The profit beat had a seventy five million dollar gain

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Speaker 2: on the value of warrants that Carvana holds ensure roots

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Speaker 2: that was part of it. Joining us now. Is Ernie Garcia,

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Speaker 2: founder and CEO of Carvana. So many questions. Great to

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Speaker 2: have you, Thanks for.

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Speaker 4: Joining, Great to be here. Thanks.

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Speaker 2: What do I learn from your numbers? Is it a

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Speaker 2: macro read on where the US economy is or is

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Speaker 2: it an operational read on what you guys did at Caravana?

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Speaker 4: I think it's it's the latter. I think our team

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Speaker 4: has done an incredible job last couple of years. As

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Speaker 4: you said, we had, you know, twenty two and twenty

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Speaker 4: three were pretty tough for us after an incredible run

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Speaker 4: from twenty thirteen through twenty twenty one. We were growing

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Speaker 4: very fast and customers were migrating more and more to

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Speaker 4: online purchasing of cars. When we went through that period,

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Speaker 4: I think the team came together, we responded incredibly well,

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Speaker 4: and I think this quarter is, you know, undoubtedly the

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Speaker 4: best quarter we've had in our history. It's the result

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Speaker 4: of a ton of hard work.

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Speaker 1: It's the result.

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Speaker 4: Of the team coming together and doing an awesome job.

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Speaker 4: So to all of you out there, thank you very much.

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Speaker 4: Great job.

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Speaker 2: When we take a look at some of your private margins,

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Speaker 2: I mean it looks like you're making like, what three

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Speaker 2: thousand plus for a car. This is so much more

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Speaker 2: ahead of your competition. How do you do that? And

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Speaker 2: how do you keep growing that? And is that sustainable?

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Speaker 4: Sure?

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Speaker 1: Well, you know, let me start with this.

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Speaker 4: I think you know what we're most proud of is

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Speaker 4: when we set out to try to build carbon and

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Speaker 4: we wanted to give customers the best deal we possibly

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Speaker 4: could want to give a better deal in the competition.

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Speaker 4: We wanted to give them an experience, it was simpler,

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Speaker 4: a broader selection, and we wanted to build a business

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Speaker 4: model that could ultimately have higher returns in the regional

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Speaker 4: business models you know had had, and that's very difficult

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Speaker 4: to do. The only way you can do all those

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Speaker 4: things it wants us to build a completely different business

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Speaker 4: and so you know, we've built a transaction flow where

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Speaker 4: customers can go through on their own, they can get

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Speaker 4: a proof for financing, they can select the car that

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Speaker 4: can take seconds there and control the entire thing. And

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Speaker 4: then we've built an entirely new supply channel underneath it

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Speaker 4: with reconditioning centers and logistics that allows us to give

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Speaker 4: customers access to a nationwide inventory and ship cars around

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Speaker 4: the country. And the economics of it are is very different.

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Speaker 4: There were a lot of fixed costs in building that system,

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Speaker 4: but the variable costs are much lower. And then we're

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Speaker 4: monetizing it more completely by being more vertically integrated. So

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Speaker 4: it allows us to check all those boxes and hopefully

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Speaker 4: we keep doing the same.

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Speaker 3: There was a lot of discussion, i mean, prior to

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Speaker 3: this year about the debt load Ernie I know that

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Speaker 3: at least that's stabilized. Do you anticipate that we could

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Speaker 3: see a reduction on the balance sheet this year, a

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Speaker 3: significant reduction?

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Speaker 4: Yeah? So, I think you know, we made saving yesterday

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Speaker 4: in our earnings call that we plan to pay cash

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Speaker 4: interest on our bonds over time. We do plan to

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Speaker 4: d level over time, and I think all that's enabled

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Speaker 4: by the incredible progress we've made. You know, we were

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Speaker 4: extremely proud to report two hundred and thirty five million

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Speaker 4: dollars Viva don Q one. You annualize that that's about

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Speaker 4: a billion dollars a year, and we're one percent of

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Speaker 4: the market. So we clearly are sitting in front of

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Speaker 4: a huge, huge opportunity, and it's our team's job dex

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Speaker 4: q really well into that opportunity. I think we're going

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Speaker 4: to have pretty great things in front of us if

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Speaker 4: we do.

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Speaker 1: As part of that opportunity.

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Speaker 3: Are you able to acquire cars at a more reasonable

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Speaker 3: or I should say a more favorable price than maybe in

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Speaker 3: the year pass?

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Speaker 1: Sure?

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Speaker 4: So, I think you know, part of our business is

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Speaker 4: buying cars from our customers. So customers can go to

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Speaker 4: our website, we'll give them a value online and in

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Speaker 4: minutes and we can come pick up the car from

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Speaker 4: them as soon as the same day, or they can

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Speaker 4: come drop it off to us. That's the way we

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Speaker 4: get the majority of our cars. That's an experience that

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Speaker 4: customers love then get paid quickly. It's an experience that

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Speaker 4: we're well positioned to provide because we have that underlying

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Speaker 4: logistics network that allows us to buy cars from them

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Speaker 4: and then shift them to wherever they're most valuable. There

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Speaker 4: are oftentimes differences in car values around the country, so

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Speaker 4: we can you know, buy them wherever they are and

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Speaker 4: then sell them into places where they're more valuable in

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Speaker 4: that world out great for our customers that are selling

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Speaker 4: cars because they get a great value, and also great

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Speaker 4: for our customers that are buying cars because they have

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Speaker 4: access to such supply.

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Speaker 3: Is there any sort of trend line that you've seen

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Speaker 3: in terms of the types of cars that people are

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Speaker 3: gravitating to right now?

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Speaker 4: I think it's first order. You know, the most interesting

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Speaker 4: storyline there is probably what's going on with evs, and

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Speaker 4: I think, you know, the ev market generally looks a

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Speaker 4: lot like the used market, but it trails and so

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Speaker 4: you know, last year EV's were around one percent of

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Speaker 4: used car sales. They are around seven and a half percent,

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Speaker 4: give or take of new car sales this year. They're

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Speaker 4: starting to ramp up, and they're they're you know, heading

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Speaker 4: in the direction of where new cars are. New cars

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Speaker 4: are also growing as well, so we've seen more demand there.

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Speaker 4: But I think in general, it's you know, customers have

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Speaker 4: been looking to save money as car prices went up

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Speaker 4: and as indust rates went up. So we've seen that

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Speaker 4: as a multi year trend. But nothing too notable be

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Speaker 4: on that are the.

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Speaker 2: High barring costs for cars at all, like or for

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Speaker 2: auto loans, affecting at all what people are buying and

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Speaker 2: what price point, et cetera.

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Speaker 4: Yeah, I mean I think, you know, car payments. Car

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Speaker 4: payments are basically the sum of the in straight environment

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Speaker 4: and the car price environment, and car prices are higher

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Speaker 4: than they were pre pandemic, and inustrates are also higher,

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Speaker 4: and so car payments for customers are higher even on

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Speaker 4: an inflation adjusted basis, they're probably between maybe five and

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Speaker 4: twenty percent higher than they were pre pandemic. So that

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Speaker 4: has people trying to save money, and we've seen people

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Speaker 4: trading down to cars that are a little bit older

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Speaker 4: with a little higher mileage. But then over the last

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Speaker 4: you know, two years, as we've seen depreciation, we've seen

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Speaker 4: customers start to migrate back in the direction that they

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Speaker 4: were prior. So our best guess is that probably continues.

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Speaker 4: But I think you know, people are trying to make

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Speaker 4: find a car that fits their life.

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Speaker 3: All right, Ernie, Well, this was certainly a phenomenal quarter,

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Speaker 3: and as you know, all eyes really right now in

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Speaker 3: this company and how you execute going forward. So a

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Speaker 3: lot of expectations for you to keep this up, and

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Speaker 3: we'll definitely check in with you over the next few

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Speaker 3: quarters or any Garcia, the founder and CEO over at a

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Speaker 3: car Vana