Cazoo reported seeing a “clear path for significant Retail GPU improvement” from its online used car sales after reporting a £550 million loss in 2021.
The rapidly-expanding retailer, which was the subject of an investigation by BBC Watchdog televised last night, reported revenues of £668 million and a gross profit up 28% from last year’s £3m loss to £25m in its results for the 12-month trading period to December 31, 2021.
But the business revealed an overall loss of over half a billion pounds in figures which included a non-cash IFRS 2 expense of £241m result from the business combination with Ajax I as part of its listing on the New York Stock Exchange.
When adjusted for EBITDA its losses were £180m (2020: £81m loss).
Cazoo’s used car sales rose 233% to 49,853 during the year and it has reiterated a target of achieving revenues of £2bn on the back of 100,000 used car sales in 2022 on the way to a long-term target of £15bn in revenues.
In the near-term it also highlighted the potential for further profit growth through an improvement in gross profit per unit to £900 this year with a longer term goal of reaching £3,000pu.
Cazoo said it has made “significant improvement in UK Retail GPU, up £656 YoY to £427 per vehicle in FY 2021” during 2021.
Spelling out its profit growth target as it establishes its operations in France and Germany – with Spain and Italy also set to be added this year – Cazoo said: “Growth in GPU will be driven by a continued shift in buying mix including further success in the sourcing of cars directly from consumers.
“In addition, we expect the investments through 2021 and further progress in Q1 2022 to lead to continued efficiencies and operational leverage in reconditioning and logistics.
“Combined with further improvements to stock turn and enhancements to the Company’s products, partnerships and processes, we expect UK Retail GPU to be approximately £900 in 2022.”
According to today’s annual results announcement Cazoo remains in a strong cash position as it expands into Europe, despite its losses, following issuance of $630m convertible notes in February.
It stated a cash position of £193m as of December 31, 2021 following a capital expenditure of £30m in 2021 and a cash outflow of £191 million on mergers and acquisitions.
As well as accelerating the growth of its physical Customer Centre network in the UK during 2021, Cazoo acquired Bristol-based commercial vehicle retailer Van365 and Spanish car subscription operation Swipcar.
Since the period’s end, it has also acquired Italy’s brumbrum car retail and subscription business.
There was also a cash outflow of £220m to fund inventory during the year, Cazoo revealed.
Alex Chesterman OBE, the founder and chief executive of Cazoo, said he was “incredibly proud of what the team at Cazoo has achieved” since its launch.
He added: “During 2021, we made some important strategic progress, creating further moats around our business.
“In the UK we brought our vehicle reconditioning in-house well ahead of schedule, a challenging process but one which has significant long-term advantages.
“We also successfully launched our car buying channel, now sourcing a substantial proportion of our vehicles directly from consumers.
“Outside of the UK, we have expanded our total addressable market (TAM) dramatically through our entry into France, Germany, Italy and Spain, the four largest automotive retail markets in the EU.
“Together with the UK, these five key markets have a combined TAM of over £300bn and our long-term target is to capture a 5% market share, which is why we are extremely energised by our future growth opportunities.”
Commenting on Cazoo’s aspiration to deliver profitability from each car sales, its chief financial officer Stephen Morana said: “Whilst these investments have impacted GPU in the short term, the benefits are clear and give us much greater visibility and confidence to deliver on our long-term GPU target of £3,000.
“We remain laser focused on continuing our path to profitability and while our UK Retail GPU will be sequentially lower in Q1 2022, we expect to see material improvements through the year, up significantly in Q2 2022 and approaching £900 for FY22.”