Cazoo Announces Third Quarter 2023 Financial Results
- Significant improvement in gross margin to 6.5%, up 3.5 ppts YoY
- Retail GPU up 14% QoQ and 201% YoY to £1,470
- Strong cash position of £151 million at end of Q3 2023
- Company expects retail unit sales of around 8,500 in Q4 2023 and full-year retail sales of 40,000-42,000 units
- Average Retail GPU for 2023 expected to approach £1,250
- None.
New Record Retail GPU of
Significant improvement to Gross Margin
Cost reductions result in strong cash position
-
Q3 2023 Retail GPU up
14% versus Q2 2023 and up201% YoY -
Gross Margin improves to
6.5% , up 3.5 ppts YoY (Q3 2022:3.0% ) - On target reduction in fixed and variable costs, delivering forecasted savings
-
Strong cash position of
£151 million of cash and cash equivalents at end of period
(Photo: Business Wire)
Paul Whitehead, Chief Executive Officer of Cazoo, commented, “I am very pleased with our results in the third quarter of 2023 where we continued to build on our track record of delivering on our targets. Through our continued focus on unit economics, we maintained the quarter-on-quarter improvement in Retail GPU and reached a new record of
“Despite the challenging economic environment with increased interest rates and higher costs of living, our online value proposition continues to appeal to consumers as we sold 9,525 retail vehicles in Q3, and delivered further improvement in Retail GPU, which was up
“Looking ahead, we see further scope to sustain and grow our Retail GPU by targeting opportunities in increased ancillary products sales, optimizing our digital finance journey, improving inventory selection and turnover, and through increased efficiency in pricing, purchasing and logistics.
“During the quarter, we continued to reduce both fixed and variable costs in line with expectations, leading to lower cash utilization. Our cash position remains strong with
“We expect to incur further one-off costs related to the Transactions1 in the fourth quarter in addition to those already spent and as a result expect to finish the year with between
“Given the impact of higher interest rates and cost of living on consumer demand, we anticipate retail unit sales in Q4 2023 of around 8,500 with full-year retail sales at 40,000-42,000 units. We expect the average Retail GPU for the full year to be better than the previous guidance, approaching
____________________
1 The Company has entered into a transaction support agreement, dated September 20, 2023 (“Transaction Support Agreement”), with certain noteholders (the “Noteholders”) representing
Summary Results
|
Three months ended |
|
||||
|
September 30, 2023 (unaudited) |
June 30, 2023 (unaudited) |
March 31, 2023 (unaudited) |
|
September 30, 2022 (unaudited) |
Change YoY |
Vehicles Sold |
12,021 |
11,538 |
17,447 |
|
23,775 |
( |
Retail |
9,525 |
9,124 |
13,314 |
|
18,889 |
( |
Wholesale |
2,496 |
2,414 |
4,133 |
|
4,886 |
( |
Revenue (£m)1 |
173 |
171 |
247 |
|
347 |
( |
Retail (£m)1 |
157 |
155 |
222 |
|
296 |
( |
Wholesale (£m) |
15 |
15 |
21 |
|
34 |
( |
Other (£m)1 |
1 |
1 |
4 |
|
17 |
( |
Retail GPU (£)2 |
1,470 |
1,290 |
980 |
|
488 |
|
Gross Profit (£m) |
11 |
8 |
14 |
|
10 |
|
Gross Margin (%) |
|
|
|
|
|
3.5ppts |
Cash & cash equivalents3, £m |
151 |
195 |
215 |
|
|
|
Self-financed inventory, £m |
~35 |
~35 |
~60 |
|
|
|
1 Retail revenue comprises ancillary products, including financing and warranty. These amounts were previously included in “Other sales”. In 2023, “Other sales” comprises revenue from walk-in servicing, subscription services, third-party reconditioning and the provision of data services. The comparatives for 2022 have been restated for consistency. |
2 Retail GPU (Gross Profit per Unit) is derived from retail revenues divided by retail units sold (net of returns). |
3 The Q1 2023 balance excludes |
Third Quarter 2023 Financial and Strategic highlights
-
Revenue of
£173 million in line with expectations and our focus on unit economics - 9,525 retail units sold as our fully online proposition continues to resonate with consumers
-
Retail GPU up
14% QoQ and201% YoY to£1,470 (Q3 2022:£488) -
Gross profit of
£11 million (Q3 2022:£10 million ), on higher Retail GPU at a lower volume of units -
Gross margin of
6.5% , better by 3.5 ppts (Q3 2022:3.0% ) -
Ancillary revenue per retail unit sold at
£735 , up29% YoY (Q3 2022:£568 ; Q2 2023:£848) -
Finance attachment rate at
49.8% (Q3 2022:43.1% ; Q2 2023:53.2% ) - Ancillary revenue per retail unit sold and finance attachment rate lower QoQ as higher interest rates impact consumer confidence
-
Annualized cost savings of
£100 million from the restructuring undertaken in Q1 2023 delivered -
On track to make further
£20 million of cash savings identified in Q2 23 -
Cash & cash equivalents of
£151 million as of Sept 30, 2023 (Dec 31, 2022:£258 million ) -
Self-financed inventory of ~
£35 million as of Sept 30, 2023 (Dec 31, 2022: ~£75 million ) - Transaction Support Agreement with Noteholders announced on September 20, 2023
- The transactions set out in the Transaction Support Agreement are expected to materially reduce Cazoo’s debt and improve our capital structure
Outlook for the remainder of 2023
Demand for used cars remains volatile and our priority is to deliver better economics per unit sold. Considering the normal seasonality of the used car market and the current economic climate, we expect to sell around 8,500 retail units in Q4 2023. For the whole of 2023 we expect to sell between 40,000-42,000 retail units and between 50,000-52,000 total units (retail and wholesale).
Having delivered average Retail GPU of
We are also achieving the planned reduction in fixed and variable costs. Consequently, our forecast for adjusted EBITDA remains unchanged at
Due to the Transactions-related costs that are being incurred in the third and fourth quarters, our cash balance at the end of 2023 is expected to be between
2023 updated guidance:
- 50,000-52,000 total unit sales, of which 40,000-42,000 Retail units
-
Full-year Retail GPU approaching
£1,250 -
2023 Retail GPU exit rate at ~
£1,400 -
Adjusted EBITDA in the range of
£(100) million to£(120) million -
Year-end cash and cash equivalents in the range of
£100 million to£115 million
Receipt of Continued Listing Standards Notice from NYSE
On September 28, 2023, the Company received a written notice from the New York Stock Exchange (the “NYSE”) that the Company is not in compliance with the continued listing standards set forth in Rule 802.01C of the NYSE Listed Company Manual because the average closing price of the Company’s Class A ordinary shares over a consecutive 30 trading-day period was less than
Conference Call
Cazoo will host a conference call today, October 25, 2023, at 8 a.m. ET. Investors and analysts interested in participating in the call are invited to dial 1-877-704-6255, or for international callers, 1-215-268-9947.
About Cazoo - www.cazoo.co.uk
Our mission is to transform the car buying and selling experience across the
Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The expectations, estimates, and projections of the business of Cazoo may differ from its actual results and, consequently, you should not rely on forward-looking statements as predictions of future events. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (1) the implementation of and expected benefits from our business realignment plan, the wind-down of operations in mainland
Non-IFRS Financial Measures
In addition to Cazoo’s results determined in accordance with IFRS, this press release includes projected Adjusted EBITDA, which is a non-IFRS financial measure. The Company believes that Adjusted EBITDA provides useful information for management and investors to assess the underlying performance of the business as it removes the effect of certain non-cash items and certain charges that are not indicative of Cazoo’s core operating performance or results of operations. Cazoo believes that non-IFRS financial information, when taken collectively with financial measures prepared in accordance with IFRS, may be helpful to investors because it provides an additional tool for investors to use in evaluating Cazoo’s ongoing operating results and trends and because it provides consistency and comparability with past financial performance. However, Cazoo’s management does not consider non-IFRS measures in isolation or as an alternative to financial measures determined in accordance with IFRS.
Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as analytical tools and should not be considered in isolation from, or as a substitute for, the analysis of other IFRS financial measures, such as loss for the period from continuing operations. Some of the limitations of Adjusted EBITDA include that it does not reflect the impact of working capital requirements or capital expenditures and other companies in Cazoo’s industry may calculate Adjusted EBITDA differently, or use a different accounting standard such as
Adjusted EBITDA is defined as loss for the period from continuing operations adjusted for tax, net finance expense, depreciation and impairment of tangible assets, amortization and impairment of intangible assets, share-based payment expense, fair value movement in Convertible Notes, embedded derivative, and warrants and foreign exchange movement in warrants and Convertible Notes and exceptional items.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231025447218/en/
Investor Relations:
Cazoo: Anna Gavrilova, Head of Investor Relations, investors@cazoo.co.uk
ICR: cazoo@icrinc.com
Media:
Cazoo: Peter Bancroft, Interim Communications Director, press@cazoo.co.uk
Source: Cazoo Group Ltd
FAQ
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