Core Viewpoint - Carvana's stock experienced a significant drop of nearly 15%, reaching a four-month low of $301.32, despite reporting strong revenue growth in Q3 [1] Financial Performance - Carvana's Q3 overall revenue increased by 54.5% year-over-year to $5.65 billion, surpassing analysts' average expectation of $5.08 billion [1] - The company's earnings per share (EPS) was reported at $1.03, which fell short of analysts' expectations of $1.30 [1] - Retail sales reached a record 156,000 units in Q3, reflecting a year-over-year growth of 44% [1] Future Outlook - Carvana anticipates retail sales in Q4 to exceed 150,000 units [1] - The company expects its full-year adjusted EBITDA to reach or exceed the upper limit of the previously announced range of $2 billion to $2.2 billion [1]

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Group 1 - US stock index futures experienced slight declines, with Nasdaq futures down 0.35%, S&P 500 futures down 0.24%, and Dow futures down 0.33% [1] - Major European indices collectively fell, with Germany's DAX down 0.15%, UK's FTSE 100 down 0.61%, France's CAC down 0.91%, and the Euro Stoxx 50 down 0.52% [1] - OpenAI is reportedly planning to apply for an IPO as early as 2026, with a potential valuation of up to $1 trillion [1] - Alphabet, Google's parent company, reported record Q3 revenue of $102.3 billion, with a 34% year-over-year increase in cloud computing revenue [1] - Microsoft reported Q1 FY2026 revenue of $77.67 billion and earnings per share of $3.72, both exceeding expectations; however, Azure and other cloud revenue fell short of buyer expectations [1] - Meta's Q3 revenue was $51.2 billion, with net profit declining to $2.7 billion due to one-time tax expenses; the company raised its full-year capital expenditure guidance [1] Group 2 - Eli Lilly reported a 54% year-over-year revenue increase to $17.6 billion in Q3, raising its full-year revenue forecast [2] - Merck's Q3 sales reached $17.28 billion, with adjusted earnings per share of $2.58, both exceeding expectations [2] - Stellantis reported a 13% year-over-year revenue increase to €37.2 billion in Q3, noting that US tariffs have caused approximately €1 billion in losses this year [2] - Shell's Q3 adjusted profit was $5.43 billion, surpassing expectations; the company announced a $3.5 billion stock buyback plan [2] - ServiceNow reported Q3 revenue of $3.41 billion, with adjusted earnings per share of $4.82, both exceeding expectations; the company plans a 1-for-5 stock split [2] - eBay's Q3 sales grew 9% year-over-year to $2.82 billion, with adjusted earnings per share of $1.36, exceeding expectations [2] - Carvana, a US used car retailer, reported a 54.5% year-over-year revenue increase to $5.65 billion in Q3, with earnings per share of $1.03, which fell short of analyst expectations [2] - KLA Corporation, a semiconductor testing equipment manufacturer, reported a 13% year-over-year revenue increase to $3.21 billion in Q1 FY2026, with adjusted earnings per share of $8.81, exceeding expectations [2] - Novo Nordisk is reportedly increasing its bid for Metsera, while Pfizer's $4.9 billion acquisition may face uncertainties [2] Group 3 - S&P has downgraded Strategy's credit rating to junk status at B-, citing significant "currency mismatch" risks [3]

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Core Insights - Carvana's stock dropped over 9.8% in after-hours trading, closing at $319 [1] - The company reported a 54.5% year-over-year revenue increase to $5.65 billion, exceeding analyst expectations of $5.08 billion [1] - Earnings per share were $1.03, which fell short of the analyst forecast of $1.30 [1] - Retail sales reached a record 156,000 units, marking a 44% year-over-year growth [1] - For the fourth quarter, Carvana anticipates retail sales to exceed 150,000 units and expects adjusted EBITDA for the year to reach or exceed the upper limit of the previously announced range of $2 billion to $2.2 billion [1]

Core Insights - Carvana's eCommerce platform has led to significant growth in units sold and revenue, contrasting with flat sales among other public retailers [1][2] - In Q3, Carvana reported a 44% year-over-year increase in retail units sold, totaling 155,941 units, and a 55% year-over-year increase in total revenue, reaching $5.647 billion [2] - The company's growth is attributed to three long-term drivers: improved customer offerings, increased awareness and trust, and enhanced inventory selection [3] Operational Strategies - Carvana's CEO highlighted that the growth in retail units sold indicates a structural difference in their business model, which aims to transform the car buying and selling process [4] - The company leverages growing data to enhance decision-making models, increase inventory, and improve delivery times [4] - Phoenix is being used as a test market, where Carvana achieves same- or next-day delivery for 40% of customers, significantly higher than the national average of 10% [5] Future Plans - Carvana intends to continue optimizing processes and improving results through ambitious staffing and evolving technology, particularly AI [6]

Core Insights - Carvana reported quarterly earnings of $1.03 per share, missing the Zacks Consensus Estimate of $1.33 per share, representing an earnings surprise of -22.56% [1] - The company posted revenues of $5.65 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 11.80%, compared to $3.66 billion in the same quarter last year [2] - Carvana shares have increased approximately 78.1% year-to-date, significantly outperforming the S&P 500's gain of 17.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.14 on revenues of $4.97 billion, and for the current fiscal year, it is $5.23 on revenues of $19.16 billion [7] - The estimate revisions trend for Carvana was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Internet - Commerce industry, to which Carvana belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5]

Financial Data and Key Metrics Changes - In Q3 2025, Carvana achieved a record retail units sold totaling 155,941, representing a 44% increase year-over-year [13] - Revenue reached $5.647 billion, marking a 55% increase year-over-year, and the annual revenue run rate exceeded $20 billion for the first time [12][13] - Net income was $263 million, up $115 million from the previous year, resulting in a net income margin of 4.7% [17] - Adjusted EBITDA was $637 million, an increase of $208 million, with an adjusted EBITDA margin of 11.3%, slightly down from 11.7% [18] Business Line Data and Key Metrics Changes - Non-GAAP retail gross profit per unit (GPU) decreased by $77, primarily due to higher retail depreciation rates [14] - Non-GAAP wholesale GPU decreased by $168, driven by higher wholesale depreciation rates and retail units sold growth outpacing ADESA marketplace growth [14] - Non-GAAP other GPU increased by $63, attributed to improvements in cost of funds and higher finance and vehicle service contract attach rates [14] Market Data and Key Metrics Changes - The company reported that 40% of customers in Phoenix are now receiving same or next-day delivery, compared to 10% nationwide [9] - More than 30% of retail customers complete the entire purchasing process without interaction with customer advocates until delivery or pickup [9] Company Strategy and Development Direction - Carvana aims to sell 3 million cars at a 13.5% adjusted EBITDA margin within the next 5 to 10 years, focusing on improving customer experience and operational efficiency [7][11] - The company is enhancing its logistics capabilities, with a focus on same-day delivery and optimizing processes in test markets like Phoenix [8][9] - Investments in reconditioning capacity and digital auction capabilities are expected to strengthen both retail and wholesale channels [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of loan performance, noting that 2024 and 2025 loan originations are performing well compared to industry standards [25] - The company remains optimistic about future growth opportunities, emphasizing the importance of prioritizing initiatives amid evolving technology and customer preferences [11] - Management highlighted the structural advantages of their business model, which positions them well against traditional retailers [81] Other Important Information - Carvana retired $559 million of senior secured notes in Q3 and reduced total corporate debt retired in 2024 and 2025 to $1.2 billion [19] - The company has over $2.1 billion in cash, with a net debt to trailing 12-month adjusted EBITDA ratio of 1.5 times, indicating a strong financial position [19] Q&A Session Summary Question: Health of the subprime loan portfolio and timing of new agreements - Management indicated that loan performance for 2024 and 2025 originations is strong, with recent agreements formalizing existing relationships to enhance loan sales [24][26] Question: Operating expense per unit and future opportunities - Management explained that while operating expenses per unit ticked up sequentially, they expect to drive down costs over time through operational efficiencies [30][32] Question: Seasonal behavior and guidance for Q4 - Management noted that Q4 typically sees variability in unit sales, but they expect strong growth to continue [40] Question: EV tax credits and impact on demand - Management acknowledged a shift in consumer preference due to the expiration of EV tax credits but noted that overall demand remains stable [63] Question: Competition from new entrants like Amazon - Management emphasized focusing on delivering the best customer experience and maintaining a scalable business model, rather than worrying about specific competitors [80][81] Question: Sourcing environment and relationships with commercial providers - Management highlighted the importance of being a structurally better buyer of cars and the ongoing work to unlock wholesale and retail capabilities [92][94]

Financial Data and Key Metrics Changes - In Q3 2025, Carvana achieved a record retail units sold totaling 155,941, representing a 44% increase year-over-year [13] - Revenue reached $5.647 billion, marking a 55% increase and also a new company record [13] - Net income was $263 million, an increase of $115 million, resulting in a net income margin of 4.7%, up from 4% [17] - GAAP operating income was $552 million, an increase of $215 million, with a GAAP operating margin of 9.8%, up from 9.2% [17] - Adjusted EBITDA was $637 million, an increase of $208 million, with an adjusted EBITDA margin of 11.3%, down from 11.7% [18] Business Line Data and Key Metrics Changes - Non-GAAP retail GPU decreased by $77, primarily due to higher retail depreciation rates [14] - Non-GAAP wholesale GPU decreased by $168, driven by higher wholesale depreciation rates and retail units sold growth outpacing ADESA marketplace growth [14] - Non-GAAP other GPU increased by $63, driven by improvements in cost of funds and higher finance and VSC attach rates [14] Market Data and Key Metrics Changes - The company reported that 40% of customers in Phoenix are now receiving same or next-day delivery, compared to 10% nationwide [9] - More than 30% of retail customers now complete the entire process without interaction with customer advocates until delivery or pickup [9] Company Strategy and Development Direction - Carvana aims to sell 3 million cars at a 13.5% adjusted EBITDA margin within the next 5 to 10 years, focusing on improving customer experience and operational efficiency [7][11] - The company is investing in reconditioning capacity and digital auction capabilities to enhance inventory management and customer delivery times [8] - Carvana is pursuing a vertically integrated business model to improve efficiency and customer satisfaction [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of loan performance and the strength of their loan originations in 2024 and 2025 [25] - The company remains optimistic about future growth opportunities despite potential macroeconomic challenges [52] - Management highlighted the importance of prioritizing opportunities in a rapidly evolving technological landscape [11] Other Important Information - Carvana's annual revenue run rate has exceeded $20 billion, indicating significant long-term growth potential [12] - The company has retired $1.2 billion of corporate debt in 2024 and 2025, strengthening its balance sheet [19] Q&A Session Summary Question: Can you talk about the health of the subprime loan portfolio and the timing of new third-party agreements? - Management indicated that loan performance for 2024 and 2025 is strong, and the new agreements formalize existing relationships to enhance loan sales [25][26] Question: Can you discuss the operating expense per unit and future opportunities to drive down costs? - Management explained that while operating expenses ticked up sequentially, they expect to drive down costs over time through operational efficiencies [32] Question: What is the guidance for retail GPU in Q4? - Management noted that retail GPU is expected to be similar to last year, influenced by seasonal factors and depreciation rates [34] Question: How does the expiration of EV tax credits impact demand for used cars? - Management stated that the expiration has shifted customer preferences but not aggregate demand, and the system is adapting accordingly [63] Question: Can you comment on the sourcing environment and relationships with commercial rental providers? - Management emphasized the importance of being a structurally better buyer of cars and the ongoing work to unlock wholesale and retail capabilities [92][94]

Financial Data and Key Metrics Changes - In Q3 2025, Carvana achieved a record retail units sold totaling 155,941, representing a 44% increase year-over-year [11] - Revenue reached $5.647 billion, marking a 55% increase year-over-year and exceeding an annual revenue run rate of $20 billion for the first time [11][12] - Net income was $263 million, up $115 million from the previous year, with a net income margin of 4.7% [16] - Adjusted EBITDA was $637 million, an increase of $208 million, with an adjusted EBITDA margin of 11.3%, slightly down from 11.7% [17] Business Line Data and Key Metrics Changes - Non-GAAP retail GPU decreased by $77, primarily due to higher retail depreciation rates [12] - Non-GAAP wholesale GPU decreased by $168, driven by higher wholesale depreciation rates and retail units sold growth outpacing ADESA marketplace growth [12] - Non-GAAP other GPU increased by $63, attributed to improvements in cost of funds and higher finance and VSC attach rates [12] Market Data and Key Metrics Changes - The company reported that 40% of customers in Phoenix are now receiving same or next-day delivery, compared to 10% nationwide [8] - More than 30% of retail customers complete the entire process without interaction with customer advocates until delivery or pickup [8] Company Strategy and Development Direction - Carvana aims to sell 3 million cars at a 13.5% adjusted EBITDA margin within the next 5 to 10 years, focusing on improving customer experience and operational efficiency [5][10] - The company is investing in reconditioning capacity and digital auction capabilities to enhance inventory management and customer delivery times [6][7] - Carvana is leveraging its vertically integrated finance platform to strengthen its balance sheet and drive toward investment-grade credit ratios [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the performance of 2024 and 2025 loan originations, indicating strong loan performance relative to industry standards [23] - The company remains optimistic about future growth opportunities, emphasizing the importance of prioritizing opportunities amid evolving technology and customer preferences [10] - Management noted that while the expiration of EV tax credits has shifted customer preferences, it has not significantly impacted overall demand [55] Other Important Information - Carvana retired $559 million of its 2028 senior secured notes and $98 million of its 2025 senior unsecured notes, reducing total corporate debt retired in 2024 and 2025 to $1.2 billion [18] - The company has expanded loan sale partnerships, formalizing agreements for the sale of up to $14 billion of future loan principal [14][15] Q&A Session Summary Question: Can you talk about the health of the loan portfolio and the need for incremental reserves? - Management indicated that 2024 and 2025 loan originations are performing well, with strong validation from partners like Ally Financial, which increased its loan purchase agreement based on performance trends [23][24] Question: Can you discuss the operating expense per unit and future opportunities to drive it down? - Management explained that while operating expenses ticked up sequentially, they expect to drive down operational expenses over time through continued efficiency improvements [26][28] Question: How do you see the impact of EV tax credits on demand for used cars? - Management noted that the expiration of EV tax credits has shifted customer preferences but has not significantly impacted overall demand, and they remain optimistic about the long-term potential of EVs [55] Question: Can you provide insights on the same-day delivery test in Phoenix? - Management highlighted the clear relationship between speed and conversion, emphasizing the strategic importance of building this capability to differentiate from competitors [60][62] Question: How does Carvana view competition from new entrants like Amazon? - Management stated that the focus remains on delivering the best customer experience and that the majority of the used car market is still dominated by traditional retailers, which positions Carvana favorably [68][69]