Carvana (NYSE:CVNA) Q3 2025 Earnings Call October 29, 2025 05:30 PM ET Company ParticipantsMark Jenkins - CFOErnie Garcia - CEOMeg Kehan - Senior Director of Capital Markets and Investor RelationsJeff Lick - Managing DirectorRajat Gupta - VPConference Call ParticipantsAndrew Boone - AnalystDaniela Haigian - VP and Equity Research AnalystChris Bottiglieri - Equity Research AnalystMarvin Fong - Equity Research Analyst, Consumer, and Technology ServicesChris Pierce - Research AnalystMichael Montani - Research ...

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]

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Core Insights - Carvana has reported another sales beat, indicating strong performance in the used car market [1] - The company is focusing on same-day deliveries as a strategy to enhance customer satisfaction and drive sales growth [1] Sales Performance - Carvana's recent sales figures exceeded expectations, showcasing resilience in a competitive market [1] - The company continues to leverage its online platform to attract customers, contributing to its sales success [1] Strategic Initiatives - The introduction of same-day delivery services is aimed at improving customer experience and increasing market share [1] - This initiative reflects a broader trend in the industry towards faster and more convenient delivery options [1]

247 Wall Street Carvana (NYSE: CVNA) reports Q3 2025 earnings after the close today. The used-car disruptor’s stock has surged this year as profitability and scale have accelerated faster than even bullish investors expected. After a six-quarter streak of positive net income and a historic Q2 that saw record revenue, margins, and units sold, the question now is whether Carvana can maintain the pace of execution as growth normalizes. CEO Ernie Garcia called Q2 “another exciting quarter” where Carvana becam ...

Core Insights - Carvana reported higher third-quarter profit and revenue, driven by strong demand for preowned vehicles [1] Company Summary - Carvana's third-quarter performance showed an increase in both profit and revenue, indicating a positive trend in the used car market [1] - The strong demand for preowned vehicles has significantly contributed to Carvana's financial results [1] Industry Summary - The used car market is experiencing robust demand, which is benefiting retailers like Carvana [1]

Financial Data and Key Metrics Changes - Q3 revenue was $7.7 billion, up 1% year-over-year [5] - EBITDA for Q3 was $292 million, with net income of $213 million and earnings per share of $3.23 [5] - Retail automotive same-store revenue increased by 5%, with service and parts revenue also up by 5% [5] - Total new vehicle gross per unit was impacted by a higher percentage of BEV sales, reducing gross by approximately $100 [6][8] - Free cash flow for the nine months ended September 30, 2025, was $625 million, with adjusted EBITDA of $1.1 billion [20] Business Line Data and Key Metrics Changes - U.S. automotive retail same-store new and used unit sales increased by 5%, with new units up 9% and used units up 1% [10] - Premier Truck Group same-store unit sales declined by 19% during Q3, with EBITDA down $15 million [9][12] - International revenue was $2.9 billion, with a 7% decline in same-store units delivered in the UK [15] - Used vehicle gross profit in the UK increased by 19%, contributing to an overall increase in used vehicle gross per unit [16] Market Data and Key Metrics Changes - In the U.S., same-store new units delivered increased by 9%, while revenue increased by nearly 10% [7] - The UK retail automotive market faced challenges due to a cyber incident at Jaguar Land Rover, impacting new vehicle deliveries [8][15] - The Class 8 market saw a 30% decline in orders and a 22% decline in retail sales during Q3 [12] Company Strategy and Development Direction - The company remains committed to its diversification strategy and has acquired a Ferrari dealership in Modena, Italy [23] - The focus on electric vehicle sales increased, with BEV sales making up over 10% of total sales in Q3 [6] - The company is adjusting its cost structure in response to macroeconomic challenges and is well-positioned for a market rebound [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the diversified model's ability to adapt to market conditions [25] - The operating environment in the UK remains challenging due to inflation and interest rates, impacting consumer affordability [15] - Management anticipates a gradual recovery in the freight environment, with potential improvements in freight rates and capacity [51] Other Important Information - The company repaid $550 million of senior subordinated notes, reducing non-vehicle debt to $1.57 billion [21] - Total inventory was $4.7 billion, with retail automotive inventory down $9 million [23] - The company has $262 million remaining under the existing securities repurchase authorization [22] Q&A Session Summary Question: Clarification on Chinese brands and Sytner Select locations - Management confirmed the transition to Sytner Select involved reducing big-box retail stores to eight high-quality locations, with partnerships with Chinese brands like Chery and Geely [32][34] Question: Impact of tax deductions on Q4 demand - Management indicated that the tax deduction for depreciation would have an impact on Q4 demand, with production schedules filled for Q4 [38][40] Question: Visibility on recovery for Premier Truck Group - Management noted that freight rates have bottomed out and discussed potential capacity tightening due to regulatory changes affecting CDL drivers [49][50] Question: Growth in U.S. parts and service business - Management highlighted strong performance in customer pay and warranty services, driven by an aging vehicle fleet and operational efficiencies [54][56] Question: Trends in luxury vehicle sales and GPU - Management discussed the performance of luxury brands, particularly Jaguar Land Rover, and the impact of supply constraints on gross profit per unit [66][68]

Financial Data and Key Metrics Changes - Q3 revenue was $7.7 billion, up 1% year-over-year [4] - EBITDA for the quarter was $292 million, with net income of $213 million and earnings per share of $3.23 [4] - Retail automotive same-store revenue increased by 5%, with service and parts revenue also up by 5% [4] - The average discount from MSRP on BEVs sold in the U.S. was $7,100, impacting new vehicle gross per unit by approximately $100 [5][6] Business Line Data and Key Metrics Changes - U.S. retail automotive same-store new units delivered increased by 9%, with revenue up by $300 million, nearly 10% [5] - Premier Truck Group same-store unit sales declined by 19%, with EBITDA down by $15 million [7][12] - In the UK, same-store units delivered declined by 7%, with a significant impact from a cyber incident at Jaguar Land Rover [14] Market Data and Key Metrics Changes - The U.S. retail automotive business showed strong performance, while the UK faced challenges due to inflation and a cyber incident [5][14] - International revenue was $2.9 billion, with a 23% increase in revenue from operations in Italy, Germany, and Japan [16] - The Class 8 market saw a 30% decline in orders and a 22% decline in retail sales during Q3 [11] Company Strategy and Development Direction - The company remains committed to its diversification strategy and has acquired a Ferrari dealership in Modena, Italy [23] - The focus is on enhancing relationships with brands and driving efficiencies in operations [18][19] - The company is adjusting its cost structure in response to market conditions and preparing for a rebound in the freight environment [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the diversified model's ability to adapt to market conditions [25] - The freight environment is expected to improve as capacity tightens due to regulatory changes affecting CDL drivers [42] - The company anticipates a gradual recovery in the used vehicle market as lease returns increase [71] Other Important Information - The company generated $852 million in cash flow from operations for the nine months ended September 30, 2025 [19] - Total debt was $5.6 billion, with a significant portion related to floor plans [20] - The company has returned over $2.5 billion to shareholders through dividends and share repurchases over the last four years [22] Q&A Session Summary Question: Clarification on Chinese brands and Sytner Select - Management confirmed the transition to Sytner Select involved reducing inventory while improving quality, with partnerships established with Chinese brands like Chery and Geely [29][30] Question: Impact of tax deductions on demand - Management indicated that the tax deduction for depreciation would have a positive cash flow impact, with expectations for continued demand in Q4 [33][36] Question: Visibility on recovery in Premier Truck Group - Management noted that freight rates have likely bottomed out, with expectations for capacity tightening and improved freight rates in the future [42] Question: Trends in luxury vehicle sales - Management highlighted strong performance in premium luxury sales, with expectations for continued demand despite challenges from specific brands [55][56] Question: Used vehicle gross profit increase - Management attributed the increase in used vehicle gross profit primarily to the Sytner Select strategy and improved inventory management [70][71]

Core Insights - The article discusses the importance of enabling Javascript and cookies in browsers to ensure proper functionality and access to content [1] Group 1 - The article highlights that users may face access issues if they have an ad-blocker enabled, suggesting the need to disable it for uninterrupted service [1]

Financial Performance - Revenue increased by 1% to $7.7 billion for Q3 2025 compared to the same period last year[15] - For the nine months ended September 30, 2025, total revenue increased by 1% to $23 billion[28] - Q3 2025 net income attributable to common stockholders was $213 million, a decrease of 6% compared to $226 million in Q3 2024[28] - Income per share for Q3 2025 was $323, a decrease of 5% compared to $339 in Q3 2024[28] - For the nine months ended September 30, 2025, net income attributable to common stockholders was $707 million, a 4% increase compared to $683 million in the same period of 2024[28] - Income per share for the nine months ended September 30, 2025, was $1066, a 5% increase compared to $1020 in the same period of 2024[28] Retail Automotive - Retail automotive same-store revenue increased by 51%, with related gross profit up by 30%[15] - Same-store new units delivered increased by 39%[15] - Same-store service & parts revenue increased by 49%, with related gross profit up by 75%[15] Capital Allocation - Repaid $550 million of 35% senior subordinated notes due September 1, 2025, at scheduled maturity[15] - Through October 24, 2025, repurchased 1086560 shares of common stock for $167 million[15] - On October 15, 2025, the company announced a 45% increase in the quarterly dividend, representing $006 per share, to $138[15]