CVNA Carvana 10-Q 2026-09-30 section summaries

Business and operating performance

Carvana operates an e-commerce platform for used-car purchases and sales, including financing, trade-ins, service contracts and insurance. It reports one operating segment, assessed using consolidated net income; substantially all revenue and all assets are in the U.S.

Q3 2026 net sales and operating revenue grew 42.4% to $8.040B from $5.647B, but costs grew faster and pressured margins:

Q3 cost of sales was $6.519B from $4.499B; gross profit rose to $1.521B from $1.148B, while gross margin narrowed to 18.9% from 20.3%. SG&A was $805M from $595M, and operating income increased to $714M from $552M. Net interest expense declined to $98M from $125M, and other expense was $11M versus $154M; a $53M debt-extinguishment loss, versus $14M, partly offset those improvements. Net income was $483M from $263M.

For the nine months ended September 30, 2026 (9M), revenue rose 48.4% to $21.848B from $14.719B:

9M cost of sales was $17.672B from $11.578B; gross profit grew to $4.176B from $3.141B, with gross margin declining to 19.1% from 21.3%. SG&A was $2.199B from $1.681B, operating income $1.975B from $1.457B, and net income $1.401B from $944M. Interest expense fell to $298M from $407M; debt-extinguishment loss was $53M from $16M, and other expense was $52M from $92M.

Net income attributable to Carvana Co. was $289M from $151M in Q3 and $849M from $550M in 9M; the balance was attributable to noncontrolling interests. Q3 diluted EPS was $0.39 from $0.21, and 9M diluted EPS was $1.15 from $0.76. Diluted weighted-average Class A shares were 739.910M from 731.374M in Q3 and 740.051M from 720.501M in 9M. At September 30, Class A shares outstanding were 721.812M, versus 711.148M at December 31, 2025; Class B shares were 380.547M at both dates. The reported diluted share count excludes anti-dilutive LLC units: 380.647M Class A Units and 6.484M Class B Units at September 30. Per-share figures reflect the five-for-one split effective May 8, 2026.

Balance sheet, cash flow and funding

At September 30, 2026, total assets were $15.195B, versus $13.201B at December 31, 2025; total stockholders’ equity was $5.653B, versus $4.203B. Goodwill was $12M and intangible assets, net, were $51M (excluding goodwill). The intangible assets included $50M of customer relationships, $31M of developed technology and $36M of franchise rights before accumulated amortization. Cash and cash equivalents were $3.049B, with $123M restricted cash, totaling $3.172B; vehicle inventory was $3.456B.

For 9M, operating cash flow was $900M from $606M and purchases of property and equipment were $166M from $96M. Carvana originated $14.187B of finance receivables and received $14.722B of net sale proceeds, including $1.084B of gains on loan sales—a substantial part of its funding model. Cash interest paid increased to $443M from $311M.

Balance-sheet debt was $5.228B, comprising $71M of short-term revolving facilities, $283M of current long-term debt and $4.874B of long-term debt. The debt-instrument disclosure separately reported $5.161B of debt excluding finance leases. In August, Carvana borrowed $1.66B under a Term Loan B and used the proceeds plus cash to redeem $1.660B principal of 2030 Senior Secured Notes for $1.711B, including a $50M premium and accrued interest; the transaction resulted in a $53M Q3 extinguishment loss. Remaining 2031 Senior Secured Notes had $2.269B principal at 9%. The Term Loan B matures in 2033, has an approximately 6.1% effective rate and no financial maintenance covenants.

Finance-receivable funding includes Ally’s forward-flow commitment, increased to up to $8B through July 2027, and third-party fixed-pool agreements with commitments of up to $12.5B through January 2028. Carvana also sells loans through securitizations, retaining at least 5% of beneficial interests. Those interests had $557M carrying value and estimated fair value at September 30, versus $486M at year-end; they expose Carvana to underlying credit and prepayment risk. Management said working capital, operating cash flows and expected financing arrangements should fund operations for at least one year from issuance.

Other material exposures

Recurring DriveTime arrangements are notable related-party dependencies: Carvana recognized $125M from $91M in Q3 and $349M from $242M in 9M in service-contract commissions and expected excess-reserve payments. The tax receivable agreement liability was $2.230B, including $1.7B owed to related parties; it requires payment of 85% of qualifying tax savings and may accelerate in specified circumstances.

Warranty expense rose to $59M from $40M in Q3 and $162M from $111M in 9M; the related liability was $33M at September 30. Carvana disclosed unresolved legal matters, including a securities class action in discovery, with an $11M accrual; it cannot estimate the potential loss in that case. Equity-based compensation expense was $24M in Q3 and $75M in 9M; an additional $204M of compensation was unrecognized, expected over approximately 2.7 years.

Business and operating performance

Carvana’s integrated online platform combines vehicle retailing, customer vehicle acquisition, inspection and reconditioning, wholesale operations, financing, complementary products, and nationwide logistics. Management identifies retail units sold as its primary long-term performance measure because volume drives vehicle, financing, product, and trade-in revenue and can improve operating leverage. Retail unit sales rose 39.4% year over year to 217,385 in Q3 2026. The platform served 316 metropolitan areas; its in-house distribution network covered more than 80% of the U.S. population.

Q3 net sales and operating revenue increased 42.4% to $8.040B from $5.647B, while gross profit rose 32.5% to $1.521B from $1.148B. Revenue growth outpaced gross profit growth, reflecting pressure on per-unit economics. For the nine months ended September 30, revenue was $21.848B versus $14.719B and gross profit was $4.176B versus $3.141B.

Retail revenue growth reflected higher unit volume and average retail revenue per unit. The latter increased 10.3% to $28,263 in Q3, which management attributed partly to used-market appreciation and a lower share of marketplace units recognized net. Wholesale volume increased 38.3% to 111,119 units, but wholesale revenue per unit fell 15.9% to $9,854, and lower marketplace revenue and weaker Q3 vehicle gross profit per unit offset some volume gains. Other revenue primarily comprises finance-receivable sale gains and commissions on vehicle service contracts, GAP, and auto insurance; these products are described as having 100% gross margins. Growth reflected greater loan-sale volume, partly offset by lower loan-sale spreads, and higher product commissions.

Total gross profit per retail unit, a management-focused measure that reflects the shared retail/wholesale operating model, declined 5.0% to $6,997 in Q3 from $7,362. Retail gross profit per unit increased 2.9% to $3,556, but wholesale gross profit per retail unit fell 18.2% to $708 and other gross profit per retail unit declined 10.1% to $2,733. Non-GAAP total gross profit per unit also fell, to $7,093 from $7,503. For 9M, retail units sold rose 39.0% to 602,103; total gross profit per retail unit was $6,936 versus $7,252.

Earnings, expenses, and financing

GAAP net income increased to $483M from $263M in Q3 and to $1.401B from $944M for 9M. Adjusted EBITDA was $800M versus $637M in Q3 and $2.241B versus $1.726B for 9M; however, Adjusted EBITDA margin declined to 10.0% from 11.3% in Q3 and to 10.3% from 11.7% for 9M.

Q3 SG&A increased to $805M from $595M, mainly with higher volumes and related compensation, advertising, logistics, occupancy, warranty, fuel, and technology costs. Non-GAAP SG&A per retail unit was nearly flat at $3,413 versus $3,418, indicating some unit-cost leverage despite higher total expense. Net interest expense declined to $98M from $125M in Q3 and to $298M from $407M for 9M, benefiting from debt redemptions/repurchases and lower cash interest on 2031 notes, partly offset by higher Term Loan B and working-capital financing interest. The income tax provision was $69M in Q3 versus a $4M benefit; the 2026 effective tax rate was 12.5%, versus (1.5)% in Q3 2025.

On August 14, 2026, Carvana entered into a $1.66B Term Loan B and used the proceeds plus cash on hand to redeem in full $1.66B principal amount of 2030 Senior Secured Notes. Q3 and 9M each included a $53M loss on extinguishment; the redemption payment was $1.711B, including a $50M premium and $4M accrued interest, as well as write-offs.

Liquidity, cash flow, and outlook

At September 30, 2026, reported liquidity resources were $7.503B, including $3.049B of cash and cash equivalents and $2.071B available under short-term revolving facilities. The total also included $1.5B of super-senior and $750M of pari passu debt capacity and $133M of unpledged securitization beneficial interests; these capacities are conditional funding sources, not cash on hand. Revolving facilities had $5.6B of commitments, $71M outstanding, and $5.5B unused. Outstanding debt principal was $5.2B, compared with $5.0B at December 31, 2025. Additional financing capacity included $6.0B unused under the Ally MPSA and $8.3B under fixed-pool loan purchase agreements.

For 9M 2026, operating cash flow was $900M versus $606M. Investing cash outflow was $129M versus $100M, primarily reflecting higher property and equipment purchases, partly offset by increased securitization-beneficial-interest collections; these figures are not a separate capital-expenditure measure. Financing cash outflow was $28M versus $45M. Cash, cash equivalents, and restricted cash increased by $743M to $3.172B from $2.221B a year earlier. Management expects available sources to cover operations and commitments for at least 12 months, while longer-term debt service and growth investment depend on cash generation and continued access to financing.

Carvana is investing in vehicle acquisition, reconditioning, logistics, technology, advertising, and customer experience. Management cites AI-enabled tools as reducing calls per sale and improving conversion and customer scores, and plans to expand production capacity at ADESA facilities. Key sensitivities include used-vehicle demand, affordability and interest rates, inventory acquisition and reconditioning costs, vehicle depreciation, loan-sale spreads and securitization-market access, and growth-related funding needs. Seasonal demand typically peaks late in Q1 and weakens toward Q4, when vehicles may also depreciate faster. Tariffs, trade restrictions, geopolitical disruption, fuel costs, and economic weakness could pressure demand or raise logistics costs; management said these developments did not materially affect Q3 results. Other material risks include substantial indebtedness and covenants, competition, operational scaling and service quality, regulation and litigation, cybersecurity, and controlling-stockholder relationships.

Market Risk

As of September 30, 2026, Carvana had $1.660B of Term Loan B principal outstanding, bearing interest at one-month Term SOFR + 2.25%. Before hedging, a 1-percentage-point change in Term SOFR would change annual interest expense by approximately $17M.

A cash-flow hedge swap with a $1.660B notional amount converts the loan’s floating-rate exposure to fixed during the swap term: Carvana pays a fixed 4.055% and receives one-month Term SOFR. Management states that a 1-percentage-point SOFR move would then have no material impact on annual interest expense. The swap is with a single major financial-institution counterparty, concentrating counterparty credit risk; Carvana monitors the counterparty’s credit standing.

Other than interest-rate risk and this counterparty concentration, Carvana reported no material changes to its market-risk disclosures from those in its February 18, 2026 Form 10-K.

As of September 30, 2026, Carvana’s CEO and CFO concluded that the company’s disclosure controls and procedures were effective. No changes during the three months ended September 30, 2026 materially affected, or were reasonably likely to materially affect, internal control over financial reporting. The section reports no specific control deficiencies.

This section provides no specific risk factors, financial metrics, or business developments. It refers readers to the “Risk Factors” section of Carvana’s most recent Form 10-K, filed February 18, 2026.

Insider Trading Plans

• On August 28, 2026, principal accounting officer Stephen Palmer entered into a Rule 10b5-1 trading plan allowing potential sales of up to 60,000 Class A shares from January 1 through December 31, 2027.
• On September 10, 2026, COO Benjamin Huston modified a previously disclosed plan to allow potential sales of up to 1,442,565 Class A shares acquired by exercising vested stock options. The plan covers sales from December 10, 2026 through December 31, 2027.

These are planned potential sales, not reported completed transactions. The section reports no company financial results or other material business developments.