Carvana Co.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals.
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Unless the context requires otherwise, references in this report to "Carvana," the "Company," "we," "us," and "our" refer to Carvana Co. and its consolidated subsidiaries. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our most recent Annual Report filed on Form 10-K, as well as our unaudited condensed consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Overview
Carvana is the leading e-commerce platform for buying and selling used cars. We are transforming the used car buying and selling experience by giving consumers what they want - a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction. Our differentiated business model combines a comprehensive online sales experience with a vertically integrated supply chain, designed to sell high-quality vehicles to our customers transparently and efficiently at a low price. The automotive retail industry is large – with approximately 37 million used auto retail transactions in the United States (“U.S.”) in 2024 according to Cox Automotive – and highly fragmented – with the top 10 used auto retailers in the U.S. accounting for less than 10% of the market share in 2024. These dynamics create an exceptional opportunity for disruption that our custom-built business model can capitalize on to remain well-positioned for long-term growth. Over the years, we have leveraged our growing logistics network, which spans 316 metropolitan statistical areas, and our in-house distribution network, servicing over 80% of the U.S. population as of March 31, 2026, to sell 2.9 million retail vehicles, generating $90.5 billion in total revenue since inception in 2012 through March 31, 2026.
•Vehicle Acquisition. We primarily acquire our used vehicle inventory directly from customers, used car auctions, and wholesale used vehicle suppliers, including retail marketplace partners. Acquiring inventory directly from customers when they trade in or sell us their vehicles in a one-way transaction eliminates auction fees and provides for a more diverse set of vehicles. After answering a few questions about the vehicle condition and features, our online tool provides customers with an automated, conditional offer for their existing vehicle that can be applied to any vehicle purchase or paid directly without an associated vehicle purchase. Our online tool then allows customers to schedule a time to have their existing vehicle picked up at their home, or drop it off at a Carvana location, and receive payment. We designed this process to be convenient, seamless, and to eliminate the need for a customer to visit a dealership or negotiate a private sale.
•Inspection and Reconditioning. Once we acquire a vehicle, we leverage our in-house logistics network or a vendor to transport the vehicle to one of our inspection and reconditioning centers ("IRC") or auction locations with reconditioning capabilities (together with IRCs "Reconditioning Sites"), at which point the vehicle enters our inventory management system. We then begin an inspection process covering controls, features, brakes, tires, and cosmetics. Each Reconditioning Site leverages proprietary inventory management technology and includes trained technicians, vehicle lifts, paintless dent repair, and paint capabilities and receives on-site support from vendors with whom we have integrated systems to expedite ready access to parts and materials. We have a uniform set of cosmetic standards across all Reconditioning Sites to provide a consistent customer experience. When an inspection is complete, we estimate the necessary reconditioning cost for the vehicle to meet our standards and expected timing for that vehicle to be made available for sale on our website. Vehicles that do not meet Carvana standards are sold wholesale, either through our wholesale marketplace platform or through third party auctions.
•Online Search and Shopping Experience. We offer a mobile-optimized website, where prospective retail car buyers can immediately begin browsing, researching, filtering, and identifying their vehicle of choice from an inventory of over 70,000 total website units that we offer for sale as of March 31, 2026. We leverage our patented, automated photo technology to offer an annotated virtual vehicle tour, which includes a 360-degree view of the interior and exterior of the actual vehicle and allows customers to view vehicle imperfections through high-definition photography. Our website also features integrations with various vehicle data providers for vehicle feature and option information to assist customers with purchase decisions.
•Financing. We offer integrated financing using our proprietary loan origination platform. Customers who choose to apply for our in-house financing fill out a short prequalification form, and, if approved, are nearly instantaneously presented with an interactive set of conditional financing terms generated by our proprietary credit scoring and deal structuring algorithms for every vehicle in our inventory. Our financing tool is designed to intuitively and
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transparently show the relationship between down payment, monthly payment, and loan term to assist the customer in selecting a payment plan tailored to their specific needs. This pre-approval involves a short process that does not impact customers’ credit unless they pursue a purchase and finance the transaction. For customers who choose not to utilize our financing, we also accept payment in cash or financing from third party lenders, such as banks or credit unions.
•Complementary Products. As part of the integrated purchasing process, customers have the option to protect their vehicle with a vehicle service contract (“VSC”). VSCs provide customers with protection against the costs of certain mechanical repairs after the expiration of their vehicle’s original manufacturer warranty. In most states, customers financing their purchase with us are also offered guaranteed asset protection ("GAP") waiver coverage during checkout to provide customers with protection for the value of the loan. We have also partnered with Root, Inc. ("Root"), an online car insurance company, to offer an integrated auto insurance solution, through which customers in most states may conveniently access auto insurance directly from the Carvana e-commerce platform. We collectively refer to VSC, GAP, and auto insurance as complementary products.
•Nationwide Logistics Network and Distinctive Fulfillment Experience. We have developed proprietary logistics software and an in-house nationwide delivery network designed to predictably and efficiently transport cars and provide customers with a distinctive fulfillment experience. Our logistics network and technologies that support it are based on a "hub and spoke" model, which connects Reconditioning Sites to vending machines and hubs via our fleet of multi-car and single-car haulers. This allows us to efficiently manage locations, routes, route capacities, trucks, and drivers while also dynamically optimizing for speed and cost. This proprietary logistics infrastructure enables us to offer our customers and operations team highly accurate predictions of vehicle availability, to minimize delays, and promote a seamless and reliable customer experience. We offer customers in our markets a home delivery option that is typically conducted by a Carvana employee on a branded hauler. Customers in certain markets can also pick up their vehicles at one of our patented car vending machines, which are multi-story glass towers that store purchased vehicles, or at other customer-facing locations. As of March 31, 2026, we estimate that 75% of the U.S. population is within 100 miles of an IRC or auction site, which shortens the distance from our inventory pools to our customers to reduce delivery times.
•Post-sale customer support. After purchase, our customer advocates handle post-sale coordination and assistance, including facilitating returns or exchanges under our seven-day return policy. As of March 31, 2026, customers rated us an average of 4.6 out of 5.0 from over 265,000 surveys on our website since inception, fostering repeat business and a strong referral network.
Retail Vehicle Unit Sales
Since launching to customers in Atlanta, Georgia in January 2013, we have experienced rapid growth in sales through our website www.carvana.com. During the three months ended March 31, 2026, the number of vehicles we sold to retail customers increased by 40.0% to 187,393, compared to 133,898 in the three months ended March 31, 2025.
We continue to view the number of vehicles we sell to retail customers as the most important long-term measure of our performance, and we expect to continue to focus on building a scalable platform to efficiently increase our retail units sold. This focus on retail units sold is motivated by several factors:
•Retail units sold enable multiple revenue streams, including the sale of the vehicle itself, the sale of finance receivables originated to finance the vehicle, complementary products, and the sale of vehicles acquired from customers.
•Retail units sold are the primary driver of customer referrals and repeat sales. Each time we sell a vehicle to a new customer, that customer may refer future customers and can become a repeat buyer in the future.
•Retail units sold allow us to benefit from economies of scale due to our centralized online sales model. We believe our model provides meaningful operating leverage in acquisition, reconditioning, transport, customer service, and delivery.
We continue to prioritize efficient growth in retail units sold, absent any material changes in macroeconomic conditions. To prioritize growth, we are pursuing investments in technology and infrastructure, while simultaneously maintaining our focus on efficiency gains and profitability. This includes continued investment in our vehicle acquisition, reconditioning and logistics network, as well as partnerships, product development, and engineering to deliver customers a best-in-class experience.
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Revenue and Gross Profit
We generate revenue on retail units sold from four primary sources: the sale of the retail vehicles, wholesale sales of vehicles we acquire from customers, including sales through our wholesale marketplace, gains on the sales of loans originated to finance the vehicles, and sales of complementary products.
Our largest source of revenue, retail vehicle sales, totaled $4.8 billion and $3.0 billion during the three months ended March 31, 2026 and 2025, respectively. We generally expect retail vehicle sales to trend proportionately with retail units sold, absent any material changes in macroeconomic conditions. We generate a majority of gross profit on retail vehicle sales from the difference between the retail selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale. Retail vehicle sales also include shipping and delivery fees and service revenue from retail marketplace transactions, which are retail marketplace partner vehicles sold to customers through Carvana, that, depending on the structure of the partnership, may receive net revenue treatment.
Wholesale sales and revenues include sales of trade-ins and other vehicles acquired from customers that do not meet the requirements for our retail inventory. We also include revenue earned from the sale of wholesale marketplace units by non-Carvana sellers through our wholesale marketplace platform, including auction fees and related service revenues, in wholesale sales and revenues. Wholesale sales and revenues totaled $1.1 billion and $863 million during the three months ended March 31, 2026 and 2025. We generally expect wholesale sales to trend proportionately with retail units sold through inventory we acquire via trade-ins and from customers who wish to sell us a car independent of a retail sale and with the movement of wholesale marketplace units. We generate gross profit on wholesale vehicle sales from the difference between the wholesale selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale. We generate a gross profit on wholesale marketplace units from the difference between the revenue earned from the sale of wholesale marketplace units through our wholesale marketplace platform less our cost of sales associated with operating the wholesale marketplace platform.
Other sales and revenues, which primarily includes gains on the sales of finance receivables we originate and sales commissions on complementary products such as VSCs, GAP waiver coverage, and auto insurance totaled $526 million and $389 million during the three months ended March 31, 2026 and 2025, respectively. We generally expect other sales and revenues to trend proportionately with retail units sold. We also expect other sales and revenues to increase as we improve our ability to monetize loans we originate, including through securitization transactions, and sell and offer attractive financing solutions and complementary products to our customers, including products customarily sold by automotive retailers or insurance products customarily sold by traditional insurance companies, absent any material changes in macroeconomic conditions. Other sales and revenues are 100% gross margin products for which gross profit equals revenue.
Our highest priority continues to be providing exceptional customer experiences while making effective use of our infrastructure to support efficient growth in retail units sold. We believe there are three fundamental drivers supporting our growth, each of which strengthens the other, which we believe creates a compounding cycle with scale:
•Continuously improving our customer offering. We continue to work on enhancing our customer offering by further integrating our technology and operations to deliver better customer experiences. Our AI-powered tools are designed to enable more customers to complete the entire buying or selling process without speaking to an advocate until vehicle delivery or pickup, which has reduced average calls per sale and driven higher conversion rates and Net Promoter Scores. When customers do choose to interact with an advocate, our technology equips the advocate with the most relevant and personalized information. Going forward, we intend to continue to refine and enhance our customer-facing and advocate-facing technology to make buying from or selling to Carvana intuitive and convenient.
•Increasing awareness, understanding, and trust of our brand. We continue to focus on expanding awareness, understanding, and trust of our brand through investments in advertising and new campaigns to expand our reach and educate customers. High-quality, efficiently-deployed advertising campaigns are essential to brand building, and we believe delivering great experiences to more customers over time will further compound this effect.
•Increasing inventory selection and other benefits of scale. We continue to work on improving selection and leveraging benefits of scale by increasing production capacity within our infrastructure. By growing inventory pools across geographies, we are able to put more cars closer to more customers to shorten average delivery times and increase the share of customers with access to same-day or next-day delivery. We plan to continue expanding production capacity through integrating retail production lines at additional ADESA facilities, increasing staffing at
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existing facilities, building new lines at ADESA facilities, and eventually building new greenfield production locations.
Seasonality
We expect to experience seasonal and other fluctuations in our quarterly operating results, including as a result of macroeconomic conditions, which may not fully reflect the underlying performance of our business. Retail and wholesale used vehicle sales generally exhibit seasonality with sales peaking late in the first calendar quarter and diminishing through the rest of the year, with the lowest relative level of vehicle sales expected to occur in the fourth calendar quarter. Due to our historical and current rapid growth, our overall sales patterns in the past have not always reflected the general seasonality of the used vehicle industry. However, as our business continues to mature, our results may become more reflective of typical market seasonality. Used vehicle prices also exhibit seasonality, with used vehicles generally depreciating at a faster rate in the fourth and first quarters of each year and a slower rate in the second and third quarters of each year, all other factors being equal.
Effects of Geopolitical Events and Tariffs
The global trade environment is uncertain and rapidly evolving. We are continuing to monitor developments, including the conflict involving Iran, changes in tariff and trade policies, and the potential effects of these events on our industry and the broader economy. In particular, sustained increases in gasoline prices, including as a result of the conflict in Iran, could further pressure consumer disposable income and reduce their ability to purchase vehicles, while also increasing our transportation and logistics costs. For the three months ended March 31, 2026, these events did not materially impact our financial or operating results.
Investment in Growth
We maintain a primary focus on expanding the scale and reach of our business, while simultaneously driving operational efficiency, flexibility, and scalability through process and technology improvements that underpin sustainable, profitable growth. While we intend to become increasingly efficient over time, absent any material changes in macroeconomic conditions, we also anticipate that our operating expenses will increase as we grow retail units sold, wholesale units sold, and wholesale marketplace units transacted. There is no guarantee that we will be able to realize the desired return on our investments.
Relationships with Related Parties
For discussion about our relationships with related parties, refer to Note 6 — Related Party Transactions of our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q.
Key Operating Metrics
We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our progress and make strategic decisions. Our key operating metrics reflect the key drivers of our growth, including increasing brand awareness and enhancing the selection of vehicles we make available to our customers. Our key operating metrics also demonstrate our ability to translate these drivers into retail sales and to monetize these retail sales through a variety of product offerings.
| Three Months Ended March 31, | |||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||
| Retail units sold | 187,393 | 133,898 | |||||||||||||||||
| Average monthly unique visitors (in thousands) | 21,422 | 17,421 | |||||||||||||||||
| Total website units | 70,600 | 53,707 | |||||||||||||||||
| Total gross profit per unit | $ | 6,783 | $ | 6,938 | |||||||||||||||
| Total gross profit per unit, non-GAAP | $ | 6,911 | $ | 7,140 | |||||||||||||||
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Retail Units Sold
We define retail units sold as the number of vehicles sold to customers in a given period, including retail marketplace partner vehicles, net of returns under our seven-day return policy. We view retail units sold as a key measure of our growth for several reasons. First, retail units sold is the primary driver of our revenues and, indirectly, gross profit, since retail unit sales enable multiple complementary revenue streams, including financing, complementary products, and trade-ins. Second, growth in retail units sold increases the base of available customers for referrals and repeat sales. Third, growth in retail units sold is an indicator of our ability to successfully scale our logistics, fulfillment, and customer service operations.
Average Monthly Unique Visitors
We define a monthly unique visitor as an individual who has visited our website or iOS/Android application within a calendar month, based on data provided by Google Analytics. We calculate average monthly unique visitors as the sum of monthly unique visitors in a given period, divided by the number of months in that period. We view average monthly unique visitors as a key indicator of the strength of our brand, the effectiveness of our advertising and merchandising campaigns, and consumer awareness of our brand.
Total Website Units
We define total website units as the number of vehicles listed on our website on the last day of a given reporting period, including vehicles available for sale, vehicles currently engaged in a purchase or reserved by a customer, and vehicles that can be reserved that generally have not yet completed the inspection and reconditioning process. We view total website units as a key measure of our growth. Growth in total website units increases the selection of vehicles available to our consumers, which we believe will allow us to increase the number of vehicles we sell over time. Moreover, growth in total website units indicates our ability to scale our vehicle purchasing, inspection and reconditioning operations. As part of our inventory strategy, over time we may choose not to expand total website units while continuing to grow sales, thereby improving other key operating metrics of the business.
Total Gross Profit per Unit
We define total gross profit per unit as the aggregate gross profit in a given period, divided by retail units sold in that period including gross profit generated from the sale of retail vehicles, gains on the sales of loans originated to finance the vehicles, commissions on sales of VSCs, GAP waiver coverage and other complementary products, and gross profit generated from wholesale sales of vehicles. We operate an integrated business with the objective of increasing the number of retail units sold and total gross profit per unit. Gross profits generated from the sale of retail and wholesale units are interrelated. For example, our nationwide reconditioning and inspection centers are designed to produce vehicles for both retail and wholesale sales, our vehicle storage locations have shared parking for both retail and wholesale vehicles, and our integrated multi-vehicle logistics and last mile delivery network is operated in service of both retail and wholesale sales. Such interrelationships require us to share finite operational capacity and optimize joint decisions between retail and wholesale sales, in order to position us to achieve our objective of increasing total gross profit per unit. As a result, the inclusion of gross profit generated from wholesale sales of vehicles in total gross profit per unit reflects our integrated business model and the interrelationship between wholesale and retail vehicle sales. We believe the total gross profit per unit metrics provide investors with the greatest opportunity to view our performance through the same lens that our management does, and therefore assists investors to best evaluate our business and measure our progress.
Total Gross Profit per Unit, Non-GAAP
We define total gross profit per unit, non-GAAP as the aggregate gross profit, non-GAAP in a given period, divided by retail units sold in that period. Gross profit, non-GAAP is defined as gross profit plus depreciation and amortization expense in cost of sales, share-based compensation expense in cost of sales, minus revenue related to warrants to acquire common stock of other entities (the "Warrants") as discussed in Note 17 — Fair Value of Financial Instruments of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q. Refer to "Non-GAAP Financial Measures" for more information, including the reconciliation of non-GAAP financial measures to the most directly comparable financial measures under generally accepted accounting principles in the United States ("GAAP").
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Components of Results of Operations
Retail Vehicle Sales
Retail vehicle sales represent the aggregate sales of new and used vehicles to customers through our website. Revenue from retail vehicle sales is recognized upon delivery to the customer or pick up of the vehicle by the customer, and is reported net of a reserve for expected returns. Factors affecting retail vehicle sales revenue include the number of retail units sold and the average selling price of these vehicles. Changes in retail units sold are a much larger driver of changes in revenue than are changes in average selling price.
Retail vehicle sales also include shipping and delivery fees and service revenue from retail marketplace transactions, which are retail marketplace partner vehicles sold to customers through Carvana, where, depending on the structure of the partnership, we may recognize revenue on the sale of the vehicle on a net basis, rather than recognizing the full amount of the vehicle sales price as revenue. As a result, an increase in retail marketplace units sold as a percentage of total retail units sold could lead to a decrease in retail revenue per unit sold, and vice versa, other things being equal.
The number of retail vehicles we sell depends on the volume of traffic to our website, our inventory selection, the effectiveness of our branding and marketing efforts, the quality of our customers' purchase experience, our volume of referrals and repeat customers, the competitiveness of our pricing, competition from other car dealerships and general macroeconomic and used car industry conditions, including inflationary pressures and benchmark interest rates, as well as those conditions that could arise from the global trade and geopolitical environment. On a quarterly basis, the number of retail vehicles we sell is also affected by seasonality, with demand for retail vehicles generally reaching a seasonal high point late in the first quarter of each year, commensurate with the timing of tax refunds, and diminishing through the rest of the year, with the lowest relative level of retail vehicle sales generally expected to occur in the fourth calendar quarter.
Our revenue per retail unit depends on macroeconomic and used car industry conditions, including those that could arise from the global trade and geopolitical environment, the mix of vehicles we acquire, retail prices in our markets, our pricing strategy, our average days to sale, and the number of retail marketplace units sold. We may choose to shift our inventory mix to higher or lower cost vehicles, or to raise or lower our prices relative to market to take advantage of supply or demand imbalances, which could temporarily lead to average selling prices increasing or decreasing. We also generally expect lower average days to sale to be associated with higher retail average selling prices due to decreased vehicle depreciation prior to sale, all other factors being equal.
Wholesale Sales and Revenues
Wholesale sales and revenues include the aggregate proceeds we receive on vehicles we acquire and sell to wholesalers and wholesale marketplace revenues. The vehicles we sell to wholesalers are primarily acquired from customers who sell a vehicle to us without purchasing a retail vehicle and from our customers who trade in their existing vehicles when making a purchase from us. Factors affecting wholesale sales and revenues include the number of wholesale units sold and the average wholesale selling price of these vehicles, and macroeconomic conditions, including those that could arise from the global trade and geopolitical environment. The average selling price of our wholesale units is primarily driven by the mix of vehicles we sell to wholesalers, as well as general supply and demand conditions in the applicable wholesale vehicle market, including the level of depreciation in the wholesale vehicle market. Wholesale sales and revenues include aggregate proceeds we receive on vehicles sold to DriveTime through competitive online auctions that are managed by an unrelated third party and through the Company's wholesale marketplace platform. Wholesale marketplace revenues include fees paid by third parties related to the sale of wholesale marketplace units by third-party sellers or Carvana to buyers through our wholesale marketplace platform, including auction fees and related services revenue.
Other Sales and Revenues
We generate other sales and revenues primarily through the sales of loans we originate and sell in securitization transactions or to financing partners, reported net of a reserve for expected repurchases, commissions we receive on VSCs, sales of GAP waiver coverage, and auto insurance, including Root Warrants we receive on sales of auto insurance.
We generally seek to sell the loans we originate to securitization trusts we sponsor and establish or to financing partners. The securitization trusts issue asset-backed securities, some of which are collateralized by the finance receivables that we sell to the securitization trusts. We also sell the loans we originate under committed forward-flow arrangements, including the Ally
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Master Purchase and Sale Agreement (as defined in Note 7 — Finance Receivable Sale Agreements of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q the "Ally MPSA"), and through fixed pool loan sales, with financing partners who generally acquire them at premium prices without recourse to us for their post-sale performance. Factors affecting revenue from these sales include the number of loans we originate, the average principal balance of the loans, the credit quality of the portfolio, the price at which we are able to sell them in securitization transactions or to financing partners, and economic conditions in the capital markets.
The number of loans we originate is driven by the number of retail vehicles sold and the percentage of our sales for which we provide financing, which is influenced by the financing terms we offer our customers relative to alternatives available to the customer. The average principal balance is driven primarily by the mix of vehicles we sell, since higher average selling prices typically mean higher average balances. The price at which we sell the loan is driven by the terms of our securitization transactions and forward-flow arrangement, applicable interest rates, and whether or not the loan includes GAP waiver coverage.
We receive a commission for selling VSCs that DriveTime Automotive Group, Inc. (together with its consolidated affiliates, collectively, "DriveTime") administers under a master dealer agreement with DriveTime. The commission revenue we recognize on VSCs depends on the number of retail units we sell, the conversion rate of VSCs on these sales, commission rates we receive, VSC early cancellation frequency and product features. The GAP waiver coverage revenue we recognize depends on the number of retail units we sell, the number of customers that choose to finance their purchases with us, the frequency of GAP waiver coverage early cancellation, and the conversion rate of GAP waiver coverage on those sales.
Through our integrated auto insurance solution with Root, customers may conveniently access auto insurance directly from the Carvana e-commerce platform. We receive commissions and Root Warrants based on the Root insurance policies sold through the integrated platform. The commission revenue we recognize depends on the number of retail units we sell, the conversion rate of auto policies on those sales, commission rates we receive, and forecasted attrition. The revenue we recognize from Root Warrants as non-cash consideration depends on the probability of achieving certain auto policy sales thresholds within a specific timeline as well as our performance under the agreement with Root.
Cost of Sales
Cost of sales includes the cost to acquire, recondition, and transport vehicles associated with preparing them for resale, and wholesale marketplace cost of sales. Vehicle acquisition costs are driven by the mix of vehicles we acquire, the source of those vehicles, and supply-and-demand dynamics in the vehicle market. Reconditioning costs consist of direct costs, including parts, labor, and third-party repair expenses directly attributable to specific vehicles, as well as indirect costs, such as IRC and auction site overhead. Transportation costs consist of costs incurred to transport the vehicles from the point of acquisition to the IRC or other site. Cost of sales also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value. Wholesale marketplace cost of sales include costs related to the sale of wholesale marketplace units by third-party sellers through our wholesale marketplace platform, including labor, rent, depreciation and amortization.
Retail Vehicle Gross Profit
Retail vehicle gross profit is primarily the vehicle sales price minus our costs of sales associated with vehicles that we list and sell. Retail vehicle gross profit per unit is our aggregate retail vehicle gross profit in any measurement period divided by the number of retail units sold in that period.
Wholesale Gross Profit
Wholesale gross profit is the vehicle sales price minus our cost of sales associated with vehicles we sell to wholesalers, and wholesale marketplace revenues less wholesale marketplace cost of sales. Factors affecting wholesale gross profit include the number of wholesale units sold, the average wholesale selling price of these vehicles, the average acquisition price associated with these vehicles, the buyer and seller fees, and the number of wholesale marketplace units transacted.
Other Gross Profit
Other sales and revenues consist of 100% gross margin products for which gross profit equals revenue. Therefore, changes in gross profit and the associated drivers are identical to changes in revenues from these products and the associated drivers.
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Selling, General and Administrative Expenses ("SG&A")
SG&A expenses include expenses associated with advertising and providing customer service to customers, including financing, title and registration and limited warranty services, operating our vending machines, hubs, physical auctions, logistics and fulfillment network and other corporate overhead expenses, including expenses associated with information technology, product development, engineering, legal, accounting, finance, and business development. SG&A expenses exclude the costs of inspecting and reconditioning vehicles and transporting vehicles from the point of acquisition to the IRC or other site, which are included in cost of sales, and payroll costs for our employees related to the development of software products for internal use, which are capitalized to software and depreciated over the estimated useful lives of the related assets.
Other Operating Expense, Net
Other operating expense, net primarily includes other general operating expenses such as gains or losses from disposals of long-lived assets.
Interest Expense, Net
Interest expense, net includes interest incurred on our various tranches of Senior Secured Notes and Senior Unsecured Notes, our Floor Plan Facility, and our Finance Receivable Facilities (each as defined in Note 9 — Debt Instruments of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q), as well as our finance leases, and long-term debt, which are used to fund general working capital, our inventory, our transportation fleet, and certain of our property and equipment. Interest expense, net also includes amortization of capitalized debt issuance costs, which is offset by amortization of debt premium and interest income earned on cash and cash equivalents. Interest expense, net excludes the interest incurred during various construction projects to build, upgrade or remodel certain facilities, which is capitalized to property and equipment and depreciated over the estimated useful lives of the related assets.
Other Expense (Income), Net
Other expense (income), net includes changes in fair value on our beneficial interests in securitizations, purchase price adjustment receivables, and fair value adjustments related to our warrants to acquire common stock of other entities as discussed in Note 17 — Fair Value of Financial Instruments of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q. Other expense (income), net also includes expense related to our Tax Receivable Agreement ("TRA") liability. Refer to Note 14 — Income Taxes for further discussion of the TRA.
Income Tax Provision
Income taxes are recognized based upon our anticipated underlying annual blended federal and state income tax rates adjusted, as necessary, for any discrete tax matters occurring during the period. As the sole managing member of Carvana Group, LLC (together with its subsidiaries “Carvana Group”), Carvana Co. consolidates the financial results of Carvana Group. Carvana Group, LLC is treated as a partnership and therefore not subject to U.S. federal and most applicable state and local income tax purposes. Any taxable income or loss generated by Carvana Group is passed through to and included in the taxable income or loss of its members, including Carvana Co., based on its economic interest held in Carvana Group. Carvana Co. is taxed as a corporation and is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income or loss of Carvana Group, as well as any stand-alone income or loss generated by Carvana Co.
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Results of Operations
| Three Months Ended March 31, | ||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||
| (dollars in millions, except per unit amounts) | ||||||||||||||||||||||||||||
| Net sales and operating revenues: | ||||||||||||||||||||||||||||
| Retail vehicle sales, net | $ | 4,828 | $ | 2,980 | 62.0% | |||||||||||||||||||||||
Wholesale sales and revenues (1) | 1,078 | 863 | 24.9% | |||||||||||||||||||||||||
Other sales and revenues (2) | 526 | 389 | 35.2% | |||||||||||||||||||||||||
| Total net sales and operating revenues | $ | 6,432 | $ | 4,232 | 52.0% | |||||||||||||||||||||||
| Gross profit: | ||||||||||||||||||||||||||||
Retail vehicle gross profit | $ | 593 | $ | 429 | 38.2% | |||||||||||||||||||||||
Wholesale gross profit (1) | 152 | 111 | 36.9% | |||||||||||||||||||||||||
Other gross profit (2) | 526 | 389 | 35.2% | |||||||||||||||||||||||||
| Total gross profit | $ | 1,271 | $ | 929 | 36.8% | |||||||||||||||||||||||
| Unit sales information: | ||||||||||||||||||||||||||||
| Retail vehicle unit sales | 187,393 | 133,898 | 40.0% | |||||||||||||||||||||||||
| Wholesale vehicle unit sales | 83,574 | 63,454 | 31.7% | |||||||||||||||||||||||||
| Per unit revenue: | ||||||||||||||||||||||||||||
| Retail vehicles | $ | 25,764 | $ | 22,256 | 15.8% | |||||||||||||||||||||||
Wholesale vehicles (3) | $ | 10,338 | $ | 9,865 | 4.8% | |||||||||||||||||||||||
| Per retail unit gross profit: | ||||||||||||||||||||||||||||
Retail vehicle gross profit | $ | 3,165 | $ | 3,204 | (1.2)% | |||||||||||||||||||||||
| Wholesale gross profit | 811 | 829 | (2.2)% | |||||||||||||||||||||||||
| Other gross profit | 2,807 | 2,905 | (3.4)% | |||||||||||||||||||||||||
| Total gross profit | $ | 6,783 | $ | 6,938 | (2.2)% | |||||||||||||||||||||||
| Per wholesale unit gross profit: | ||||||||||||||||||||||||||||
Wholesale vehicle gross profit (4) | $ | 1,328 | $ | 1,009 | 31.6% | |||||||||||||||||||||||
(1) Includes $13 and $8, respectively, of wholesale sales and revenues from related parties.
(2) Includes $114 and $72, respectively, of other sales and revenues from related parties.
(3) Excludes wholesale marketplace revenues and wholesale marketplace units transacted.
(4) Excludes wholesale marketplace gross profit and wholesale marketplace units transacted.
Retail Vehicle Sales
Three months ended March 31, 2026 versus 2025. Retail vehicle sales increased by $1.8 billion to $4.8 billion during the three months ended March 31, 2026, compared to $3.0 billion during the three months ended March 31, 2025. The increase in revenue was primarily due to an increase in the number of retail vehicles sold to 187,393 from 133,898 during the three months ended March 31, 2026 and 2025, respectively, and an increase in retail revenue per retail unit sold to $25,764 from $22,256 in the prior year, primarily due to lower retail marketplace units sold as a share of total retail units sold.
Wholesale Sales and Revenues
Three months ended March 31, 2026 versus 2025. Wholesale sales and revenues increased by $215 million to $1.1 billion during the three months ended March 31, 2026, compared to $863 million during the three months ended March 31, 2025. The increase in revenue was primarily due to an increase in the number of wholesale units sold to 83,574 from 63,454 during the three months ended March 31, 2026 and 2025, respectively, driven by an increase in overall vehicle acquisitions compared to the prior year, partially offset by a decrease in wholesale marketplace revenues.
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Other Sales and Revenues
Three months ended March 31, 2026 versus 2025. Other sales and revenues increased by $137 million to $526 million during the three months ended March 31, 2026, compared to $389 million during the three months ended March 31, 2025. The increase in revenue was primarily due to an increase in gain on loan sales as a result of increased retail units sold and loan sale volume, partially offset by lower loan sale spreads, and to higher VSC conversion rates during the three months ended March 31, 2026.
Retail Vehicle Gross Profit
Three months ended March 31, 2026 versus 2025. Retail vehicle gross profit increased by $164 million to $593 million during the three months ended March 31, 2026, compared to $429 million during the three months ended March 31, 2025. This increase was driven primarily by an increase in the number of retail vehicles sold to 187,393 from 133,898 during the three months ended March 31, 2026 and 2025, respectively, partially offset by a $39 decrease in retail vehicle gross profit per unit.
Wholesale Gross Profit
Three months ended March 31, 2026 versus 2025. Wholesale gross profit increased by $41 million to $152 million during the three months ended March 31, 2026, compared to $111 million during the three months ended March 31, 2025. This increase was primarily driven by an increase in wholesale units sold to 83,574 from 63,454 during the three months ended March 31, 2026 and 2025, respectively, along with an increase in wholesale vehicle gross profit per wholesale unit to $1,328 from $1,009, respectively, partially offset by a decrease in wholesale marketplace gross profit. The increase in wholesale units sold was primarily a result of an increase in overall vehicle acquisitions during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase in wholesale vehicle gross profit per wholesale unit was primarily a result of lower vehicle acquisition costs relative to sales prices during the three months ended March 31, 2026.
Other Gross Profit
Other sales and revenues consist of 100% gross margin products for which gross profit equals revenue. Therefore, changes in other gross profit and the associated drivers are identical to changes in other sales and revenues and the associated drivers.
Components of SG&A
| Three Months Ended March 31, | |||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||
| (in millions) | |||||||||||||||||||
Compensation and benefits (1) | $ | 245 | $ | 199 | |||||||||||||||
| Advertising | 118 | 72 | |||||||||||||||||
Market occupancy (2) | 19 | 16 | |||||||||||||||||
Logistics (3) | 48 | 37 | |||||||||||||||||
Other (4) | 260 | 211 | |||||||||||||||||
| Total | $ | 690 | $ | 535 | |||||||||||||||
(1) Compensation and benefits includes all payroll and related costs, including benefits, payroll taxes, and equity-based compensation, except those related to preparing vehicles for sale, which are included in cost of sales, and those related to the development of software products for internal use, which are capitalized to software and depreciated over the estimated useful lives of the related assets.
(2) Market occupancy costs include occupancy costs of our vending machine and hubs. It excludes occupancy costs related to reconditioning vehicles which are included in cost of sales and the portion related to corporate occupancy which are included in other costs.
(3) Logistics includes fuel, maintenance and depreciation related to operating our own transportation fleet, and third-party transportation fees, except the portion related to inbound transportation, which is included in cost of sales.
(4) Other costs include all other selling, general and administrative expenses such as IT expenses, corporate occupancy, professional services and insurance, limited warranty, and title and registration.
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Selling, general and administrative expenses increased by $155 million to $690 million during the three months ended March 31, 2026, compared to $535 million during the three months ended March 31, 2025, primarily due to higher retail units sold which drove increases in employee headcount, advertising, market occupancy, logistics, limited warranty, and title and registration.
Interest Expense, Net
Interest expense, net decreased by $40 million to $99 million during the three months ended March 31, 2026 compared to $139 million during the three months ended March 31, 2025, primarily due to lower interest on the Senior Secured Notes as a result of the repurchases and redemption of the 2028 Senior Secured Notes and the lower cash interest rate on the 2031 Senior Secured Notes.
Loss on Debt Extinguishment
There were no debt extinguishments during the three months ended March 31, 2026. Loss on debt extinguishment was $2 million during the three months ended March 31, 2025 due to the repurchase of $52 million of principal amount of 2028 Senior Secured Notes in the open market for $55 million, which included less than $1 million of accrued interest and pro-rata write-offs of unamortized debt issuance costs and unamortized premium.
Other Expense (Income), Net
Other expense (income), net was expense of $41 million during the three months ended March 31, 2026 and was primarily due to a $42 million decrease in the fair value of Warrants, compared to income of $122 million during the three months ended March 31, 2025 which was primarily due to a $158 million increase in the fair value of Warrants, partially offset by a $40 million TRA expense.
Income Tax Provision
Income tax provision was $36 million and $2 million during the three months ended March 31, 2026 and 2025, respectively. Effective tax rates were 8.1% and 0.5% during the three months ended March 31, 2026 and 2025, respectively. Our tax provision for interim periods is determined by using an estimated annual effective tax rate based on anticipated blended federal and state income tax rates, adjusted for discrete items arising in that quarter. Each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The increase in our effective tax rate was primarily due to the impact of releasing the valuation allowance on our deferred tax assets in the fourth quarter of 2025. Our effective tax rate for the three months ended March 31, 2026 differed from the expected U.S. federal statutory rate of 21% primarily due to income attributable to non-controlling interests and excess tax benefits related to stock-based compensation.
Non-GAAP Financial Measures
To supplement the unaudited condensed consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we also present the following non-GAAP measures: Adjusted EBITDA; Adjusted EBITDA margin; Gross profit, non-GAAP; Total gross profit per retail unit, non-GAAP; SG&A expenses, non-GAAP; and Total SG&A expenses per retail unit, non-GAAP.
Adjusted EBITDA; Adjusted EBITDA margin; Gross profit, non-GAAP; Total gross profit per retail unit, non-GAAP; SG&A expenses, non-GAAP; and Total SG&A expenses per retail unit, non-GAAP are supplemental measures of operating performance that do not represent and should not be considered an alternative to net income, gross profit, or SG&A expenses, as determined by GAAP.
Adjusted EBITDA is defined as net income plus (minus) income tax provision, interest expense, net, other operating expense, net, other expense (income), net, depreciation and amortization expense in cost of sales and SG&A expenses, share-based compensation expense in cost of sales and SG&A expenses, and loss on debt extinguishment, minus revenue related to our Warrants. Adjusted EBITDA margin is Adjusted EBITDA as a percentage of total revenues.
Gross profit, non-GAAP is defined as GAAP gross profit plus depreciation and amortization expense in cost of sales and share-based compensation expense in cost of sales, minus revenue related to our Warrants. Total gross profit per retail unit, non-GAAP is Gross profit, non-GAAP divided by retail vehicle unit sales.
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SG&A expenses, non-GAAP is defined as GAAP SG&A expenses minus depreciation and amortization expense in SG&A expenses and share-based compensation expense in SG&A expenses. Total SG&A expenses per retail unit, non-GAAP is SG&A expenses, non-GAAP divided by retail vehicle unit sales.
We use these non-GAAP measures to measure the operating performance of our business as a whole and relative to our total revenues and retail vehicle unit sales. We believe that these metrics are useful measures to us and to our investors because they exclude certain financial, capital structure, and non-cash items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations, in part because they may vary widely across time and within our industry independent of the performance of our core operations. We believe that excluding these items enables us to more effectively evaluate our performance period-over-period and relative to our competitors. Adjusted EBITDA; Adjusted EBITDA margin; Gross profit, non-GAAP; Total gross profit per retail unit, non-GAAP; SG&A expenses, non-GAAP; and Total SG&A expenses per retail unit, non-GAAP may not be comparable to similarly titled measures provided by other companies due to potential differences in methods of calculations.
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A reconciliation of Adjusted EBITDA to net income, Gross profit, non-GAAP to gross profit, and SG&A expenses, non-GAAP to SG&A expenses, which are the most directly comparable GAAP measures, and calculations of Adjusted EBITDA margin, Total gross profit per retail unit, non-GAAP, and Total SG&A expenses per retail unit, non-GAAP is as follows:
| Three Months Ended March 31, | |||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||
(dollars in millions, except per unit amounts) | |||||||||||||||||||
Net income | $ | 405 | $ | 373 | |||||||||||||||
| Income tax provision | 36 | 2 | |||||||||||||||||
| Interest expense, net | 99 | 139 | |||||||||||||||||
| Other operating expense, net | — | — | |||||||||||||||||
| Other expense (income), net | 41 | (122) | |||||||||||||||||
| Depreciation and amortization expense in cost of sales | 28 | 31 | |||||||||||||||||
| Depreciation and amortization expense in SG&A expenses | 41 | 42 | |||||||||||||||||
| Share-based compensation expense in cost of sales | 1 | 1 | |||||||||||||||||
| Share-based compensation expense in SG&A expenses | 26 | 25 | |||||||||||||||||
| Warrant revenue | (5) | (5) | |||||||||||||||||
| Loss on debt extinguishment | — | 2 | |||||||||||||||||
| Adjusted EBITDA | $ | 672 | $ | 488 | |||||||||||||||
| Total revenues | $ | 6,432 | $ | 4,232 | |||||||||||||||
Net income margin | 6.3 | % | 8.8 | % | |||||||||||||||
| Adjusted EBITDA margin | 10.4 | % | 11.5 | % | |||||||||||||||
| Gross profit | $ | 1,271 | $ | 929 | |||||||||||||||
| Depreciation and amortization expense in cost of sales | 28 | 31 | |||||||||||||||||
| Share-based compensation expense in cost of sales | 1 | 1 | |||||||||||||||||
| Warrant revenue | (5) | (5) | |||||||||||||||||
| Gross profit, non-GAAP | $ | 1,295 | $ | 956 | |||||||||||||||
| Retail vehicle unit sales | 187,393 | 133,898 | |||||||||||||||||
| Total gross profit per retail unit | $ | 6,783 | $ | 6,938 | |||||||||||||||
| Total gross profit per retail unit, non-GAAP | $ | 6,911 | $ | 7,140 | |||||||||||||||
| SG&A expenses | $ | 690 | $ | 535 | |||||||||||||||
| Depreciation and amortization expense in SG&A expenses | 41 | 42 | |||||||||||||||||
| Share-based compensation expense in SG&A expenses | 26 | 25 | |||||||||||||||||
Next expected filings
- ~2026-07-29 10-Q expected by 2026-08-07 (in 89 days)
- ~2026-10-28 10-Q expected by 2026-11-06 (in 180 days)
- ~2027-02-17 10-K expected by 2026-09-21 (in 292 days)
- ~2027-04-28 10-Q expected by 2027-05-07 (in 362 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-04-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-29 10-Q Quarterly Report
- 2026-02-18 10-K Annual Report
- 2026-02-18 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-29 10-Q Quarterly Report
- 2025-10-29 8-K Earnings Release; Financial Statements and Exhibits
- 2025-07-30 10-Q Quarterly Report
- 2025-07-30 8-K Earnings Release; Financial Statements and Exhibits
- 2025-05-07 10-Q Quarterly Report
- 2025-05-07 8-K Earnings Release; Financial Statements and Exhibits
- 2025-04-29 8-K Material Agreement Entered; Financial Statements and Exhibits
- 2025-02-19 10-K Annual Report
- 2025-02-19 8-K Other Events; Financial Statements and Exhibits
- 2025-02-19 8-K Earnings Release; Financial Statements and Exhibits
- 2025-01-06 8-K Material Agreement Entered; Financial Statements and Exhibits