Cazoo revealed that its gross profit and earnings per unit both declined as its online used car sales soared to record revenue in the first quarter of 2022.
The New York Stock Exchange-listed digital disruptor revealed revenue up 159% year-on-year to a record £295m in the three months to March 31, in an update commercial published this morning (May 3), after its sales volumes increased by 102% (to 19,713) following its expansion in France and Germany.
However, gross profit per unit in the UK fell 19% to £124 in a market defined by its high volumes, as the limited supply of used cars continues to be outpaced by demand.
Cazoo’s overall gross profit for the period fell 2% to £2m.
The first-quarter result comes less than a month after Cazoo reported seeing a “clear path to significant retail GPU improvement” in its online used car sales after reporting a $550 million loss. sterling in 2021.
The company revealed it was aiming for profit growth by improving its gross profit per unit to £900 this year, with a longer-term target of reaching £3,000.
Commenting on today’s first quarter update, Cazoo Founder and Managing Director, Alex Chesterman OBE said: “I am extremely pleased with our record first quarter revenue and unit sales as we begin to see the benefits of the important strategic actions we took in 2021.
“We achieved sequential quarterly growth of over 50% in retail units sold during the period, driven by increased inventory available on our website, supporting our thesis that the increase in remanufacturing production leads to increased sales.
“As we move forward into 2022, we aim to continue to increase our remanufacturing capacity, which should lead to additional growth and allow us to continue our progress towards our long-term market share ambitions.”
Cazoo’s business update revealed that it was able to increase its used car inventory to more than 6,500 vehicles in the first quarter.
It did so while continuing to expand its operations in France and Germany and preparing for launches in Spain and Italy this summer.
The company also continued to raise funds to drive its continued growth, issuing $630 million in convertible bonds to an investor group led by Viking Global Investors and securing €50 million in equity-backed financing. assets for its subscription business in France and Germany.
Chesterman said: “This strong acceleration in growth comes despite a rapidly changing macroeconomic backdrop in our markets. While we are keenly aware of the broader macroeconomic uncertainties, we remain focused on executing our strategy as we continue to progress against our previously detailed expectations for the year.
“We expect any macro headwinds to be transitory in nature and remain extremely excited about the huge market opportunity for Cazoo and are very confident in achieving our long-term growth and margin targets.”
Cazoo’s chief financial officer, Stephen Morana, said he was “encouraged” by the progress made in the first quarter. He added: “As detailed previously, our UK retail GPU in the first quarter was impacted in the short term by the investments made in the second half of last year with the launch of our buy channel cars and the integration of our reconditioning in the UK.
“We expect significant improvement in our UK retail GPU in the second quarter and throughout the year as we begin to see the benefits of these investments.”