Online used car dealer Carvana (NYSE: CVNA) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 41.9% year on year to $4.84 billion. Its non-GAAP profit of $1.28 per share was 12.3% above analysts’ consensus estimates.

Is now the time to buy CVNA? Find out in our full research report (it’s free).

StockStory’s Take

Carvana’s second quarter results were met with a notably positive market reaction, as the company’s revenue and non-GAAP earnings surpassed Wall Street expectations. Management attributed this performance to continued operational improvements, a sharp increase in retail units sold, and expanded inventory selection. CEO Ernest Garcia highlighted that Carvana’s growth rate outpaced the broader automotive retail market by a substantial margin, emphasizing the company’s progress in reducing reconditioning and inbound transport costs, which contributed to stronger margins. CFO Mark Jenkins also cited higher vehicle service contract attachment rates as a key contributor to profitability.

Looking ahead, Carvana’s management emphasized a focus on scaling operations, further leveraging operational efficiencies, and expanding brand awareness through increased marketing investment. Garcia stated the company aims to build on its vertically integrated business model and continue investing in reconditioning capacity, logistics, and technology to support long-term unit growth. Jenkins noted that additional advertising spend and integration of ADESA facilities are expected to drive future expansion, with management targeting the long-term goal of selling 3 million cars annually while achieving a higher adjusted EBITDA margin.

Key Insights from Management’s Remarks

Carvana’s leadership credited robust unit growth, cost discipline, and increased operational leverage as primary factors behind the quarter’s financial outperformance. The management team also discussed initiatives shaping the company’s competitive position and long-term strategy.

• Unit growth well ahead of market: Management highlighted that Carvana’s 41% year-over-year growth in retail units sold significantly outpaced the broader used car market, which grew less than 5%. This was attributed to improvements in the customer experience and scaling of inventory selection.
• ADESA integration enhances efficiency: Ongoing integration of ADESA reconditioning centers enabled Carvana to grow inventory selection by 50%, reduce inbound transport miles, and lower per-unit reconditioning costs. Jenkins noted these integrations are "CapEx light" and leverage existing infrastructure.
• Operational expense leverage: The company achieved a notable reduction in non-GAAP SG&A expense per unit, driven by higher sales volume and operational efficiency initiatives. Fulfillment, logistics, and customer support costs were moderated through process improvements and technology, including early use of AI in customer care and documentation.
• Marketing investment ramps up: Carvana increased advertising spend to build brand awareness, understanding, and trust, with Garcia explaining that both direct and brand marketing channels are being tested for long-term growth impact. Management views the current gap between gross profit and advertising expense as an opportunity to further accelerate growth.
• Finance platform and ancillary product gains: Jenkins described the strength of Carvana’s vertically integrated finance platform, which allows for higher approval rates, improved cost of funds, and a higher attachment rate for vehicle service contracts. These factors, combined with expanded loan investor relationships, contributed to improved other GPU (gross profit per unit) performance.

Drivers of Future Performance

Carvana expects continued growth to be driven by expanding operational capacity, improved customer experience, and strategic reinvestment in marketing and technology.

• Scaling reconditioning and logistics: Management is prioritizing the integration and build-out of ADESA sites, which are expected to further increase inventory selection, reduce transport distances, and enhance operational efficiency. Jenkins emphasized that this approach is designed to support higher sales volumes with minimal capital expenditure in the near term.
• Elevated marketing spend: Carvana plans a sequential increase in advertising investment to drive brand awareness and customer acquisition. Garcia noted that brand building and direct response marketing are being tested to lay the groundwork for sustained, long-term unit growth.
• Focus on customer experience and product expansion: Continued improvements in the digital buying process, fulfillment speed, and customer support—alongside higher attachment rates on vehicle service contracts—are expected to boost conversion and retention. Management also sees room for further gains from leveraging data analytics and automation across the platform.

Catalysts in Upcoming Quarters

In the upcoming quarters, the StockStory team will be monitoring (1) the pace and effectiveness of ADESA facility integrations and their impact on inventory selection and reconditioning efficiency, (2) the results of stepped-up marketing campaigns on brand awareness and customer acquisition, and (3) ongoing improvements in operational leverage, particularly SG&A expense per unit. Additional focus will remain on the adoption of ancillary products and developments in Carvana’s finance platform.

Carvana currently trades at $345.98, up from $333.52 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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