Executive Summary

Q4 2024 revenue was $9.22B, up 20% year over year; diluted EPS was $8.12 (+5% YoY) and adjusted diluted EPS was $7.79 (-6% YoY) as GPUs continued normalizing and SG&A discipline offset part of the pressure .
Gross margin fell 150 bps YoY to 14.9%; adjusted EBITDA rose 5% YoY to $419M with sequential SG&A improvements and tighter inventory execution; dividend of $0.53/share maintained .
Driveway Finance Corporation (DFC) delivered $9M income in Q4 and $15.4M for FY 2024; net interest margin expanded to 4.7% on $3.93B average managed receivables, marking the first profitable year for financing operations .
Management highlighted cost savings fully realized in Q4, a path to normalized combined vehicle GPU of $4,200–$4,500, and 2025 targets including new GPU $2,500–$2,700 and aftersales margin 52–55%; focus near term on buybacks given elevated M&A multiples .

What Went Well and What Went Wrong

What Went Well
- “Record-breaking fourth-quarter revenues” and “first profitable year for Driveway Finance,” underscoring diversification tailwinds in adjacencies (DFC) .
- Same-store new retail units +7.4% and aftersales gross profit +4.5% YoY, while SG&A showed sequential improvement from Q3, helping operating profit grow YoY for the first time in 9 quarters .
- DFC net interest margin increased to 4.7% and originations were $501M with $3.93B average managed receivables, supporting higher adjacency earnings contribution .
What Went Wrong
- Gross margin fell 150 bps YoY to 14.9% as new and used vehicle GPUs normalized; total vehicle GPU declined to $4,273 from $4,973 YoY .
- Floor plan interest expense rose 34% YoY to $64.8M in Q4, and other interest expense increased 15% YoY, compressing pretax margin and net margin .
- Same-store total gross profit declined 3.7% YoY, with used performance soft (unit comps -4.3% YoY) and management acknowledging missed opportunity in used cars versus strong new demand .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Billions)	$7.67	$9.22	$9.22
Diluted EPS ($)	$7.74	$7.80	$8.12
Adjusted Diluted EPS ($)	$8.32	$8.21	$7.79
Gross Margin %	16.4%	15.5%	14.9%
Operating Profit % of Revenue (As reported)	4.9%	4.6%	4.5%
Net Profit Margin (As reported)	2.8%	2.4%	2.4%
SG&A % of Gross Profit (Adjusted)	65.2%	66.0%	66.3%
Consensus Revenue ($USD Billions)	N/A (S&P Global unavailable)	N/A (S&P Global unavailable)	N/A (S&P Global unavailable)
Consensus EPS ($)	N/A (S&P Global unavailable)	N/A (S&P Global unavailable)	N/A (S&P Global unavailable)

Note: S&P Global consensus estimates were unavailable due to API limit; results comparison to Street is therefore not included.

Segment revenue breakdown ($USD Millions):

Segment	Q4 2023	Q3 2024	Q4 2024
New vehicle retail	$3,974.8	$4,430.0	$4,705.9
Used vehicle retail	$2,267.5	$2,843.3	$2,638.5
Used vehicle wholesale	$242.9	$390.9	$340.9
Finance and insurance	$331.5	$360.4	$355.8
Aftersales	$818.3	$1,012.8	$973.8
Fleet and other	$39.5	$183.6	$207.2

Key KPIs:

KPI	Q4 2023	Q3 2024	Q4 2024
New units sold	80,596	94,964	96,760
Used units sold	78,424	104,898	95,342
ASP – New ($)	49,318	46,649	48,635
ASP – Used ($)	28,913	27,105	27,674
GPU – New ($)	3,899	3,226	3,175
GPU – Used ($)	1,965	1,801	1,694
GPU – F&I ($)	2,084	1,803	1,852
Total Vehicle GPU ($)	4,973	4,271	4,273

Financing Operations (DFC and segment metrics):

Metric	Q4 2023	Q3 2024	Q4 2024
Finance ops income ($MM)	-$2.1	$0.9	$9.0
Avg managed receivables ($MM)	$3,277.0	$3,812.8	$3,928.7
Net interest margin %	3.4%	4.1%	4.7%
Originations ($MM)	N/A	$518	$501

Balance sheet snapshot:

Metric	Q4 2023	Q4 2024
Total Assets ($MM)	$19,632.5	$23,127.9
Total Debt ($MM)	$10,900.5	$13,265.7
Net Debt ($MM)	$3,219.1	$4,142.2
Net Debt / TTM Adjusted EBITDA (x)	1.83x	2.56x

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
New vehicle GPU ($)	FY 2025	Normalization implied toward $2,500–$2,700 (Q3 narrative)	$2,500–$2,700 for 2025	Maintained/clarified
Combined vehicle GPU incl. F&I ($)	Normalized state	$4,200–$4,500 (reaffirmed)	$4,200–$4,500 (reiterated)	Maintained
Aftersales gross margin %	FY 2025	LT target 51–54%	52–55% (mix shift to parts)	Slightly raised range
Used vehicle GPU ($, same-store)	FY 2025	Trough near ~$1,700 run-rate	$1,800–$2,300 (same-store)	Introduced recovery range
F&I GPU ($)	FY 2025	~$2,000 target referenced	$2,000 target reiterated	Maintained
SG&A % of Gross Profit (same-store)	FY 2025	Momentum to mid-50s over time	65.5–67.5% in 2025; long-term mid-50s path	Near-term range introduced
DFC profitability	FY 2024–2025	Continued profitability expected	“Expect increasing profitability” trajectory	Maintained/strengthened
Dividend	Q4 2024	$0.53 in Q3 2024	$0.53 in Q4 2024	Maintained
Capital allocation (buybacks)	Near term	30–40% FCF to buybacks	30–40% FCF; bias to buybacks given M&A pricing	Maintained/emphasized

Earnings Call Themes & Trends

Topic	Q2 2024 (Prior)	Q3 2024 (Prior)	Q4 2024 (Current)	Trend
Omnichannel & tech	Burn rates down ~40%; Pinewood gains; MUV growth; Wheels stake	Pinewood ~90% U.K. stores; MyDriveway portal rollout noted	Launched MyDriveway consumer portal (250+ functions); digital + physical integration	Execution ramping
Supply/inventory	CDK impact; target large inventory reductions	New DSO down to 68; targeting further reductions	Inventory down ~$200M QoQ; target 50 DSO new / 40 DSO used by Q2	Improving
Tariffs/macro	Affordability sensitivity to rates	Incentives rising to ~7.3% of MSRP; ASPs balancing	SAAR optimism (path to 17M); ~36–38% of vehicles potentially tariff-impacted; inventory positioning helps	Macro tailwinds cautiously optimistic
Product performance (GPUs)	Normalization path to $4,200–$4,500 total	Reaffirmed normalization; new GPU to decline further; used recovery over time	2025 new GPU $2,500–$2,700; used $1,800–$2,300; total $4,200–$4,500	Normalization continuing
Regional trends	Building Southeast/South Central mix	U.S. regions converging; U.K. optimization continues	U.K. SG&A improving; divestitures/closures completed; F&I progressing	U.K. cleanup progressing
Regulatory/legal (U.K.)	Highly regulated F&I noted	U.K. F&I and margins structurally lower	Continued progress; F&I lifted to ~$903 in quarter in U.K. context (prior trend)	Steady improvement
Financing operations (DFC)	First profitable quarter; originations $562M	Continued profitability; ABS pricing favorable	First profitable year; NIM +55 bps seq; originations $501M	Strengthening
Capital allocation	Rebalancing to buybacks	30–40% FCF to buybacks; M&A $2–$4B annual target	Near-term emphasis on buybacks given high M&A multiples	Buyback bias near term

Management Commentary

“2024 marks another milestone year…record-breaking fourth-quarter revenues, the first profitable year for Driveway Finance…positions us to deliver sustainable performance” — Bryan DeBoer, CEO .
“Adjusted diluted EPS of $7.79…first year-over-year operating profit increase in 9 quarters…full realization of our $200M annual cost savings” — Bryan DeBoer .
“We reported adjusted EBITDA of $419M in the fourth quarter…generated free cash flows of $180M…net leverage of 2.5x, below our long-term target of 3x” — Tina Miller, CFO .
“Opportunities remain to achieve SG&A of 65.5–67.5% same-store in 2025…inventory days targets of 50 new / 40 used” — Adam Chamberlain, COO .

Q&A Highlights

Macro/SAAR and tariffs: Management sees a path to 17M SAAR by year-end; ~36–38% of vehicles potentially tariff-impacted but inventory days provide cushion .
GPU guidance: New GPU target $2,500–$2,700 for 2025; normalized total vehicle GPU $4,200–$4,500; used GPU recovery expected $1,800–$2,300 same-store; F&I ~$2,000 .
U.K. progress: SG&A improving toward ~75% target over time; divestiture/closures largely completed; management confident in trajectory .
Cost savings and SG&A: $200M realized; additional $50–$70M floor plan interest savings targeted via inventory reductions; broader multi-year path to mid-50s SG&A (as % of gross) .
Capital allocation: High M&A multiples vs trough stock valuation favors buybacks near term; annual acquired revenue expectation $2–$4B maintained .

Estimates Context

S&P Global consensus revenue and EPS for Q4 2024 were unavailable due to API limits; as a result, a beat/miss analysis versus Wall Street estimates is not provided today.
Based on management guidance, consensus may need to reflect: 2025 new GPU $2,500–$2,700, used GPU $1,800–$2,300, normalized total GPU $4,200–$4,500, and aftersales margin 52–55% (mix shift to parts), alongside sequential SG&A discipline and improving DFC profitability trajectory .

Key Takeaways for Investors

Core operations: Strong revenue growth (+20% YoY) with GAAP EPS +5% YoY; margin normalization continues to weigh on gross margin and GPUs, but SG&A discipline and cost savings are offsetting .
Adjacency contribution: Financing operations achieved Q4 and full-year profitability; NIM and receivables growth indicate rising earnings power from DFC .
Inventory & interest: Focused inventory reductions (days targets) should lower floor plan interest and support margin stabilization through 2025 .
Guidance clarity: Explicit 2025 ranges for GPUs and aftersales margins help set expectations; long-term SG&A target mid-50s supports EPS leverage from operational improvement .
Capital allocation: Emphasis on buybacks near term given elevated M&A pricing; dividend maintained, ample authorization remaining .
Strategic ecosystem: MyDriveway and broader digital ecosystem deepen customer engagement and should enhance throughput and loyalty, supporting unit economics over time .
Trading lens: Near-term narrative hinges on margin normalization pace, SG&A execution, and DFC profitability trajectory; catalysts include adjacency earnings momentum, inventory/interest savings, and potential SAAR tailwinds .

Sources: Q4 2024 8-K and press release , Q4 2024 earnings call , Q3 2024 materials , Q2 2024 materials .

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