Carvana’s third quarter saw strong top-line growth and profitability, but the market responded negatively, with shares declining significantly after results. Management attributed the quarter’s performance to expanded inventory, increased reconditioning capacity, and operational efficiencies across logistics and finance. CEO Ernest Garcia highlighted the company’s improved delivery speed, with Phoenix as a pilot market for same-day and next-day delivery. While these initiatives contributed to new highs in retail units sold and revenue, management acknowledged that higher depreciation rates and advertising investment offset some efficiency gains.
Is now the time to buy CVNA? Find out in our full research report (it’s free for active Edge members).
Carvana (CVNA) Q3 CY2025 Highlights:
- Revenue: $5.65 billion vs analyst estimates of $5.08 billion (54.5% year-on-year growth, 11.1% beat)
- Adjusted EPS: $1.89 vs analyst estimates of $1.37 (38.3% beat)
- Adjusted EBITDA: $637 million vs analyst estimates of $600.2 million (11.3% margin, 6.1% beat)
- Operating Margin: 9.8%, in line with the same quarter last year
- Retail Units Sold: 155,941, up 47,290 year on year
- Market Capitalization: $43.81 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Carvana’s Q3 Earnings Call
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Sharon Zackfia (William Blair) asked about the health of Carvana’s subprime loan portfolio and whether incremental reserves would be needed. CFO Mark Jenkins replied that 2024 and 2025 loan originations are performing well, supported by tightened credit since late 2023 and validation from new loan sale agreements.
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Marvin Fong (BTIG) questioned the sequential uptick in operating expense per unit and prospects for further cost reduction. Jenkins explained that while advertising spend has risen, core operational and overhead expenses continue to show leverage, with further gains expected as scale increases.
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Rajat Gupta (JPMorgan) pressed on the unit sales outlook for Q4 and whether guidance reflects a shift in seasonality or caution about macro trends. CEO Garcia stated the company factors in variability but continues to see strong growth and views execution as the primary driver.
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Christopher Bottiglieri (BNP Paribas) inquired about the performance of same-day delivery in Phoenix versus control markets. Garcia said increased speed improves conversion and customer experience, and that the capability will be expanded incrementally as operational hurdles are addressed.
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Daniela Haigian (Morgan Stanley) asked about competition from new entrants like Amazon and the scalability of Carvana’s model. Garcia emphasized the company’s focus on efficiency and customer experience rather than competitors, noting the capital and operational intensity required to replicate Carvana’s platform.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) the national rollout and operational impact of same or next-day delivery, (2) additional automation and tech-driven cost reductions, and (3) the effectiveness of brand and customer acquisition investments. Progress on reconditioning and logistics capabilities, as well as adaptation to industry seasonality and consumer trends, will also be important signposts for tracking execution and long-term competitiveness.
Carvana currently trades at $307.67, down from $354.04 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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