British online auto dealer Cazoo sold 20,454 cars in the first half of 2021 but made an adjusted EBITDA loss of £69 million ($94 million U.S.)in the period, according to its latest financial results.
The adjusted loss takes into account tax credits, finance income/expense, depreciation and amortization, share based payment expense and exceptional cost. The net loss was £102 million ($139 million U.S.) compared to a net loss of £31 million in H120.
The results cover a period in which used car values have increased strongly due to supply shortages. Although revenue increased by 521% in the period to £248 million ($337 million U.S.) from £40 million in the corresponding period in 2020 and its gross margin rose 9ppts to 5%, profitability remains elusive.
Total vehicles sold increased by 401% year-on-year from just 4,084 cars sold in H120, which covered the first Covid-19 lockdown when U.K. car buyers were collectively deciding whether and how to purchase new cars via an all-in online option. In H120 just 3,234 cars were sold online and 850 were sold to trade buyers. Cazoo made a loss of £55 on each car sold. For H121, of 20,454 cars sold, 16,557 cars were sold to retail customers and 3,897 to trade buyers.
Cazoo made a gross profit of £11 million at a gross margin of 5%. Retail GPU reached £315 in H1, up by £670 Y-o-Y on the loss delivered previously “due to continued operational efficiencies”.
Cazoo previously released sales figures for Q2, ahead of its debut on the NYSE on Aug. 27, so the quarterly split for the period can be seen. It sold 9,762 cars in the first three months of 2021 and increased this by about 10% in Q2 to 10,692 cars sold. Gross profit in Q2 was £8 million ($11.1 million U.S.).
During the reporting period Cazoo launched a car subscription service in the U.K., launched a new car-buying service with a home collection option in August and signalled plans to expand into France and Germany using its acquisition of Cluno to aid this process by the end of the year.
In September it also acquired data insights platform Cazana and U.K. vehicle preparation center SMH Fleet Solutions for around £70 million ($97 million U.S.). This deal continues the process of bringing vehicle preparation in-house after it had previously acquired vehicle reconditioning and storage business Smart Fleet Solutions in February.
These business developments illustrate the ambition of the business and suggest strong momentum will continue, which the company expects to turn into profitable financial results in due course.
The car-buying business should help Cazoo improve the type, options and mix of cars, which should add to the volume of cars it can sell and improve future margins. The acquisition of Cazana will help the business optimize its buying and pricing of vehicles in the U.K. and Europe.
“Consumers continue to embrace the selection, transparency and convenience of buying cars entirely online,” said Cazoo CEO and founder Alex Chesterman.
“We expect operational efficiencies to continue to drive further gross margin improvement and we remain on track to achieve revenue approaching $1 billion in 2021.”
However, Chesterman warned that the biggest challenge for the business and to reach profitability was the ability to “recondition vehicles in the volumes required to meet consumer demand”.
“This latest strategic acquisition will de-risk our future growth by doubling our capacity and significantly enhancing our team of vehicle preparation and logistics staff, giving us the ability to meet our growth aspirations over the next two years,” Chesterman said.