With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

<p>During the COVID pandemic, this used-car seller thrived as supply-chain problems made new cars hard to find; today business is booming as inflation makes new cars hard to afford. Carvana sold nearly 600,000 cars in 2025 at healthy profit margins, and its revenue rose 49%, helping it leap ahead 94 spots on the Fortune 500.</p>

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-483-Carvana

Breaking into the <em>Fortune</em> 500 for the first time this year is online used car retailer, Carvana. The company is known for its multi-story, coin-operated car vending machines, where consumers pick up vehicles after finalizing their purchase.

This year's Fortune 500 marks the 66th running of the list.

This year's Fortune 500 marks the 65th running of the list.

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Founded by Ernest Garcia III, Ryan Keeton, and Ben Huston in 2012, Carvana set out to “change the way people buy cars.” The company operates an e-commerce platform for buying and selling used cars in the U.S. and, with its subsidiaries, offers related services including inspection and reconditioning, financing, and auction sites. Carvana debuted its distinctive car vending machine in Nashville in 2015, and now operates almost 40 of the glass towers showcasing its cars. Since launching in 2013, more than 4 million customers have chosen its automotive e-commerce experience to shop, sell, finance, and trade in vehicles entirely online.

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Q1 2026

Q4 2025

Q3 2025

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Q1 2025

Q4 2024

Carvana (CVNA): Company Profile, Stock Price, News, Rankings

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Carvana

carvana

Good afternoon. Welcome to the Carvana first quarter 2026 earnings conference call. Our participants will be in listen only mode, should you need assistance please contact a conference specialist by pressing the star key followed by zero, I would now like to turn the conference over to Meg Kehan, Investor Relations. Please go ahead.

Thank you, Gary. Good afternoon, ladies and gentlemen, and thank you for joining us on Carvana's first quarter 2026 earnings conference call. Please note that this call is being webcast and can be accessed along with our Q1 shareholder letter and supplemental financial tables on the investor relations section of the company's corporate website at investors.carvana.com. Joining me on the call today are Ernie Garcia, Chief Executive Officer, and Mark Jenkins, Chief Financial Officer. Before we start, I would like to remind you that this discussion contains forward-looking statements within the meaning of the federal securities laws, including, but not limited to, Carvana's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. A detailed discussion of these factors can be found in the Risk Factors section of Carvana's most recent Form 10-K.

These forward-looking statements are based on current expectations as of today, and Carvana assumes no obligation to update or revise them. Our commentary today will include non-GAAP financial metrics. GAAP reconciliations can be found in the shareholder letter posted on our IR website. With that said, I'd like to turn the call over to Ernie Garcia. Ernie.

Thanks, Meg, thanks, everyone, for joining the call. The first quarter was another outstanding quarter for Carvana. It was another quarter full of records, including a record 187,000 cars sold in a single quarter, a record GAAP operating income of $581 million, and a record adjusted EBITDA of $672 million. It was our ninth straight quarter of being the most profitable and fastest-growing automotive retailer, as well as our sixth straight quarter of 40% year-over-year growth. The quality of our customer offering, the fact that it naturally gets better as we get bigger, and our experience over the last 13 years lead us to believe the demand is available at the speed that we are able to scale the business effectively.

As it has been since the beginning, we expect our execution will be the biggest determinant of the speed and degree of our success. Execution in a complex operational scaled business like Carvana that is growing at 40% is an inherently difficult problem. While the best-case scenario in a vacuum is to avoid bumps in the road, those bumps are a reality of building ambitiously. This means success requires building a better system with better scaling properties and assembling a team and building a culture that drives intensity, focus, accountability, and resilience. With the right team and culture, the bumps in the road create pressure that makes us better. In the fourth quarter, we hit a bump in recon that gave us another chance to prove that we assembled just such a team. The recon team is using that pressure to make us better.

When we realized we were off track a bit, the first thing the team did was turn up the operational intensity across the network, setting higher expectations for each facility and leaning into the operational structures we've built over the last several years. This allowed us to make rapid progress nationwide. In addition, they quickly assessed the underlying cause of the variation in facility performance, most notably newer managers that could use more detailed direction and more powerful tools to help them execute at the level we were aiming for and adjusted their roadmap to prioritize building the tools that mattered most immediately.

Over the last couple of months, they built additional data integrations, developed tools to help managers make faster, higher quality decisions in how they staff their lines and how they optimize flow through their paint lines, and implemented a productivity tracker to ensure feedback reaches the right groups quickly. To accomplish all this and to ensure the tools address real-world operational needs, the product team spent weeks on the ground in the facilities that needed it most, rolling out testing and iterating with the operators until they were making a real measurable difference. We will continue to iterate on these tools, and we will roll them out to the rest of the facilities over the coming months. The result is that so far in April, we are operating just shy of our all-time best in labor efficiency throughout the network.

This will take a little time to flow through to the financials as cars carry the cost of reconditioning at the time they were produced, not at the time they were sold. We still have a ton of work to do across reconditioning and other operational technology teams, but every time a team reacts that quickly to a problem, it excites us. Once again, the people on Team Carvana have proven that they are exceptional, that they are resilient, and that they are up to the challenges we will inevitably face as we scale Carvana to millions of transactions per year. We remain firmly on the path of achieving our mission of changing the way people buy and sell cars and to selling 3 million cars per year at a 13.5% adjusted EBITDA margin by 2030-2035. The march continues. Mark.

Thank you, Ernie, and thank you all for joining us today. Unless otherwise noted, all comparisons will be on a year-over-year basis. Q1 was a strong quarter driven by our team's continued focus on profitable growth and strong execution. We set new company records for retail units sold, revenue, gross profit, SG&A expense per retail unit sold, GAAP operating income, and adjusted EBITDA. Retail units sold totaled 187,393 in Q1, an increase of 40% and a new company record. Revenue was $6.432 billion, an increase of 52%. Revenue growth exceeded retail units sold growth primarily due to traditional gross revenue treatment for certain vehicles acquired from a large retail marketplace partner.

Consistent with past quarters, our growth in the first quarter was driven by our three long-term drivers of growth: a continuously improving customer offering, increased awareness, understanding, and trust, and increasing inventory selection and other benefits of scale. The first quarter marked our ninth consecutive quarter of industry-leading retail unit growth and margins.

Non-GAAP retail GPU decreased by $58, primarily driven by higher non-vehicle costs and lower shipping fees. Looking ahead to Q2, we expect retail GPU to increase sequentially, but to decrease year-over-year due to approximately $100 of tariff-related benefits last year, lower shipping fees and higher non-vehicle costs this year, and approximately $100-$200 of impact from narrower industry-wide wholesale to retail spreads this year. Non-GAAP wholesale GPU decreased by $83, primarily driven by increased wholesale vehicle volume and gross profit per unit that was more than offset by lower wholesale marketplace gross profit and growth in retail units that outpaced wholesale gross profit. Non-GAAP other GPU decreased by $88, primarily driven by our decision to give back to customers in the form of lower interest rates, partially offset by higher finance and VSC attach rates.

Q1 was another strong quarter for levering SG&A expenses. Our 40% growth in retail units sold led to a $170 reduction in non-GAAP SG&A expense per retail unit sold, including a $36 reduction in operations expenses and a $226 reduction in overhead expenses. Advertising expense increased by $92 per retail unit sold as we continue to invest in building awareness, understanding and trust in our customer offering. With a nearly 2% market share in the U.S. used vehicle retail market, compared to approximately 20% e-commerce adoption in non-automotive retail verticals, we believe we are in the early days of customer awareness and adoption of our model.

We continue to see opportunities for significant SG&A expense leverage over time and as we scale, driven by both continued improvements in operational expenses as well as leverage in the fixed components of our cost structure. Net income was $405 million in Q1, an increase of $32 million. Net income margin was 6.3%, a decrease from 8.8%. Adjusted EBITDA was $672 million, an increase of $184 million and a new company record. Adjusted EBITDA margin was 10.4%, a decrease from 11.5%, primarily driven by increased retail revenue per unit resulting from the traditional gross revenue treatment mentioned previously. GAAP operating income was $581 million, or 86% of adjusted EBITDA, an increase of $187 million and a new company record.

As discussed in prior quarters, we continue to drive toward investment grade quality credit ratios over time. In Q1, we again reduced our net debt to trailing twelve-month adjusted EBITDA ratio to 1.1x, our strongest financial position ever. Q1 was a record quarter that again demonstrated the significant power of our business model. Looking toward Q2 and assuming the environment remains stable, we expect a sequential increase in both retail units sold and adjusted EBITDA, leading to all-time company records on both metrics. We remain on track to deliver significant growth in both retail units sold and adjusted EBITDA in full year 2026. In conclusion, our Q1 results were outstanding. Our team is intently focused on driving profitable growth, and we remain excited about progressing toward our goals of becoming the largest and most profitable auto retailer and buying and selling millions of cars.

Thank you for your attention. We'll now take questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please limit yourselves to one question and one follow-up. If you have additional questions, you may rejoin the queue. The first question today is from Chris Pierce with Needham. Please go ahead.

Oh, hey, good afternoon. Ernie, in your remarks, you said, you talked about new tools at underperforming sites where there are new managers. I just want to understand, do these tools, these are brand new and these could help top performing sites further improve or these are to bring those underperforming sites in line with your top performing sites?

Sure. Well, first I want to start with just giving gratitude and credit to the reconditioning team. I think, you know, they took it very personally and hard when we didn't have a perfect fourth quarter and they reacted extremely effectively. That's why I wanted to make sure that I spent some time in our comments giving them credit. I'm extremely impressed and proud of how hard they work and how quickly they made a difference. I think there were a number of things that were done. The new tools that were discussed are net new tools, and those are tools that we hope will drive additional fundamental gains over time. I think, you know, that will take time and we'll see how powerful that ends up being.

I think they're fundamentally value-added tools that are not in the vast majority of our facilities yet. We'll roll those out over time. I think, you know, to me, the way that we hope that this goes over the next many years is we're scaling a big business that's operationally complex very quickly. I think we're inevitably going to run into bumps in the road, and every time you run into a bump, I think it's a chance to reevaluate what you're doing and to try to learn from that and get a little better. I think the team dug in. I think they reevaluated the roadmap. I think they found new opportunities that are potentially bigger. I think they focused and made a huge difference quickly. I think we're very excited about those opportunities.

To me, I wouldn't want to set expectations too high beyond, you know, we think we're very much back on track. But I think if we had to pick a direction, the tooling that we're building, I think is exciting and it's, you know, more room for fundamental gains over time.

Okay, perfect. Thank you. Then just kind of a bigger picture question? You know, new vehicle prices, tariffs, gas prices, do you think there's some portion of people tapping out and dropping down to used? Could we see when off-lease supply and more supply comes back, used go north of 40 million units for a couple years because of this? If that did happen, would that affect other GPU as you guys tilt more prime versus subprime? I just would love to hear your thoughts on that.

Sure. I think, I mean, car prices are high. I think, these numbers won't be exactly right, but the last numbers that I remember is kinda pre-pandemic, I think general consumer goods are up 25%, give or take, and I think cars are up 35%-40%. I think car prices, all else constant, are higher, and that has to be impacting people. I think generally the kind of elasticities for cars at like the aggregate level are not super high. People need cars to live their lives when they get tired of the car they own. I think you generally see aggregate transactions that are relatively stable. I think there is room, though.

All the things you pointed to are things that are probably, you know, directional positives for the overall market size over time. I think realistically, the scale of those positives relative to the scale of our growth is just very small. I think our view is that most things that happen to the market are gonna impact us in a proportionate way. What we are doing ourselves is dramatically more powerful than that, we try to stay really focused on all the fundamental tools that we're building and just making sure that we're delivering great customer experiences and doing all the hard operational work to make sure we can scale effectively.

I think on your last point on rates and shifting between prime and non-prime customers, I think first of all, our balance of customer credit is pretty similar to the market overall. I think the profitability per, you know, retail unit sold for prime versus not prime is not different enough to where, you know, moves in those distributions matter all that much to the overall other GPU. Generally speaking, I think that would fit in the same category. You know, those things can move around. There'll always be little macro effects that move things around by, you know, tens of dollars, give or take. In general, the most important thing is that we keep delivering great customer experiences and stay focused on us.

The next question is from Daniela Haigian with Morgan Stanley. Please go ahead.

Hi, Ernie and team. Thanks for taking the question. My first one's on SG&A leverage. Most line items this quarter, including logistics, came in lower as a percentage of sales versus the run rate we've been seeing the last few quarters. How should we be thinking about operating leverage in fixed costs? Mark, you mentioned that. More near term, how should investors think about logistics expense in a rising fuel cost environment?

Sure, I can hit that. I think it's helpful to break that down into a couple different categories. 1, you know, operations expense, that's the, you know, the expenses associated with executing a transaction, providing customer service, fulfilling the transaction via our logistics network and last mile delivery network, and all of those sort of expenses that are more variable in nature. I think we had a strong quarter on that front with operations expenses, you know, down slightly year-over-year. I think in the longer term, we definitely see an opportunity to march those down further on a per retail unit basis. You know, in any given quarter, they, you know, they can be impacted. You mentioned fuel prices. That would definitely have an impact because logistics is part of that operations expense.

I wouldn't expect that impact to be particularly large, you know, there's some impact there. The second category of expenses is overhead expenses. That's an area where we've shown a lot of strong leverage. I think overhead expenses are expenses that are more fixed in nature. You know, they can grow due to investments that we make. For example, we're making some investments now in additional technology, including AI-related technology, you know, that would be in that overhead expense number. They can grow, it's much more fixed in nature, and we do expect to see significant leverage in that overhead line item over time. Those are two of the big categories. Just to add the third, you know, we have been marching up advertising spend.

You know, we think given where we are in our company's, you know, life, we think there's still a lot we can do to continue to raise, you know, that understanding, awareness, and trust of our offering. You know, we're in the relatively early days of online auto retail adoption. Obviously, we're, you know, playing a big role in telling that story, and we think there's a lot of value to us continuing to invest in advertising. Those would be the three big categories, and I've walked you through some of the dynamics.

Thanks, Mark. That's helpful. Second question, a bit longer term, on CapEx long term. Recognizing you're only 20% utilized on your current real estate capacity of 3 million, but at this rate of growth, you're gonna need to think about builds beyond that over the next few years. You had a helpful exhibit in last quarter's investor letter, on eventually building out greenfield production. What would that look like? What's the team's philosophy on building in that capacity?

Sure. You know, the way I think about our production growth plan, and I, you know, I think a lot of our capital investment is really related to just growing production and production facilities. Right now there's, you know, multiple ways that we're doing that. One is just adding staffing into existing facilities. That's no CapEx. You know, a second is we're integrating ADESA locations, which basically means going into existing ADESA buildings that have already been constructed, implementing our CARLI proprietary software system to do inventory and reconditioning management in those centers, adding some equipment. You know, that's a very CapEx light way to add production capacity.

The third way is to actually start doing full build-outs of existing ADESA facilities. The way to think about that is, you know, we've got, we've got the land, but we can expand the buildings and structure in order to add more production lines into those facilities. We did talk a little bit about that in our last letter. We think those are, you know, very high quality investments to be making and expect to start, you know, making those investments over the course of this year. Last is greenfield IRCs. That's not a priority at this time. I think the, you know, our bigger priority is executing those first three types of production expansion. You know, up to this point, we've been really focused on the first two, ramping capacity in existing facilities and integrations.

You know, this year is the year where, you know, we'll start doing some of those full build-outs, which we think make a lot of sense.

The next question is from Rajat Gupta with JPMorgan. Please go ahead.

Great. Thanks for taking the question, and congrats on the execution around the reconditioning cost. I had a question on the wholesale retail spread comment, you know, Mark, that you made in the prepared remarks. Is that impact that you're already feeling in the month of April, based on how retail prices are tracking? Or is that more of an expectation around May and June or baking in some sort of, you know, slowdown in demand because of gas prices and just, you know, sentiment tied to the war? Any more color around that $100-$200 wholesale retail spread headwind would be helpful. I have a quick follow-up.

Sure, yeah. You know, what we're seeing on spreads and what we've, you know, seen year to date, it really starts with a very hot wholesale market in Q1. You know, I think wholesale prices, you know, really appreciated in Q1. You know, that appreciation can happen in any given year as a lead up to tax season. The appreciation in wholesale prices that we saw early this year, it both started earlier and it was of a larger magnitude than we've typically seen in past Q1s. I think, you know, a strong wholesale market, which should benefit us. We had, you know, one of our highest quarters ever on wholesale vehicle gross profit per wholesale unit sold in Q1, commensurate with that hot wholesale market.

I think you know, what we're seeing is, you know, that wholesale appreciation wasn't fully passed on into retail prices, and that's causing a little bit of that, you know, wholesale to retail, spread compression that we're pointing to.

Got it. Got it. That's, that's clear. Just to follow up on the previous question around SG&A, you know, the, the sequential pickup in the overhead expenses, it's. Or, you know, just the other costs is probably the highest we've seen in a while, you know, from 4Q to 1Q, you know, particularly since the turnaround. You mentioned some investments around AI and stuff. Any way you could double click on that, give us a little more detail around what's going on. Are there any one-timers, you know, maybe some of the new car acquisitions? You know, just a little more granularity there would be helpful.

Any color on, you know, overhead expenses for the year would be helpful. Thanks.

Yeah, sure. Yeah. I think there are, you know, some, you know, seasonal or one-time components in there as well as some investments. You know, we typically see, you know, Q1 is a high quarter for payroll expense related to share-based compensation because we typically have large vesting of share-based compensation in Q1, larger than some other quarters. In addition, the weather events in Q1 actually did have some impact on overhead expenses, where we spent much more than a typical winter quarter on snow plowing and removal. That, you know, is in that number. There are, you know, ongoing investments, you know, things that I wouldn't think of as seasonal or, you know, one time, you know, including technology investments, some, you know, incremental investments in facilities.

You know, that I think will have us operating at a higher level on overhead expenses than we were in 2025. But, you know, I would not expect to see, you know, overhead expenses to increase at a rate like that. I think, you know, thinking of Q1 as, you know, more like a new level is probably more appropriate.

Understood. Great. Thanks for all the color and good luck.

The next question is from Sharon Zackfia with William Blair. Please go ahead.

Hi, and congratulations on getting wholesale ops, you know, back up and running. I guess. Well, it was running, but more optimized. I guess, you know, with that, it sounds like you might be positioned to hold retail GPU for the full year, and I'm curious on your thoughts on that in terms of, you know, seeing improvement in the back half of the year again.

Sure. I think, you know, we try to stay away from giving too much precise color there. I think all the things that we've generally kind of said in the past, we continue to believe. I think there's a little bit of seasonality in those numbers. I think we have fundamental gains that we're gonna continue to seek to attack. I think across the sum of the GPU line items plus expenses, we feel like we've got clear visibility to 13.5% adjusted EBITDA margin, which is our goal. Yeah, I think there's been. There's always, like, a couple little interesting stories that pop up from time to time.

You know, gas prices or impacts from Iran or, you know, recon expense or whatever it is. I think as a general matter, we think we're in an environment that looks similar to the past, and we're just gonna keep chugging forward.

I think, secondarily. Sorry, I'm losing my voice. For the OBBB, there had been kind of a lot of talk about tax refunds and the benefit that you might see in your business. You know, that happened right around the time the war broke out and, you know, obviously gas prices spiked. I'm curious, you know, as you went throughout the quarter, did you see any change in the complexion of your customers across income cohorts, or does it look very similar to what you were seeing in 2025? Thanks.

Sure. Well, I would say, you know, we grew by 40% in the quarter. Overall, I would say we're, you know, extremely happy with the way the business performed and the way the team operated during the quarter. I think it's a little hard to massage out some of those effects. I think there was an expectation that, you know, tax dollars would be larger. I think that did play out. Like, there's data out there that suggests that that is true and that that may lead to additional vehicle demand. I think, you know, we only see our own data, and that did coincide very closely with the Iran situation.

I think it's hard to disentangle, but I would say our view would be that it probably was not as strong as expectations, in terms of, you know, converting to vehicle demand, and was probably more similar and maybe even a touch softer than years past. I think overall, not really a huge event for the quarter, and I think hard to separate the tax season effect from the gas price effect. Since then, it feels like things are operating the way that we'd expect, and I think that's true, you know, almost any way you look at the business, whether it's volume or, you know, seasonality or distribution of customers or anything like that.

The next question is from Brian Nagel with Oppenheimer. Please go ahead.

Hi, good afternoon. Great quarter. Congratulations. Very nice.

You know, the question I know that some of this has been asked before, so I apologize for being repetitive. Just with respect to gas prices, I mean, clearly, you know, the strain, you had a very strong quarter and, you know, the commentary in Q2 was very strong as well. As you think about gas prices and potential impacts to the consumer, and then maybe you look over time, over prior spikes in gas prices, I mean, how should we be thinking about that? I mean, have you noticed over time that your consumer acts different when gas prices spike?

I think, sure. I think that maybe there's 2 potential impacts. 1 is what happens to aggregate sales, and 1 is what happens to mix of sales. I think what we've seen in the past is that the impact to aggregate sales is usually pretty small and over any reasonable period of time, I think largely it massages out. I think in terms of mix of sales, you know, we do see some movement. You know, you see expected things. I think, you know, over the last couple of months we saw, you know, large SUVs kind of decrease as a % of sales a little bit, and we saw EVs kind of increase again as a % of sales. I think even over the last several weeks, we've seen that normalize or kinda go back to closer to baseline.

Not all the way to baseline, but closer to baseline. I'm sure those things will continue to migrate. I think the way that we try to manage that is we try to just make sure that we build a system that's adaptive and we've got all the cars the customers could want in front of them. Based on the demand signals we see every day, we're adjusting what we're buying every day to try to match what that demand is. Given how quick our turn times are, you know, generally the system adapts very quickly. I think our view would be that there will be impacts, and they will generally be directionally as would be expected.

We don't expect them to be a central part of the story, you know, unless the impacts were to get much, much larger.

No, that's very, that's very helpful. I appreciate that. My second question, you know, this would regard to the commentary on, you know, the narrowing spreads between retail and wholesale. I guess I wanna understand better, as you look at this and what's happened here, is this more of a short-term phenomena where, you know, it's, you know, maybe started a couple of quarters ago and now is correcting? Or do you think there's actually some type of, you know, longer term or, you know, multi-quarter shift happening within the marketplace?

Yeah. I think our pretty strong view would be this is a transitory impact. I think it's hard to know exactly what drives these, you know, these movements. I think the kind of wholesale retail spread, you know, that we mention a lot, I think generally that follows a pretty clear seasonal pattern. I think, you know, in any given quarter, it tends to bounce around a little bit around the normal seasonal expectation. I do think that this year, heading into the year and heading into tax season, the wholesale market was really strong. The way the market would normally react to that is the retail market would just kinda catch up on a, you know, 30 to 60 day lag.

It seems like the retail market is catching up, but it's catching up on a little bit longer lag. I think there's room for that to normalize relatively quickly, and there's room for it to kinda hold where it is. Either way, we don't think it'll be a central part of the story, but as we look at it today, the wholesale market is ahead of the retail market, and so that led to the call-out.

That's very helpful. I appreciate the color. Thanks.

The next question is from Jeff Lick with Stephens Inc. Please go ahead.

Good afternoon. Thanks for taking my question, guys. Of course, you know, I was wondering if we could talk and just unpack a little bit deeper, you know, as you guys become bigger, you become a bigger part of the entire used ecosystem, not, you know, not just retail, but wholesale. Just looking at your wholesale numbers, you know, wholesaled less as a percentage of your retail, you know, down to 44.6 from 47.4. Then your marketplace units were actually down. Then you were, you know, Mark, as you pointed out, your wholesale GPU was $1,327. I'm just curious to, you know, how that dynamic's playing out in terms of your ability to source your decisions that you're making as to why you might?

You would think almost if you can get that much money wholesaling, you might have wholesaled more, but it appears that you retailed more. Just, you know, if you may talk a little bit more about the dynamics there.

Sure, yeah. I think, you know, we're extremely excited with how the business is operating overall. I think, you know, keep in mind, I think one of the central things that we're always trying to balance is making sure that we're managing the business operationally as best we can while growing at these very high rates. The wholesale side of the business does have operational impacts on the overall business, most notably in last mile logistics, which, you know, is an important part of our system that we've got to carefully manage to make sure that we can handle the growth. I think we're always making trade-offs there and trying to make sure that, you know, we're doing smart things. In general, the signs that we see are very good, and the teams are executing extremely well.

I think the wholesale team continues to unlock fundamental gains and is doing great. I think you see that in the wholesale vehicle results. I think in wholesale marketplace, I think we're also building a lot of fundamental value there that feels very exciting. I think, you know, we made a comment in the letter that we feel like ADESA CLEAR , which is our digital auction platform, is now a best-in-class platform. We've got a lot of reasons for believing that, but that's pretty exciting. We think that we've built something there that is extremely high quality, and it's growing very quickly, and it's adding value to the ADESA system and to the Carvana system as we buy cars wholesale and dispose of most of them through that platform.

Then you kind of saw in the letter, we shared a number of speed stats that I think are fun reductions of the rate at which we can kind of move cars through the system. You know, we've talked about it before, but, you know, the goal of building the entirety of the Carvana system is to deliver incredible customer experiences on both sides of the transaction and to minimize the expense that is necessary to allow customers to trade cars with each other. I think if you look at the cars that we're buying retail and then, you know, putting through our system and selling to a different customer, that entire process, in the fastest case, you know, took place in just under five days, which I think is remarkable. I mean, it's.

Forgive me for walking through that, you know, that means the customer goes to our site, gets a value for their car, decides they wanna sell it. They go through a verification process, go through all the title work, schedule a time to drop off the car to us or for us to pick it up. We get the car, we land it at our hub, we put it on a multi-car hauler, we drive it to an inspection center, we inspect it. We run it through the reconditioning process after figuring out what needs to be fixed on the car, photograph it, put it up on the site, price it in an automated way, another customer finds it, decides they wanna buy it. They go through the entire purchase process, schedule their delivery.

We put it on a truck, deliver to them, and it's theirs. That took 4.8 days, which is pretty exciting. I think the system overall, we're making a lot of investments to make sure it's very tight. We're getting, you know, a lot of fundamental value out of that, and we think that that's gonna unlock a lot of value over time. I think overall, we're very excited by how the system is performing overall.

That's an amazing anecdote. Thanks for sharing that. Congrats and best of luck on Q2.

The next question is from John Colantuoni with Jefferies. Please go ahead.

Great. Thanks for taking my question. Just wanna ask about other GPU. Can you give us a sense if you sort of see an opportunity to incrementally invest some of the financing GPU into growth, as you've done in recent quarters, or is that reinvestment largely behind you so that other GPU sort of has more or less hit a run rate level at this, at this point? Thanks.

Yeah, thank you. I would say, I mean, let's start with, you know, in the quarter, we are 10.4% adjusted EBITDA margin. I think, you know, in the past we've provided these walks that we think are relatively straightforward to get to our, you know, goal of 13.5, that basically include leverage and fixed costs and then, include getting to marketing dollar per unit spend that is similar to our more mature cohorts. I think if you, if you do that walk, it continues today to be, you know, pretty straightforward, and the math is approximately the same.

I think what that leaves from there is basically we've got room for any place where we make fundamental gains, whether we get more efficient in any of the GPU line items or we get more efficient in any of the variable cost line items. That gives us room to share value with customers. I think where we share value with customers, you know, will not necessarily always be in the exact places we unlock it, but we are seeking to unlock it in every part of the business. We've got, you know, projects that we're very excited about in every single one of those line items, every expense line item, every revenue line item.

They're all credible projects that we think have a real impact to make meaningful differences in the business, but we haven't done them yet, so we gotta go, you know, unlock that value. As we unlock it, our plan is to share that with customers. We do think that there's gonna be value there to share with customers. We think that if we execute really well, it could be significant. We think even with doing that, we can hit our goals, which, you know, overall has us excited but means there's a lot of work to do.

Okay, great. I wanted to ask one about advertising. Mark, you talked about spending more. Just be curious if you could give us a sense for what advertising channels you're seeing the best returns and how you sort of think about advertising fitting into your broader growth strategy over time. Is there sort of a near term ramp in spend in a particular market, and then once you hit a level of mind share, you sort of can pull back? I just made that up. I'm just curious to get your perspective on sort of how you think about advertising fitting into your long-term growth strategy over time. Thanks.

Sure. Absolutely. Let me just start with that long-term growth strategy. You know, we've talked about the three pillars of that growth strategy. One is continuing to improve the product and customer experience. That's a place where, you know, we've made and, you know, hope to continue to make significant gains. Second is, you know, building, you know, increased awareness, understanding, and trust. That is the growth pillar, obviously, where advertising plays a role. Advertising is not the only component of that. You know, great customer experiences, word of mouth, repeat customers. There's a number of different ways to do that, advertising is certainly a component of it. Just to round out that framework, third is increasing collections and other benefits of scale, including adding more inventory pools to put more cars closer to customers.

On the advertising component of that leg, you know, as I mentioned in my remarks, we still feel like we're in the relatively early days of telling our story. We do see opportunities to continue to advertise more. I would expect that advertising to be very broad based, you know, across many different channels as we seek to reach, you know, different audiences and meet them where they are. I think in the very near term, you know, we haven't, you know, provided too much commentary on our advertising outlook. I think if you look over the last, you know, 2, 3 quarters or so, you'll see relatively consistent advertising expense per unit. I think that's a reasonable way to think about where we are today.

The next question is from John Healy with Northcoast Research. Please go ahead.

Thanks for taking the question. Just wanted to see if we could switch gears just a little bit, Ernie, and talk about your priorities on the new car side. I think you guys are up to maybe six or seven Chrysler dealerships or Stellantis dealerships now. Any kind of updated perspective on where you're seeing benefits and, you know, I, I know you said in the past it's a, it's a learning process, but with the pace of these acquisitions continuing, I was hoping you could provide some more context there. Thank you.

Thank you. I'm gonna apologize in advance, and you are welcome to ask another question, but I think our answer remains the same. It's still early. You know, stay tuned. We'll share more when it's time to share more. As I said, if you've got another question, you're more than welcome to ask it.

Understood. I guess I'll stick on the other businesses as well. You know, obviously we continue to see mobility and autonomous offerings rolling out in more cities. Obviously you have a really good asset, and we've talked about capacity at the reconditioning centers. Have you guys, you know, game planned out to any more that you could talk to us about, maybe how you see yourself maybe facilitating those, that business potentially as being a service provider there or, you know, kind of any updated thoughts maybe on evolution of the business model? Thanks.

Sure. Yeah, I mean, I would say, we're always paying attention and I think, you know, we try to always be thoughtful about, you know, what opportunities exist out there given the assets that we've built. I think we try to balance that with, you know, where is the best place to put our focus. I think, you know, we've clearly got an opportunity here to continue to grow a lot very quickly, and it clearly takes a lot of operational discipline and operational effort. I think, you know, that will continue to be our primary focus for the foreseeable future, but we're always paying attention.

The next question is from Marvin Fong with BTIG. Please go ahead.

Great. Thanks for taking my question and congratulations. I think this quarter makes you the top used car dealer in the country. Question on, just kind of inventory. I was taking that from the Q. Looks like it grew quite a bit less than sales. Just wanted your take on, you know, was that partly a function of just kind of bringing the operational efficiency up and getting recon in order? Then just secondarily, how should we kind of think about having what looks like a pretty lean inventory relative to your sales growth rate? How do we think about that in terms of your pricing power?

You know, acknowledging what you said about spread, it would seem to me that you would have pretty good ability to exercise some pricing power with this level of inventory. Thanks.

Sure. Yeah. I think, you know, last quarter, you know, I think our inventory was up approximately 40% year-over-year. I think this quarter it was up a little over 30% year-over-year. I think that directional change is correct, and that kinda means that our, you know, implied turn times have gotten a bit faster. I think that can generally be a not surprising seasonal move, as you head kind of, you know, right out of tax season, where you tend to have, like, the biggest discrete change in sales rates. You can kind of, you know, quickly eat through inventory that you were building up prior to that.

Carvana (CVNA) Q1 2026 Earnings Call Transcript

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