Carvana (NYSE:CVNA) executives highlighted record retail unit sales, expanding profitability, and continued investments in infrastructure and customer experience during the company’s fourth-quarter and full-year 2025 earnings conference call.
Management’s view: scale is improving the customer offer
Chief Executive Officer Ernie Garcia said 2025 marked “another incredible year,” emphasizing that both volume and financial performance are “moving up into the right rapidly.” He attributed that momentum to a customer offering “sufficiently different and desirable” to change buyer behavior and a business model that he said is increasingly efficient at scale.
Q4 and full-year results: records for units, revenue, and profitability metrics
Chief Financial Officer Mark Jenkins said Carvana entered 2025 focused on three objectives: growth in retail units sold and adjusted EBITDA, “fundamental gains” in unit economics and customer experience, and building foundational capabilities. By those measures, he called 2025 “a resounding success.”
For the full year, Jenkins said retail units sold grew 43% to a record 596,641 and adjusted EBITDA margin reached a record 11%. He also said the company integrated 10 additional ADESA locations and expanded digital auction capabilities nationwide.
In the fourth quarter, Carvana posted another record for retail volume, with retail units sold of 163,522, up 43% year over year. Revenue totaled $5.603 billion, up 58%. Jenkins said revenue growth outpaced unit growth “primarily due to traditional gross revenue treatment” for certain vehicles acquired from a large retail marketplace partner.
On profitability, Jenkins reported:
- Net income: $951 million, up $792 million, aided by a non-cash benefit of $618 million, including a net non-cash tax benefit of $685 million, partly offset by a $67 million reduction in the fair value of warrants.
- Adjusted EBITDA: $511 million, up $152 million, a new Q4 record.
- Adjusted EBITDA margin: 9.1%, down from 10.1%, which Jenkins attributed primarily to higher retail revenue per unit tied to the revenue accounting treatment referenced earlier.
- GAAP operating income: $424 million, which Jenkins said was 83% of adjusted EBITDA and a new quarterly record.
Unit economics: GPU pressures tied to non-vehicle costs and shipping fee decisions
Jenkins said non-GAAP retail GPU declined by $255 in the fourth quarter, primarily reflecting higher non-vehicle costs, lower shipping distances that flowed through to customers via lower shipping fees, and higher retail depreciation rates. He added that non-GAAP wholesale GPU decreased by $148 due to faster retail growth than wholesale marketplace units, while “other” GPU increased by $49, driven by improvements in cost of funds and higher finance and VSC attach rates, partially offset by the company’s decision to give customers lower interest rates.
Garcia and Jenkins both addressed questions about elevated reconditioning costs, calling reconditioning the most operationally intensive part of the business. Garcia said Q4 expenses in that area were “a little higher than we would have liked,” citing additional sites operating with “a single line instead of multiple lines” and costs associated with newer managers. He said the company has opportunities to automate management processes further, focused on “lifting the floor of performance,” and predicted the team would respond quickly, saying he expects the company to be in “a better spot in 3-6 months.”
Garcia also explained the shipping-fee dynamic, saying that by positioning cars closer to customers, logistics expenses fell about $60 year over year and shipping fees were also reduced about $60—roughly neutral to Carvana financially but beneficial to customers. He framed that choice as an example of “fundamental gains” being passed back to customers to further differentiate the offering.
Financing, AI, and related-party questions
On financing, Jenkins said the company expanded its loan sale platform by entering into a fourth loan purchase agreement with a long-standing partner for up to $4 billion of loan purchases through December 2027. He said that brings total new partner loan purchase agreements to $12 billion over the next two years, in addition to $6 billion with Ally through October 2026.
Garcia also discussed the company’s use of AI-driven tools, pointing to operational automation as a visible benefit. He said 30% of retail customers complete the process without talking to a person until the vehicle handoff, and 60% of customers selling a car to Carvana do so without speaking to anyone until drop-off. Garcia said those customers have higher NPS than those who call, and cited tools such as “Sebastian” as part of what enables that scalability and customer experience.
During the Q&A, management addressed investor concerns around related-party transactions raised in recent short reports. Jenkins stated that related-party transactions are disclosed in financial statements and said, “we do not sell loans to related parties,” adding that the company has not done so from 2017 through 2025. He characterized the short reports suggesting otherwise as “100% inaccurate.”
Balance sheet and 2026 outlook
Jenkins said Carvana ended 2025 with $2.3 billion of cash and equivalents, retired $709 million of corporate notes, and reduced net debt to trailing twelve-month adjusted EBITDA to 1.3x. He reiterated a commitment to “driving toward investment-grade quality credit ratios over time.”
Looking ahead, Jenkins said that “assuming the environment remains stable,” the company expects significant growth in both retail units sold and adjusted EBITDA in full-year 2026, including sequential increases in both metrics in the first quarter. Executives said the company plans to maintain its three objectives from 2025, while placing additional weight on driving “significant profitable growth at scale.”
Garcia said the company has infrastructure to scale, noting it already owns real estate for 3 million units per year and has invested in facilities capable of producing 1.5 million cars per year, with 34 locations capable of reconditioning vehicles. He said continued scaling of reconditioning—efficiently and with high quality—will remain a central focus.
About Carvana (NYSE:CVNA)
Carvana Co is an online-only retailer of used vehicles that operates a consumer-facing e-commerce platform for buying and selling cars. The company markets and sells inspected, reconditioned pre-owned vehicles through its website, where shoppers can browse inventory, view detailed 360-degree photos and vehicle history reports, finance purchases, and arrange delivery or pickup. Carvana’s model is built around a digital end-to-end car buying experience that aims to simplify vehicle transactions compared with traditional dealerships.
Its products and services include direct retail sales of used cars, trade-in and purchase offers for consumer vehicles, vehicle financing and related protection products, and a seven-day return policy that allows customers to test a vehicle in everyday use.
