Cazoo the UK’s online used car retailer which makes buying and selling a car as simple as ordering any other product online, announces its financial results for the three months ended September 30, 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, Cazoo expects to sell around 8,500 retail units in Q4 2023. For the whole of 2023.
Cazoo expects 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 £1,215 for the first nine months of the year, Cazoo have upgraded their expectations for the average Retail GPU for 2023 to approach £1,250 and anticipate to exit the year at ~£1,400 Retail GPU reflecting pressure on profitability expected in the last quarter of the year due to seasonality and the higher interest rates environment.
The company has also achieved the planned reduction in fixed and variable costs. Consequently, our forecast for adjusted EBITDA remains unchanged at £100 million to £120 million for 2023.
Due to the Transactions-related costs that are being incurred in the third and fourth quarters, their cash balance at the end of 2023 is expected to be between £100 million and £115 million with between £20 million and £30 million of self-financed inventory
Paul Whitehead, Chief Executive Officer of Cazoo, said, “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 £1,470.
“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 14% quarter-on-quarter and 201% year-on-year. Average Retail GPU for the first nine months of 2023 was £1,215.
“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 £151 million of cash and cash equivalents plus approximately £35 million of self-financed inventory as at September 30, 2023.
“We expect to incur further one-off costs related to the Transactions in the fourth quarter in addition to those already spent and as a result expect to finish the year with between £100 million and £115 million of cash and cash equivalents and between £20 million and £30 million of self-financed inventory.
“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 £1,250 and the exit rate to be around £1,400, which reflects normal market seasonality and the challenging economic environment. We are maintaining our adjusted EBITDA forecast unchanged at between £(100) million and £(120) million. Our top priorities remain to continue to improve unit economics, reduce our fixed cost base and extend our cash runway, as we work towards our goal of reaching profitability.”