- 43% Retail Units Growth Carvana sold 596,641 retail units in 2025, up 43% year-over-year, with Q4 units at 163,522.
- 11% Adjusted EBITDA Margin The company achieved a record margin, driven by cost reductions and operational efficiency.
- $4 Billion Loan Sale Expansion New loan purchase agreements expanded capacity, with net debt reduced to 1.3x trailing EBITDA.
- $220/Car Reconditioning Automation Benefit AI and process improvements aim to unlock this savings if all locations reach top quartile performance.
- 30% AI-Driven Customer Experience 30% of customers use AI tools like Sebastian, avoiding human interaction until receiving the car, enhancing efficiency.
Operational Highlights
Carvana's operational performance was equally impressive, with the company highlighting significant improvements in customer selection, faster car delivery, and reduced interest rates for customers. The company's CEO, Ernie Garcia, noted that the team has done an "incredible job" in scaling the reconditioning operations, but there are opportunities to improve performance, particularly in newer locations. The company aims to make the management of reconditioning processes more automated, which could lead to a $220 benefit per car if all locations reach the top quartile.
Growth Prospects
For 2026, Carvana expects significant growth in both retail units sold and adjusted EBITDA, with a sequential increase in both metrics in Q1 2026. The company's guidance implies at least 22% growth in Q1, driven by its focus on delivering great customer experiences and making its system more efficient. Analysts estimate revenue growth at 23.8% for next year, indicating a strong outlook for the company.
Valuation Metrics
Carvana's valuation metrics provide insight into what's priced in. The company's P/E Ratio is 33.53, indicating a relatively high valuation. However, its EV/EBITDA ratio is 56.14, suggesting that the market is pricing in significant growth. The company's ROE is 62.85%, indicating strong profitability. With a Net Debt / EBITDA ratio of -0.86, Carvana's financial health is robust.
Key Takeaways
Carvana's strong financial performance, operational improvements, and growth prospects make it an attractive investment opportunity. While the company's valuation is relatively high, its growth prospects and robust financial health suggest that it may be well-positioned for long-term success. As Ernie Garcia noted, "as long as we build the operational chain to support volume, there's demand for that volume," indicating a strong outlook for the company's future growth.