Carvana (CVNA) - 2023 Q4 - Annual Report

Debt and Interest Expenses - Total outstanding debt of $668 million under short-term revolving facilities at December 31, 2023, with a variable interest rate. A 100-basis point change in market interest rates would result in a$8 million change in annual interest expense[621] - Interest expense increased by $146 million to$632 million in 2023 compared to $486 million in 2022, primarily due to increased interest from Senior Secured Notes[621] - The company has short-term revolving facilities with an aggregate borrowing capacity of$4.2 billion, with an outstanding balance of $668 million as of December 31, 2023[663] Customer Experience and Mobile Platform - Mobile platform investments aim to enhance customer experience, with 76% of U.S. adults making purchases using mobile devices and one in three making weekly mobile purchases[629] - Customers can complete vehicle purchases in as little as 10 minutes using seamless transaction technology[636] - Post-sale customer support includes a seven-day return policy, with an average customer satisfaction rating of 4.7 out of 5.0 based on over 195,000 surveys[642] - Investments in vending machines and delivery services aim to improve customer experience and brand awareness[626][630] Inventory and Vehicle Acquisition - Inventory includes over 33,000 total website units, with mobile-optimized search and discovery features for customers[633] - Proprietary algorithms evaluate over 100,000 vehicles daily to identify suitable purchases, leveraging data sources for quality, inventory fit, and consumer desirability[645] - Vehicle acquisition primarily from customer trade-ins and auctions, reducing auction fees and diversifying inventory[644] - The company's inventory management system and automated photography technology provide a 360-degree virtual tour of vehicles, enhancing transparency and customer experience[647][660] Logistics and Infrastructure - 80% of the U.S. population is within 100 miles of an IRC or auction site, reducing delivery times and potentially increasing conversions[627] - The company has established a logistics network and local marketing presence in 316 metropolitan cities, covering 81.1% of the U.S. population as of December 31, 2023[650] - The company's proprietary logistics network, based on a "hub and spoke" model, connects all inspection and reconditioning centers (IRCs) to vending machines and hubs, optimizing speed and cost[648] - The company's logistics infrastructure ensures highly accurate predictions of vehicle availability, minimizing delays and enhancing customer experience[648] Business Performance and Growth - The company has purchased, reconditioned, sold, and delivered over 1.7 million retail vehicles since its first market launch in January 2013[650] - The company employs over 13,700 full-time and part-time employees as of December 31, 2023[666] Technology and Innovation - The company's technology portfolio includes predictive models and APIs for automobile finance services, optimizing consumer lending processes[660] Marketing and Competitive Advantage - The company's marketing strategy includes multi-channel advertising, focusing on brand building and direct response channels to scale local markets[652] - The company's competitive advantage lies in its vertically integrated business model, emphasizing transparency, convenience, and vehicle quality[658]