Cazoo Group Ltd

Cazoo reported Q2 revenue of GBP171 million, down 44% year on year, and H1 revenue of GBP419 million. Q2 retail GPU was GBP1,290; H1 retail GPU was GBP1,106, up GBP880 year on year and 389%. H1 gross profit was GBP23 million after GBP3 million of subscription losses, adjusted EBITDA was minus GBP70 million, SG&A before D&A was GBP98 million, and total loss for the period was GBP150 million versus GBP241 million last year. Cash and cash equivalents were GBP195 million at June 30, 2023, plus around GBP35 million of self-funded inventory. Full-year guidance was reiterated for retail unit sales of 40,000 to 50,000, retail GPU approaching GBP1,200 for the year and approaching GBP1,500 exit run-rate, adjusted EBITDA loss of GBP100 million to GBP120 million, year-end cash of GBP110 million to GBP130 million, and self-funded inventory of GBP15 million to GBP25 million.

Paul Whitehead said the company has deliberately pivoted from fast growth to unit economics and cash preservation in a challenging market. He emphasized better inventory selection, higher finance attachment, stronger ancillary revenue, and a leaner operating footprint after consolidating centers, reducing headcount, and exiting Europe. His tone was constructive and confident, saying the business is “right sized” and laying the foundation for profitable growth in the future.

Paul Woolf focused on cost reduction, saying the restructuring produced about GBP100 million of annualized SG&A savings and that another GBP20 million of cash savings was identified in Q2, to be realized in the second half and fully in 2024. He said more than half of SG&A is fully fixed, with the rest more variable, and pointed to network capacity of up to 85,000 retail units per year versus this year’s 40,000 to 50,000 target. He also highlighted H1 cash outflow of GBP61 million and closing cash of GBP195 million, noting lower inventory and reduced spending on technology, PPE, and acquisitions.

Analysts asked how much of the cost base is fixed and how much volume the current structure can support; management said a little over half of SG&A is fully fixed, the rest is more variable, and the current network can support up to 85,000 retail units with limited additional fixed cost. They also asked about the capital structure, and Alex Chesterman said talks with bondholders are ongoing, there is no certainty of a deal, but an improved capital structure could help fund growth, M&A, or consolidation. On July trends, management said the market remains challenging but unit economics continue to improve, and on pricing they said some price increases reflect a more targeted inventory mix and the wind-down of subscription cars.