Carvana (US:CVNA)2025-10-29 22:32Financial 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]