Why did Carvana's Adjusted EBITDA margin decline even though profits grew?

Adjusted EBITDA margin fell to 10.4% from 12.4% because revenue grew faster than Adjusted EBITDA, and per-unit economics softened. Total GPU fell $412 year-over-year. Management attributes this to higher retail pricing following FTC guidance requiring dealers to include mandatory fees in advertised prices, and to rising benchmark rates reducing Other GPU. SG&A also rose 28% year-over-year, and SG&A per retail unit fell to $3,568 from $3,846.

What does the 2026 Adjusted EBITDA guidance imply for the rest of the year?

Guidance of $2.7 to $3.0 billion for full-year 2026 implies roughly $1.2 to $1.5 billion across the second half after first-half results (Q1 plus Q2 Adjusted EBITDA of $769 million in Q2 alone). This assumes continued sequential unit growth and a stable operating environment. The guidance is conditional, and the company does not provide a reconciliation to GAAP net income because of unpredictable fair value and one-time items.

How much capacity does Carvana have to grow?

Carvana's current footprint supports fully built-out annual capacity of about 1.5 million retail units, with real estate to support 3 million. The company integrated retail production at three more ADESA locations in Q2, bringing the total to 19, and began building its first full ADESA buildout, expected to start production in early 2027.

What are the main risks flagged in the filing?

Risks include macroeconomic and consumer demand conditions, tariffs and trade restrictions, fuel and energy costs, the conflict in Iran, changes in new and used vehicle prices, and regulatory changes such as recent FTC rulemaking on advertising and dealer fees. Company-specific risks include managing rapid growth, using infrastructure capacity and ADESA integration benefits, raising capital given substantial indebtedness, and the relationship with DriveTime and its affiliates.

How does the share structure affect per-share earnings?

Basic Class A EPS was $0.43 and diluted EPS was $0.42 on about 718 million and 740 million weighted shares. However, roughly 380 million Class A LLC units are held by non-controlling interests and are not in the Class A count. On a full conversion basis there would be about 1.127 billion shares, so per-share earnings for Class A holders reflect only a portion of total economic earnings. Net income attributable to non-controlling interests was $203 million in Q2.

CVNA 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 29, 2026. Cited figures are marked; the original filing is the authoritative source.

Carvana (CVNA) reported a strong second quarter of fiscal 2026 (quarter ended June 30, 2026).

Retail units sold rose 38% year-over-year to a record 197,325, and revenue increased 52% to $7.376 billion^a. Profitability also reached records: net income was $513 million (a 7.0% margin, up from 6.4%), Adjusted EBITDA was $769 million, and GAAP operating income was $680 million, up $169 million. Diluted EPS was $0.42 versus $0.26 a year earlier.

The company frames itself as the fastest-growing and most profitable U.S. automotive retailer, citing 10 consecutive quarters of leadership on both measures. The main caution for investors is unit economics. Total gross profit per unit (GPU) fell to $7,014^b from $7,426, a $412 decline, and Adjusted EBITDA margin compressed to 10.4% from 12.4%.

Management attributes the GPU decline to higher retail pricing following FTC guidance on mandatory dealer fees, which pushed retail GPU down relative to Other GPU, and to rising benchmark interest rates. Management says the aggregate GPU was in line with its expectations. Operating expenses also rose, with SG&A up 28% year-over-year to $704 million^c.

Looking ahead, Carvana expects sequential growth in retail units in Q3 2026 and full-year 2026 Adjusted EBITDA of $2.7 to $3.0 billion^d, up from $2.24 billion in 2025, conditional on a stable environment. Management also reiterated long-term goals of 3 million units per year and a 13.5% Adjusted EBITDA margin by 2030 to 2035, and noted capacity of about 1.5 million retail units fully built out with real estate for 3 million.

Liquidity was $7.0 billion in total resources, including $2.63 billion of cash. Investors will likely focus on whether GPU stabilizes and whether the company can convert unit growth into the guided Adjusted EBITDA range.

02—Key points

Key Highlights

Retail unit sales of 197,325 rose 38% year-over-year, a record and nearly double the level of two years earlier, while the broader industry declined.
Revenue of $7.376 billion grew 52% year-over-year; GAAP operating income reached a record $680 million, up $169 million.
Net income of $513 million (7.0% margin) and Adjusted EBITDA of $769 million (10.4% margin) were both records in dollar terms, but Adjusted EBITDA margin fell from 12.4%.
Total GPU declined $412 year-over-year to $7,014 (non-GAAP $7,125), driven by a shift from Other GPU to Retail GPU amid FTC dealer-fee rules and rising benchmark rates.
FY2026 Adjusted EBITDA guidance of $2.7 to $3.0 billion, up from $2.24 billion in 2025, assumes a stable environment; Q3 retail units are expected to rise sequentially from Q2.
Diluted EPS of $0.42 vs. $0.26 a year earlier; the company has 1.127 billion Class A shares outstanding on a fully converted basis.
Liquidity resources totaled $7.0 billion at June 30, 2026, including $2.63 billion of cash, and the company reiterated long-term targets of 3 million annual units and a 13.5% Adjusted EBITDA margin by 2030 to 2035.

03—Questions

Frequently Asked Questions

Why did Carvana's Adjusted EBITDA margin decline even though profits grew?
Adjusted EBITDA margin fell to 10.4% from 12.4% because revenue grew faster than Adjusted EBITDA, and per-unit economics softened. Total GPU fell $412 year-over-year. Management attributes this to higher retail pricing following FTC guidance requiring dealers to include mandatory fees in advertised prices, and to rising benchmark rates reducing Other GPU. SG&A also rose 28% year-over-year, and SG&A per retail unit fell to $3,568 from $3,846.
What does the 2026 Adjusted EBITDA guidance imply for the rest of the year?
Guidance of $2.7 to $3.0 billion for full-year 2026 implies roughly $1.2 to $1.5 billion across the second half after first-half results (Q1 plus Q2 Adjusted EBITDA of $769 million in Q2 alone). This assumes continued sequential unit growth and a stable operating environment. The guidance is conditional, and the company does not provide a reconciliation to GAAP net income because of unpredictable fair value and one-time items.
How much capacity does Carvana have to grow?
Carvana's current footprint supports fully built-out annual capacity of about 1.5 million retail units, with real estate to support 3 million. The company integrated retail production at three more ADESA locations in Q2, bringing the total to 19, and began building its first full ADESA buildout, expected to start production in early 2027.
What are the main risks flagged in the filing?
Risks include macroeconomic and consumer demand conditions, tariffs and trade restrictions, fuel and energy costs, the conflict in Iran, changes in new and used vehicle prices, and regulatory changes such as recent FTC rulemaking on advertising and dealer fees. Company-specific risks include managing rapid growth, using infrastructure capacity and ADESA integration benefits, raising capital given substantial indebtedness, and the relationship with DriveTime and its affiliates.
How does the share structure affect per-share earnings?
Basic Class A EPS was $0.43 and diluted EPS was $0.42 on about 718 million and 740 million weighted shares. However, roughly 380 million Class A LLC units are held by non-controlling interests and are not in the Class A count. On a full conversion basis there would be about 1.127 billion shares, so per-share earnings for Class A holders reflect only a portion of total economic earnings. Net income attributable to non-controlling interests was $203 million in Q2.

04—Continue

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