Cazoo Q1 2023

British used car dealer Cazoo has announced its financial results for Q1 2023.

The company achieved its highest retail GPU of £980 ($1,220 U.S.) per vehicle sold in the period, a 690% increase year-on-year. This increased to over £1,200 per vehicle in March, which is the target Cazoo has set for 2023.

The company has also now completed its business restructure, which aimed to reduce costs and put Cazoo on a clear path towards profitability.

Cazoo said retail unit sales for the period were in line with expectations, though they were 7% lower than the same period last year, 17,447 compared to 18,679 in Q1 2022. Within the total, retail car sales accounted for 13,314, up 4% year-on-year and wholesale vehicles sold was 4,133, a 29% reduction on Q1 2022.

Revenue fell 11% year-on-year from £279 million to £247 million, Gross profit was £14 million, compared to £3 million in the same period in the prior year. Gross margin increased from 1.1% to 5.8%.

The company retained a healthy level of cash and cash equivalents on its balance sheet of £215 million, albeit down 58% year-on-year from £525 million. It also had £60 million of self-finances inventory.

“I am very pleased with our performance in the first quarter of 2023,” said Cazoo CEO Paul Whitehead. “Our focus on unit economics, together with the restructuring changes, is starting to bear fruit as evident in the significant improvement in Retail GPU.

“Whilst the broader economic environment remains challenging, demand was robust in the quarter and we sold 13,314 retail cars as our online proposition continues to resonate with consumers due to the selection, transparency and convenience of using our platform.

“We are applying a more targeted approach to which vehicles we buy, guided by our proprietary data of their desirability, with a better selection of models available on our website driving better margins.

The company also provided details on ancillary revenue per retail unit sold. This increased 10% year-om-year “due to the improvement in our proposition,” the company said.

During the period, the proportion of buyers who arranged finance directly with Cazoo increased from 47.4% in Q1 2022 to 52.5%. Cazoo said reconditioning costs were lower following the closure of some of its vehicle reconditioning centers.

Cazoo said the restructuring of its business that saw hundreds of U.K. staff made redundant and the closure of 15 of its 22 sites was a “difficult decision” made to “optimize our fixed costs.” This resulted in £13 million one-off costs, but would lead to “a reduction in selling, general and administrative (SG&A) run rates of over £25 million per quarter by Q4 2023, representing over £100 million of annualised savings going into 2024.”

Cazoo said the cash utilization rate is expected to reduce to approximately £30 million per quarter by the end of the year and it anticipates finishing the year with between £110 million and £130 million of cash and between £15 million and £25 million of self-financed inventory.

The company reiterated its guidance for 2023 and said it remains “fully focused on delivering profitable growth.” It expects to sell 50,000-60,000 total unit sales, of which 40,000-50,000 will be retail units, to have full-year retail GPU of approaching £1,200 and for this figure to be approaching £1,500 by the end of 2023 and to have adjusted EBITDA of (£100) to (£120) million.

Cazoo published its FY 2022 results last month which showed the company made a loss of £704 million ($867 million U.S.) on revenue of £1.25 billion ($1.54 billion) in 2022 and pushed back its break even target to H2 2024.

 

Related Articles