AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Direct sourcing eliminates auction fees, and the established distribution and reconditioning footprint supports demonstrated fulfillment improvements. Relative all-in cost superiority remains primarily a management assertion, limiting the strength of the structural conclusion.
durability · 2/4 · Acquired locations and completed reconditioning conversions represent accumulated infrastructure that takes investment to reproduce. The highly competitive market and absence of demonstrated exclusivity or a persistent comparative cost gap limit durability.
customer dependency · 1/4 · Customer satisfaction supports preference, but the return policy and disclosed financing alternatives provide little evidence of dependency or switching friction. Repeat demand is not quantified.
erosion resilience · 2/4 · Delivery improvements and operating-income growth demonstrate continued execution. However, first-half 2026 gross and operating margins declined from the comparable period, and debt and financing dependence remain vulnerabilities. Generic financing risks are not treated as realized failures.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Disclosed loan sales generally occur at premium prices, providing favorable realized pricing evidence in financing. Those prices depend on contractual terms and interest rates. Vehicle price outcomes are missing, and wholesale prices are market-driven, so broad pricing power is unproven.
retention · 2/4 · Reported customer satisfaction and growing aggregate sales support repeat-demand potential indirectly. They do not establish measured repeat purchases or continued demand following price increases; loyalty remains partly management interpretation.
margin resilience · 2/4 · Annual operating profitability improved substantially through 2025. First-half 2026 gross profit and operating income increased in dollars, but both margins contracted versus first-half 2025. This is mixed resilience and does not isolate pricing from mix, financing revenue, or operating efficiency.
contractual freedom · 2/4 · Carvana controls vehicle prices, financing offers, and acquisition bids, and discloses discretion to change prices relative to market. Wholesale auctions and negotiated loan-sale arrangements constrain portions of its economics. Pricing discretion is stronger than demonstrated ability to impose prices.
Predictability55
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 25.67
- Positive FCF years (%)
- 60.00
- FCF margin volatility (pp)
- 12.64
Financial strength57
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 33.28
- netDebtEbitGrade
- 71.14
- interestCoverageGrade
- 24.77
- currentRatioGrade
- 100.00
- Debt / FCF (x)
- 5.67
- Net debt / operating income (x)
- 1.44
- Interest coverage (x)
- 3.72
- Current ratio (x)
- 4.31
Capital allocation66
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 16.18
- 3-year average dilution (%)
- 10.94
- 3-year average SBC / revenue (%)
- 0.61
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Voluntary debt retirement and positive operating cash flow are favorable realized outcomes. Cash generation partly benefited from payables and deferred tax utilization, while inventory investment, additional financing, substantial debt, and equity issuance temper the assessment. Net investing cash use is not treated as a complete capital-expenditure measure.
incentive alignment · 2/4 · Four-year equity vesting and performance awards that actually vested establish financial exposure and incentive links. Time-based equity, already-satisfied performance hurdles, and automatic share authorization increases limit conclusions about future discipline and dilution. The 2026 plan is assessed as adopted, without assuming new awards or vesting.
execution · 3/4 · Expanded selection, additional inventory pools, and shorter delivery times demonstrate operational delivery alongside substantial revenue and operating-income growth. Financial results indirectly corroborate execution; they do not establish customer retention or comparative cost leadership.
governance · 2/4 · Independent director sessions, annual evaluations, and currently unused controlled-company exemptions provide actual governance safeguards. Concentrated control, related-party dealings, and material related-party liabilities create countervailing conflicts. Their disclosure does not establish misconduct, and safeguards do not prove exceptional oversight.
Evidence
Acquiring inventory directly from customers when they trade in or sell us their vehicles in a one-way transaction eliminates auction fees and provides for a more diverse set of vehicles.
Business / Vehicle Acquisition · Filed 18/02/2026
Over the years, we have leveraged our growing logistics network, which spans 316 metropolitan statistical areas, and our in-house distribution network, servicing over 80% of the U.S.
Business / Our Company / logistics coverage · Filed 18/02/2026
population as of December 31, 2025, to sell 2.8 million retail vehicles, generating $84.1 billion in total revenue since inception in 2012 through December 31, 2025.
Business / Our Company / population coverage and cumulative sales · Filed 18/02/2026
Purpose-Built Vertically Integrated E-commerce Platform We believe our proprietary technology and vertically integrated business model allow us to enjoy a significantly lower variable cost structure versus traditional dealerships and to provide substantial value to our customers by providing a seamless, best-in-class car buying and selling experience.
Business / Strengths and Competitive Advantages / management cost claim · Filed 18/02/2026
Further, the acquisition of ADESA US Auction, LLC in 2022 provided us with 56 additional locations, which we have been building out to increase our reconditioning capacity and the number of inventory pools closer to customers.
Business / Vertically Integrated Platform / acquired locations · Filed 18/02/2026
As of December 31, 2025, 16 of these ADESA auction sites have been built out to provide IRC capabilities, and the remaining sites provide continued potential for further growth.
Business / Vertically Integrated Platform / completed reconditioning conversions · Filed 18/02/2026
We expanded vehicle selection by 42% to more than 75,000 total website units as of December 31, 2025 and grew inventory pools to 34 locations nationwide, cutting average delivery times by a full day compared to 2024 and more than doubling the shares of sales with same-day or next-day deliveries.
Compensation Discussion and Analysis / Performance Highlights / selection and delivery · Filed 25/03/2026
Competition With tens of thousands of automotive retailers in the U.S., the used car marketplace is a highly fragmented and highly competitive industry.
Business / Competition · Filed 18/02/2026
We believe the primary competitive factors in this market include transparency, convenience, price, selection, and vehicle quality.
Business / Competition / competitive factors · Filed 18/02/2026
If we fail to adjust appraisal offers to stay in line with broader market trade-in offer trends, to recognize those trends, or to properly assess vehicles before we purchase them, it could adversely affect our ability to acquire desirable inventory.
Risk Factors / vehicle appraisal and acquisition pricing · Filed 18/02/2026
If we are unable to extend the current financing agreements on favorable terms or at all, if the agreements expire and are not renewed, if new financing arrangements are at higher interest rates or with less favorable terms, or if we are unable to secure new financing, our inventory supply may decline.
Risk Factors / inventory financing · Filed 18/02/2026
As of December 31, 2025, we had outstanding, on a consolidated basis, (1) $107 million aggregate principal amount of our Senior Unsecured Notes, (2) $3.9 billion aggregate principal amount of our Senior Secured Notes, (3) $58 million aggregate principal amount of borrowings under our Floor Plan Facility and the Finance Receivable Facilities (as defined below), (4) $157 million aggregate principal amount of indebtedness represented by our finance lease agreements between us and providers of equipment financing, (5) an outstanding balance of $374 million under our secured borrowing facility through which we finance certain retained beneficial interests in our securitizations, (6) $485 million of other long-term debt related to our sale leaseback transactions, and (7) an outstanding balance of $23 million under a loan and security agreement to finance certain equipment for our transportation fleet.
Risk Factors / outstanding indebtedness at December 31, 2025 · Filed 18/02/2026
AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In millions, except number of shares, which are reflected in thousands, and per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Sales and operating revenues: Retail vehicle sales, net $ 5,507 $ 3,405 $ 10,335 $ 6,385 Wholesale sales and revenues, including $13, $9, $26 and $17, respectively, from related parties 1,343 1,024 2,421 1,887 Other sales and revenues, including $117, $83, $231 and $155, respectively, from related parties 526 411 1,052 800 Net sales and operating revenues 7,376 4,840 13,808 9,072 Cost of sales, including $4, $4, $9 and $7, respectively, to related parties 5,992 3,776 11,153 7,079 Gross profit 1,384 1,064 2,655 1,993 Selling, general and administrative expenses, including $12, $8, $22 and $15, respectively, to related parties 704 551 1,394 1,086 Other operating expense, net — 2 — 2 Operating income 680 511 1,261 905 Interest expense, net 101 143 200 282 Loss on debt extinguishment — — — 2 Other expense (income), net — 60 41 (62) Net income before income taxes 579 308 1,020 683 Income tax provision 66 — 102 2 Net income 513 308 918 681 Net income attributable to non-controlling interests 203 125 358 282 Net income attributable to Carvana Co.
Condensed Consolidated Statements of Operations / three and six months ended June 30 · Filed 29/07/2026
As of December 31, 2025, customers rated us an average of 4.7 out of 5.0 from over 245,000 surveys on our website since inception, fostering repeat business and a strong referral network.
Business / customer surveys and asserted repeat business · Filed 18/02/2026
After purchase, our customer advocates handle post-sale coordination and assistance, including facilitating returns or exchanges under our seven-day return policy.
Business / post-sale assistance and seven-day return policy · Filed 18/02/2026
The number of loans we originate is driven by the number of retail vehicles sold and the percentage of our sales for which we provide financing, which is influenced by the financing terms we offer our customers relative to alternatives available to the customer.
MD&A / Other Sales and Revenues / customer financing alternatives · Filed 29/07/2026
We control the algorithms that help determine the vehicles we make available to our customers, the prices of those vehicles, the financing terms offered to customers, complementary products, and the purchase prices and trade-in values we offer.
Business / Vertically Integrated Platform / control of prices and terms · Filed 18/02/2026
We may choose to shift our inventory mix to higher or lower cost vehicles, or to raise or lower our prices relative to market to take advantage of supply or demand imbalances, which could temporarily lead to average selling prices increasing or decreasing.
MD&A / Retail Sales and Revenues / pricing and inventory-mix discretion · Filed 29/07/2026
The average selling price of our wholesale units is primarily driven by the mix of vehicles we sell to wholesalers, as well as general supply and demand conditions in the applicable wholesale vehicle market, including the level of depreciation in the wholesale vehicle market.
MD&A / Wholesale Sales and Revenues / market pricing · Filed 29/07/2026
We also sell the loans we originate under committed forward-flow arrangements, including the Ally 42 Master Purchase and Sale Agreement (as defined in Note 7 — Finance Receivable Sale Agreements of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q the "Ally MPSA"), and through fixed pool loan sales, with financing partners who generally acquire them at premium prices without recourse to us for their post-sale performance.
MD&A / Other Sales and Revenues / loan sales at premium prices · Filed 29/07/2026
The price at which we sell the loan is driven by the terms of our securitization transactions and forward-flow arrangement, applicable interest rates, and whether or not the loan includes GAP waiver coverage.
MD&A / Other Sales and Revenues / loan-sale price determinants · Filed 29/07/2026
Cash provided by operating activities was $345 million and $261 million during the six months ended June 30, 2026 and 2025, respectively, an increase in cash provided by operating activities of $84 million, primarily due to an improvement in operating results, an increase in accounts payable and accrued liabilities driven by the increase in retail unit sales and production, and utilization of deferred tax assets, partially offset by an investment in vehicle inventory as we grow retail unit sales and acquire more vehicles from customers.
MD&A / Operating Activities / cash generation and working capital · Filed 29/07/2026
Cash used in investing activities was $83 million and $54 million during the six months ended June 30, 2026 and 2025, respectively, an increase in cash used in investing activities of $29 million, primarily due to an increase in purchases of property and equipment and the acquisition of two franchise dealerships, partially offset by higher principal payments of beneficial interests in securitizations.
MD&A / Investing Activities · Filed 29/07/2026
During the year ended December 31, 2025, as permitted by the indenture, $611 million of principal amount of 2028 Senior Secured Notes were voluntarily repurchased and redeemed for $633 million, which included $7 million of accrued interest and $1 million of pro-rata write-offs of unamortized debt issuance costs and unamortized premium.
MD&A / voluntary secured-note repurchase and redemption · Filed 18/02/2026
Cash provided by and used in financing activities was $52 million and $37 million during the six months ended June 30, 2026 and 2025, respectively, an increase in cash provided by financing activities of $89 million, primarily due to higher borrowings on short-term revolving facilities relative to payments and lower repayments of long-term debt due to the repurchase and cancellation of $52 million of principal amount of 2028 Senior Secured Notes in the open market for $55 million during the six months ended June 30, 2025, partially offset by higher tax withholding payments related to RSUs.
MD&A / Financing Activities · Filed 29/07/2026
The Company’s grants of time-based RSUs and prior grants of stock options to the CEO and other NEOs on a four-year vesting schedule continue to render the yearly value of compensation actually paid highly responsive to changes in the Company’s stock performance.
Executive Compensation / Pay versus Performance / four-year equity vesting · Filed 25/03/2026
100% of the 2023 Adjusted EBITDA PSUs vested upon the filing of the Company's Quarterly Report on Form 10-Q for the second quarter of 2023 on July 19, 2023, and 100% of the 2023 Core Free Cash Flow PSUs vested upon the filing of the Company's Quarterly Report on Form 10-Q for the first quarter of 2024 on May 1, 2024.
Executive Compensation / actual vesting of 2023 performance awards · Filed 25/03/2026
AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (Unaudited) 2026 Omnibus Incentive Plan On May 5, 2026, following stockholder approval at the Company's 2026 Annual Shareholder Meeting, the Company adopted the 2026 Omnibus Incentive Plan (the "2026 Incentive Plan") which superseded and replaced the 2017 Omnibus Incentive Plan (the "2017 Incentive Plan").
Equity Compensation / adoption of 2026 Omnibus Incentive Plan · Filed 29/07/2026
The number of shares authorized for issuance under the 2026 Incentive Plan is subject to an automatic annual increase of the lesser of two percent of the Company's outstanding Class A common stock or an amount determined by the Compensation and Nominating Committee of the Board.
Equity Compensation / automatic annual share authorization increase · Filed 29/07/2026
Risks Related to Ownership of our Class A Common Stock •the volatile trading price of our Class A common stock; •the Garcia Parties’ control us and their interests may conflict with our or our stockholders’ interests; •dilution due to issuance of additional Class A common stock or LLC Units in the future; •we may issue shares of preferred stock in the future; •Delaware law and our charter may prevent stockholders from changing decisions made by management; and •the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation.
Risk Factors / voting control and potential conflicts · Filed 18/02/2026
We do not currently utilize these exemptions; however, for so long as we qualify as a controlled company, we will maintain the option to utilize some or all of these exemptions.
Risk Factors / controlled-company exemptions currently unused · Filed 18/02/2026
Non-employee directors, all of whom are independent, meet periodically, and at least once annually, at executive sessions without management.
Corporate Governance / independent director executive sessions · Filed 25/03/2026
SELF EVALUATION Our Compensation and Nominating Committee conducts an annual evaluation of the Board, its committees, and directors to assess its effectiveness.
Corporate Governance / annual self-evaluation · Filed 25/03/2026
(together with its subsidiaries and affiliates other than the Company, collectively, "DriveTime"), a related party of the Company due to Ernest Garcia II, Ernest Garcia III, and entities controlled by one or both of them (collectively the "Garcia Parties") controlling and owning substantially all of the interests in DriveTime, entered into a lease agreement that previously governed the occupation of two inspection and reconditioning centers in Blue Mound, Texas and Delanco, New Jersey.
Note 6 / Related Party Transactions / common control of DriveTime · Filed 29/07/2026
FINANCIAL STATEMENTS CARVANA CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions, except number of shares, which are reflected in thousands, and par values) June 30, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 2,630 $ 2,327 Restricted cash 113 102 Accounts receivable, net 377 245 Finance receivables held for sale, net 921 813 Vehicle inventory 3,263 2,408 Beneficial interests in securitizations 502 486 Other current assets, including $7 and $5, respectively, due from related parties 200 168 Total current assets 8,006 6,549 Property and equipment, net 2,859 2,814 Operating lease right-of-use assets, including $5 and $6, respectively, from leases with related parties 425 443 Intangible assets, net 53 47 Goodwill 12 10 Deferred tax assets 2,968 3,064 Other assets 229 274 Total assets $ 14,552 $ 13,201 LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities, including $33 and $21, respectively, due to related parties $ 1,461 $ 1,100 Short-term revolving facilities 126 58 Current portion of long-term debt 256 227 Other current liabilities, including $78 and $31, respectively, due to related parties 196 134 Total current liabilities 2,039 1,519 Long-term debt, excluding current portion 4,854 4,830 Operating lease liabilities, excluding current portion, including $4 and $5, respectively, from leases with related parties 385 406 Tax receivable agreement liability, including $1,645 and $1,721, respectively, due to related parties 2,130 2,228 Other liabilities 6 15 Total liabilities 9,414 8,998 Commitments and contingencies (Note 16) Stockholders' equity: Preferred stock, $0.01 par value - 50,000 shares authorized; none issued and outstanding as of each of June 30, 2026 and December 31, 2025 — — Class A common stock, $0.001 par value - 2,500,000 shares authorized; 718,978 and 711,148 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 1 1 Class B common stock, $0.001 par value - 625,000 shares authorized; 380,547 shares issued and outstanding as of each of June 30, 2026 and December 31, 2025 — — Additional paid-in capital 3,476 3,449 Retained earnings (accumulated deficit) 551 (9) Total stockholders' equity attributable to Carvana Co.
Condensed Consolidated Balance Sheets / debt, related-party liabilities, and equity · Filed 29/07/2026
Segment information for the years ended December 31, 2025, 2024, and 2023 are as follows: Years Ended December 31, 2025 2024 2023 (in millions) Net sales and operating revenues $ 20,322 $ 13,673 $ 10,771 Cost of sales 16,130 10,797 9,047 Gross profit 4,192 2,876 1,724 Compensation and benefits 830 700 661 Advertising 363 229 228 Market occupancy 68 68 71 Logistics 162 118 119 Other (1) 885 759 717 Other operating expense, net 3 12 8 Operating income (loss) 1,881 990 (80) Interest expense, net 505 651 632 Loss (Gain) on debt extinguishment 16 12 (878) Other expense (income), net 2,250 (73) (9) Net (loss) income before income taxes (890) 400 175 Income tax (benefit) provision (2,785) (4) 25 Net income $ 1,895 $ 404 $ 150 (1) Other costs include all other selling, general and administrative expenses such as IT expenses, corporate occupancy, professional services and insurance, limited warranty, and title and registration.
Financial statement notes / annual segment operating results · Filed 18/02/2026
