Carvana Co.

Q3 2026 hard numbers: retail units sold were 217,385, up 39% year over year; revenue was $8.04 billion, up 42%; net income was $483 million, up $220 million, though results included a one-time $53 million pretax expense tied to early redemption of senior secured notes; net income margin was 6%, up from 4.7%; adjusted EBITDA was a record $800 million, up $163 million, with a 10% margin versus 11.3% last year; GAAP operating income was $714 million, up $162 million. Management also said the business produced more than 200,000 units in the quarter for the first time. For the balance sheet, Carvana refinanced the remaining $1.7 billion of senior secured notes due 2030, which it said should save about $45 million of annual interest expense, and it ended with net debt to trailing 12-month adjusted EBITDA of 0.8x and trailing adjusted EBITDA to interest expense of 6.9x. Looking ahead, management expects a sequential increase in retail units sold and adjusted EBITDA in the higher end of its previously communicated full-year 2026 range of $2.7 billion to $3.0 billion, assuming the environment remains stable.

Ernie Garcia emphasized that Carvana is building a scaled “machine” aimed at 3 million units per year and a 13.5% adjusted EBITDA margin, and he framed Q3 as another step in that direction. He highlighted record scale, improving customer experience, and early proof points from Stellantis new-car work as evidence that the platform has broader value. Garcia also leaned heavily into the company’s fit with AI and agentic commerce, arguing that Carvana’s vertically integrated, deterministic systems make it especially well positioned if consumers increasingly use AI tools to shop and transact.

Mark Jenkins described Q3 as another strong quarter with records in retail units sold, revenue, gross profit, GAAP operating income and adjusted EBITDA. He noted that non-GAAP retail GPU rose by $85, wholesale GPU fell by $196, and other GPU fell by $299, while SG&A per retail unit was approximately flat; operations expense rose $109 per unit, offset by a $159 per unit reduction in overhead. He said the refinancing of $1.7 billion of senior secured notes due 2030 should save about $45 million in annual interest expense and helped drive the company to a 0.8x net debt to trailing 12-month adjusted EBITDA ratio. Jenkins also said Carvana expects continued SG&A leverage over time and reiterated the full-year 2026 adjusted EBITDA outlook of $2.7 billion to $3.0 billion, with a sequential increase expected in Q4 if the environment stays stable.

Analysts focused on other GPU and how Carvana is handling rising benchmark rates; management said it is passing through some benchmark moves to customers, but with lag and not always in full, while also giving back some previously captured gains via lower customer rates. Questions also centered on retail GPU and production constraints, and management said production capacity is the bigger driver of growth, with the company making progress but still needing more recon capacity and more cars immediately available on the website. Several questions probed agentic AI, FTC disclosure changes, and competition; management said those developments should favor companies with simpler, more transparent offerings and that Carvana’s API-driven, vertically integrated system is already built for that environment. On financing and future reporting, management said higher consumer information access could increase prepayments but that Carvana’s finance structure and partner mix should remain resilient, and Mark Jenkins said the company’s shift toward emphasizing GAAP earnings in 2027 is a natural evolution as profitability improves.