Carvana Co.

Carvana reported Q1 retail units sold of 187,393, up 40% year over year. Revenue was $6.432 billion, up 52%. Net income was $405 million, up $32 million, with a 6.3% margin versus 8.8% last year. Adjusted EBITDA was $672 million, up $184 million, with a 10.4% margin versus 11.5% last year. GAAP operating income was $581 million, up $187 million. Non-GAAP retail GPU decreased by $58 year over year, wholesale GPU decreased by $83, and other GPU decreased by $88. SG&A expense per retail unit sold fell by $170, including a $36 reduction in operations expenses and a $226 reduction in overhead expenses, while advertising expense increased by $92 per retail unit sold. Net debt to trailing 12-month adjusted EBITDA improved to 1.1x. For Q2, management expects retail GPU to increase sequentially but decrease year over year due to roughly $100 of tariff-related benefits last year, lower shipping fees, higher non-vehicle costs, and about $100 to $200 of wholesale-to-retail spread impact. They also expect a sequential increase in both retail units sold and adjusted EBITDA, with full-year 2026 still on track for significant growth in both metrics.

Ernie Garcia framed the quarter as evidence that Carvana’s model is scaling and that the team can respond quickly to operational setbacks. He highlighted the record sales and profit results, then spent much of his remarks on how the reconditioning organization reacted to prior-quarter issues by rolling out new tools, better data integrations, and more centralized planning. His tone was confident but disciplined: he emphasized that growth at 40% is operationally complex, that bumps are inevitable, and that execution and culture will determine how far and how fast the company can scale toward its 3 million vehicle and 13.5% adjusted EBITDA margin goal.

Mark Jenkins emphasized broad-based operating leverage and strong financial performance, citing the record revenue, EBITDA, operating income, and the $170 improvement in SG&A expense per retail unit sold. He explained that retail GPU pressure came mainly from lower shipping revenue tied to shorter logistics distances, higher non-vehicle costs, and the decision to pass along some savings to customers, while wholesale and other GPU were also lower. On capital allocation and balance sheet management, he noted net debt to trailing 12-month adjusted EBITDA improved to 1.1x and reiterated that Carvana is working toward investment-grade credit ratios over time. He also laid out capacity investment priorities: staffing existing facilities, integrating ADESA sites, then full build-outs this year, while greenfield IRCs are not a priority now.

Analysts focused on the reconditioning turnaround, the possibility of tariffs/gas prices shifting demand toward used cars, SG&A leverage, logistics costs, and whether narrowing wholesale-to-retail spreads are temporary. Management said the new reconditioning tools are net new and should create additional fundamental gains over time, but they are being rolled out gradually and it will take time to show up in the financials. On macro questions, Ernie Garcia said gas prices and tariffs can affect mix, but the impact on aggregate sales is usually small and the company’s own execution matters far more. On spreads, management repeatedly described the current wholesale-to-retail compression as transitory and linked it to a hot wholesale market that retail prices are only catching up to with a lag.