12:28 pm, October 25, 2023
Online used car retailer Cazoo saw its gross profit rise by 10 per cent year on year for the third quarter of this year, it announced today.
It made £11m over the three months ended September 30, 2023 versus £10m during the same period last year, according to latest financial results.
The figure was also £3m more than Cazoo made during the second quarter – a 37.5% rise.
That was on revenue that plummeted by 50% over the year from £347m to £173m, although the Q3 figure was up by £2m on the Q2 total – a rise of 1.2%.
The revenue figure comprised £157m retail, £15m wholesale and £1m other.
Meanwhile, its retail gross profit per unit (GPU) rose by 14% over the quarter from £1,290 in Q2 to a record £1,470 – a massive 201% year-on-year rise from the £488 it was making last year.
It shifted 12,021 vehicles during the quarter, comprising 9,525 retail and 2,496 wholesale. That was up 4.2% per cent on the previous quarter’s total figure of 11,538 but down 49% on last year’s Q3 figure of 23,775.
Cazoo’s gross margin rose by 1.8 percentage points to 6.5% over Q2 and three percentage points on last year’s Q2 figure of 3%.
CEO Paul Whitehead 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.’
He added: ‘Looking ahead, we see further scope to sustain and grow our retail GPU by targeting opportunities in increased ancillary products sales, optimising our digital finance journey, improving inventory selection and turnover, and through increased efficiency in pricing, purchasing and logistics.’
Whitehead said Cazoo’s cash position remained strong, as it had £151m of cash and cash equivalents plus some £35m of self-financed inventory as of the end of September.
Cazoo expects to finish the year with between £100m and £115m of cash and cash equivalents and between £20m and £30m of self-financed inventory.
Looking ahead, Whitehead said: ‘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.’
Its adjusted Ebitda forecast is unchanged, though, at a deficit of between £100m and £120m.
Whitehead concluded by saying: ‘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.’
