CARVANA CO. (CVNA) Q1 2025 Earnings Summary

Executive Summary

Record Q1 with retail units +46% YoY to 133,898 and revenue +38% YoY to $4.232B; profitability inflected with net income margin 8.8%, operating margin 9.3%, and Adjusted EBITDA margin 11.5% .
Clear beats vs S&P Global consensus: revenue $4.232B vs $4.002B est., EPS $1.51 diluted vs $0.75 est., and EBITDA $488M (company measure) vs ~$437M est.; upside driven by unit growth, stronger “Other GPU” (financing/VSC), and SG&A per-unit leverage . Estimates from S&P Global marked with asterisks below.
Q2 outlook: management expects sequential increases in retail units and Adjusted EBITDA to new all‑time records, and re‑affirms path to significant FY25 growth; long‑term objective set to 3M units at 13.5% EBITDA margin in 5–10 years .
Watch items: Q1 net income included a $158M benefit from Root warrant fair value (+3.7% margin); revenue growth trailed unit growth due to higher retail marketplace mix not recognized as retail revenue . Initial aftermarket reaction was “surprising” per CFO, implying investor debate around reinvestment cadence and guidance specificity .

What Went Well and What Went Wrong

What Went Well
- Unit growth and efficiency: Retail units +46% YoY to 133,898 (company record) with Total GPU (GAAP) $6,938 and Non‑GAAP Total GPU $7,140; Adjusted EBITDA margin reached 11.5%, within long‑term model .
- High‑quality profits: ~80% of Adjusted EBITDA converted to GAAP operating income ($394M, 9.3% margin), signaling limited non‑cash add‑backs and strong operating leverage .
- Financing tailwinds: “Other GPU” rose on wider rate spreads and higher VSC attachment; lending platform and whole‑loan buyer base expanded; management cited exceptional finance GPU and broader, recurring buyer support .
What Went Wrong
- Net income boost from non‑operating item: $158M Root warrant fair value gain benefitted net income (3.7% margin), complicating YoY comparison; excluding warrant impacts in both periods, net income up $241M YoY .
- Wholesale GPU pressure: Non‑GAAP wholesale vehicle GPU decreased YoY, reflecting faster growth in retail vs wholesale units and higher wholesale depreciation rates .
- Limited numerical guidance: Company reiterated qualitative Q2/FY25 growth (units and Adjusted EBITDA) without ranges; some investors questioned reinvestment pacing and near‑term margin trajectory, noted by CFO’s comment on aftermarket reaction .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($B)	$3.061	$3.547	$4.232
Diluted EPS (Class A)	$0.23	$0.56	$1.51
Net Income Margin (%)	1.6%	4.5%	8.8%
GAAP Operating Margin (%)	N/A	7.2% (FY24) / 7.3% Q4 implied	9.3%
Adjusted EBITDA ($M)	$235	$359	$488
Adjusted EBITDA Margin (%)	7.7%	10.1%	11.5%
Retail Units Sold	91,878	114,379	133,898

Revenue breakdown and gross profit per retail unit:

Metric	Q1 2024	Q4 2024	Q1 2025
Retail Vehicle Sales ($M)	$2,175	$2,552	$2,980
Wholesale Sales & Revenues ($M)	$657	$678	$863
Other Sales & Revenues ($M)	$229	$317	$389
Total Gross Profit ($M)	$591	$763	$929
Total GPU (GAAP) per Retail Unit ($)	$6,432	$6,671	$6,938
Total GPU (Non‑GAAP) per Retail Unit ($)	$6,802	$6,916	$7,140
Retail GPU (GAAP) per Retail Unit ($)	$3,080	$3,226	$3,204
Retail GPU (Non‑GAAP) per Retail Unit ($)	$3,211	$3,331	$3,308
Wholesale Vehicle GPU (Non‑GAAP) per Retail Unit ($)	$522	$402	$493
Wholesale Marketplace GPU (Non‑GAAP) per Retail Unit ($)	$631	$455	$471
Other GPU (Non‑GAAP) per Retail Unit ($)	$2,438	$2,728	$2,868

Operating expense efficiency:

Metric	Q1 2024	Q4 2024	Q1 2025
SG&A ($M)	$456	$494	$535
SG&A per Retail Unit (GAAP, $)	$4,963	$4,319	$3,996
SG&A per Retail Unit (Non‑GAAP, $)	$4,245	$3,777	$3,495
Carvana Operations Expense per Unit ($)	N/A	$1,696	$1,658
Advertising Expense per Unit ($)	N/A	$564 (Q4 implied)	$538

Context and notes:

Revenue growth (+38% YoY) lagged unit growth (+46% YoY) due to a higher share of retail marketplace units (gross vehicle price not recognized as retail revenue) .
Net income included a $158M gain from Root warrant fair value (+3.7% margin); net income grew $241M YoY excluding Root effects in both periods .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Retail Units Sold	Q2 2025	None numeric	Sequential increase to all‑time record expected	New qualitative
Adjusted EBITDA	Q2 2025	None numeric	Sequential increase to all‑time record expected	New qualitative
FY Growth (Units, Adj. EBITDA)	FY 2025	Significant growth expected (from Q4 2024 letter)	Reiterated track to significant growth	Maintained
Capex	FY 2025	~$140M (10–12 ADESA integrations)	No update in Q1 materials	Maintained
Overhead Expense Growth	FY 2025	Mid‑single‑digit YoY	No update in Q1 materials	Maintained
D&A	FY 2025	~$300M	No update in Q1 materials	Maintained
Share‑Based Compensation (SG&A)	FY 2025	~$110M	No update in Q1 materials	Maintained
GAAP Interest Expense	FY 2025	~$520M (incl. $182M PIK)	No update in Q1 materials	Maintained
Effective Tax Rate	FY 2025	~22% (incl. TRA)	No update in Q1 materials	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
AI/Technology	AI “Sebastian” scaled; calls per sale down ~45% since Q4’22; delivery time −20% YoY in Q4’24	Continued efficiency gains; conversion improvements; platform investments cited across underwriting, ops	Improving
ADESA/Marketplace	Integrating Carvana IRCs at ADESA; digital auction benefits repeatedly highlighted	ADESA Clear expansion across 45+ locations; strong adoption by wholesale buyers	Expanding
Tariffs/Macro	Not a major driver in Q3’24 press; macro discussed broadly	Tariffs could lift new car prices more than used; system adapts to demand mix; minor timing gyrations observed	Managed, neutral-to-slightly positive bias
Product/Customer Experience	Faster delivery, higher NPS by YE’24	Highest NPS in ~3 years; faster delivery and self‑service tools stressed	Improving
Financing/Monetization	Record EBITDA; lending platform functioning well	Wider rate spreads, more whole‑loan buyers; exceptional finance GPU	Strengthening
Capacity/Scaling	>1M unit operational capacity; 3M unit real estate capacity (Q4’24)	New objective: 3M units at 13.5% margin in 5–10 years; weekly production cadence roadmap	Ambition raised

Management Commentary

“For the last 4 consecutive quarters, we have been in [our 8%–13.5%] range. And in Q1… we were 11.5%.” — CEO Ernie Garcia .
“Adjusted EBITDA was $488 million… our adjusted EBITDA is very high quality… we converted approximately 80%… into $394 million of GAAP operating income.” — CFO Mark Jenkins .
“Our new management objective is to sell 3 million retail units per year at an Adjusted EBITDA margin of 13.5% within 5 to 10 years.” — Shareholder Letter .
“Looking toward Q2, we expect a sequential increase in both retail units sold and Adjusted EBITDA, leading to all‑time company records on both metrics.” — CFO Mark Jenkins .
On tariffs: new car prices could rise more than used; model remains adaptive to demand shifts; minimal impact to plan observed .

Q&A Highlights

Margin vs growth balance: Management will prioritize growth “within reasonable ranges” but does not plan near‑term margin retrenchment; expects to share future fundamental gains with customers via price and experience investments .
Retail/Total GPU trajectory: Focused projects across transport, acquisition, recon, merchandising, and demand; manage across revenue/expense lines to maintain strong overall margins .
Financing monetization: Higher gain‑on‑sale driven by better scoring/underwriting, lower cost of funds, broader buyer base; opportunity for further gains .
Resilience in downturn: Now most profitable auto retailer by EBITDA margin; strong cash balances and margin cushion; expect dynamics to resemble profitable retailers in prior downturns vs 2022–2023 period .
Scale roadmap: Weekly production additions averaged ~80 units/week over last year; path to ~90/week (10 yrs) or ~180/week (5 yrs) supported by growing number of CARLI‑enabled facilities; demand benefits from broader selection and faster delivery .

Estimates Context

Q1 2025 actuals vs S&P Global consensus:

Metric	Consensus	Actual
Revenue ($B)	$4.002*	$4.232
Primary EPS	$0.75*	$1.51 (diluted Class A)
EBITDA ($M)	$437.3*	$488 (Adj. EBITDA)

Values retrieved from S&P Global.*

Implications: Consensus underappreciated the magnitude of unit growth, Other GPU (financing/VSC) strength, and SG&A per‑unit leverage; estimate revisions should trend higher for FY25 revenue/EBITDA. Management reiterated Q2 sequential growth to fresh records, which supports upward near‑term revisions .

Key Takeaways for Investors

Structural profitability: Four straight quarters within the 8%–13.5% EBITDA model; Q1 at 11.5% with ~80% conversion to operating income underscores earnings quality .
Growth runway: Units +46% YoY with improving NPS and faster delivery; outlook calls for new unit/EBITDA records in Q2; long‑term target of 3M units at 13.5% margin reframes TAM and scale potential .
Financing engine: Wider lending spreads and broader whole‑loan buyer support drove strong “Other GPU”; continued platform and funding optimizations are levers for sustained monetization .
Mix nuance: Marketplace mix suppresses reported retail revenue vs unit growth but not profit per unit; investors should anchor on GPU and EBITDA margins .
Non‑GAAP/one‑time items: $158M Root warrant fair value uplift aided net income; Adjusted EBITDA and operating income trends better reflect underlying operations .
Execution watch‑list: Wholesale GPU softness, reinvestment cadence vs margin, and limited numeric guidance; however, ADESA Clear/megastore integration and SG&A per‑unit trends remain positive .
Trading setup: Q1 beats plus Q2 record setup are supportive; initial aftermarket skepticism noted by CFO implies sensitivity to reinvestment narrative and desire for more granular guidance, a potential catalyst as visibility improves .

Citations:

Q1 2025 8‑K letter and press release:
Q1 2025 earnings call:
Q4 2024 8‑K letter/press:
Q3 2024 press release:
ADESA Clear expansion press release: