Online used car dealer Carvana (NYSE: CVNA) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 54.5% year on year to $5.65 billion.

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StockStory’s Take

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.

Looking forward, Carvana’s management emphasized continued investment in automation, technology, and customer experience as key to future growth. Garcia stated, “Selling 3 million cars per year with 13.5% adjusted EBITDA margin in 5 to 10 years is very achievable.” The company plans to expand its same-day delivery program beyond Phoenix, increase automation in customer and internal workflows, and leverage foundational capabilities built over recent quarters. However, management also noted the need to prioritize opportunities amid evolving customer preferences and technology, with the pace of execution viewed as the main determinant of progress toward long-term goals.

Key Insights from Management’s Remarks

Management pointed to gains in operational efficiency, inventory breadth, and foundational tech capabilities as drivers of Q3 results, while also addressing seasonality and increased investment in customer acquisition.

• Inventory expansion and selection: Carvana increased available inventory by nearly 50% year-over-year, enhancing customer choice without compromising inventory turn times. Management credited this breadth as a factor supporting higher sales and customer satisfaction.

• Operational efficiency improvements: The company leveraged scale by adding reconditioning capacity to 15 ADESA locations, which enabled faster delivery and positioned vehicles closer to customers. These operational changes reduced average delivery times by one day over the past five quarters.

• Digital transformation and automation: More than 30% of retail customers now complete their transactions without human interaction until delivery, and over 60% of car sellers do the same. Garcia highlighted advances in automated finance verification, registration, and scheduling as central to this shift.

• Financial platform maturation: Carvana formalized loan sale agreements with three major partners, including an upsized Ally agreement, reflecting strong loan performance and improved monetization of its vertically integrated finance platform.

• Advertising and brand investment: Advertising expenses rose as Carvana pursued greater brand awareness and trust. Management sees continued investment in marketing as necessary to scale customer acquisition and maintain growth momentum, despite the impact on per-unit SG&A.

Drivers of Future Performance

Carvana’s outlook centers on scaling automation, broadening delivery speed, and maintaining cost discipline amid evolving customer behaviors and macro conditions.

• Expansion of same-day delivery: The company plans to roll out its Phoenix-tested same or next-day delivery model to more markets, aiming for a differentiated customer experience and higher conversion rates. Management views this as a long-term competitive advantage, though the rollout requires careful investment in logistics and technology.

• Automation and workflow enhancements: Carvana expects further gains by automating key processes, such as finance verification and registration, with the goal of reducing costs and simplifying operations. These initiatives are anticipated to improve both customer satisfaction and profitability as scale increases.

• Monitoring macro and industry headwinds: Management cited seasonality, depreciation rates, and evolving consumer demand as ongoing risks. They also acknowledged that prioritizing and executing operational improvements—rather than external factors—will be the largest determinant of achieving long-term growth and margin targets.

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 $321.54, down from $354.04 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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