Carvana (NYSE:CVNA) reported record second-quarter results as retail unit sales rose 38% year over year to 197,325 vehicles and revenue increased 52% to $7.38 billion. The online used-car retailer also posted record adjusted EBITDA of $769 million, net income of $513 million and GAAP operating income of $680 million.
Chief Executive Officer Ernie Garcia said the company sold “almost 200,000 cars” during the quarter, nearly double its sales volume from two years earlier. He said that scale still represents approximately 2% of the used-car market and 1.5% of the broader auto retail market, underscoring the company’s remaining growth opportunity.
Growth Tied to Inventory Expansion
Garcia emphasized the relationship between regional inventory expansion and sales growth. In the Midwest and Northeast, where Carvana added the most retail production capacity, inventory increased 57% and sales rose 54% in the second quarter. In the West and Southeast, where less capacity was added, inventory increased 17% and sales grew 30%.
According to Garcia, larger local inventory assortments improve the odds that customers find vehicles they want, lifting conversion rates and making advertising spending more efficient. More vehicles near customers can also reduce delivery times and shipping fees while improving logistics efficiency, he said.
The company said it had recently focused on bringing reconditioning costs under control before returning to inventory growth. Garcia said the company began increasing inventory more in line with sales during the middle of the second quarter and is moving back toward its traditional mix of vehicle ages and mileage after leaning into newer, higher-priced vehicles that required less reconditioning.
Chief Financial Officer Mark Jenkins said revenue growth exceeded unit growth partly because of traditional gross-revenue treatment for certain vehicles acquired from a large retail marketplace partner, higher industry vehicle prices and a mix shift toward newer, more expensive vehicles. He said the revenue-treatment change will no longer affect year-over-year comparisons beginning in the third quarter, when revenue growth is expected to be more aligned with retail unit growth.
Profitability and Expense Trends
Non-GAAP retail gross profit per unit declined $105 from a year earlier, primarily because the company lapped an approximately $100 benefit from tariff-related effects in the prior year. Higher non-vehicle costs, including inbound transportation fuel expenses, were more than offset by higher retail appreciation, Jenkins said.
Non-GAAP wholesale GPU declined $158, as retail unit growth outpaced wholesale gross profits. Non-GAAP Other GPU declined $192, driven mainly by Carvana’s decision to offer customers lower interest rates and by higher benchmark rates. Those pressures were partly offset by lower funding costs, higher average amounts financed and higher finance attachment rates.
Garcia said Carvana passed more than 100 basis points of interest-rate reductions to customers over the past year, with a greater focus on prime borrowers. He said the company’s fundamental financing gains helped offset a portion of the resulting pressure on Other GPU.
Carvana’s non-GAAP SG&A expense per retail unit sold declined by $157. The company cited a $272 reduction in overhead expense per unit, partly offset by an $88 increase in operations expense per unit, mainly due to fuel costs. Advertising expense rose $27 per retail unit as the company continued to invest in awareness and said it expects advertising dollars to increase in the third quarter.
- Net income was $513 million, up $205 million year over year.
- Net income margin was 7.0%, compared with 6.4% a year earlier.
- Adjusted EBITDA margin was 10.4%, compared with 12.4%, with the decline primarily attributed to the gross-revenue treatment that increased retail revenue per unit.
- Net debt to trailing 12-month adjusted EBITDA fell to 1.0 times, which Jenkins called the company’s strongest financial position to date.
Outlook and Long-Term Goals
For the third quarter, Carvana expects a sequential increase in retail units sold. For full-year 2026, the company forecast adjusted EBITDA of $2.7 billion to $3.0 billion, compared with $2.24 billion in 2025, assuming the operating environment remains stable.
Management said the company’s long-term objective remains selling 3 million vehicles annually at a 13.5% adjusted EBITDA margin between 2030 and 2035. Garcia said the company now needs to grow to less than four times its current scale to reach that target, compared with approximately six times its scale when the goal was introduced in early 2025.
The company also discussed artificial intelligence initiatives, including its Sebastian customer-assistance tool. Garcia said customer-care costs have declined annually over the last four years, falling 40% three years ago, 30% two years ago, 20% last year and 10% this year. He attributed those reductions in part to increasingly capable digital customer experiences.
Carvana said it is continuing to roll out operational tools, including Roll Call and Leader Hub, over coming quarters. It is also evaluating additional production capacity through ADESA-site conversions, existing inspection centers and a newly initiated fresh-build location.
On new-vehicle efforts, Garcia said the initiative remains early but that customer satisfaction scores for new-car transactions have been “very high.” He said new cars are currently profitable for the company, though management did not provide further details on expected gross profit or inventory implications.
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.
