Carvana Co (NYSE:CVNA) has reported financial results for the third quarter of 2025 that present a complex picture for investors. The company posted record-breaking revenue figures that significantly surpassed analyst expectations, yet its stock experienced a notable decline in after-hours trading following the announcement. This market reaction appears to be primarily driven by the company's earnings per share performance relative to estimates, creating a divergence between top-line success and bottom-line perception.
Quarterly Performance Versus Expectations
The online automotive retailer delivered substantial growth across key metrics during the third quarter, though not all figures met Wall Street's projections.
- Revenue: $5.65 billion reported versus $5.18 billion estimated, representing a beat of approximately $468 million or 9%.
- Non-GAAP EPS: $1.03 reported versus $1.29 estimated, falling short by $0.26 per share or about 20%.
- Year-over-Year Growth: Revenue surged 55% compared to the same quarter last year, while retail units sold increased by 44% to 155,941 vehicles.
The revenue performance demonstrates Carvana's continued strong sales growth and market share gains in the used car sector. However, the earnings miss suggests that this growth may be coming at a cost, or that operational expenses were higher than analysts had modeled for the quarter.
Profitability and Operational Highlights
Beyond the headline revenue and EPS numbers, Carvana's press release emphasized significant achievements in profitability. The company reported a GAAP net income of $263 million, translating to a 4.7% net income margin. It is important to note that this figure was impacted by a $120 million non-cash loss from the decline in fair value of Root warrants. On an operational basis, the company generated an adjusted EBITDA of $637 million, achieving an 11.3% margin. These profitability metrics indicate that despite the EPS shortfall, the underlying business model is generating substantial earnings.
Market Reaction and Outlook
Following the earnings release, Carvana's stock was down approximately 5.6% in after-hours trading. This immediate negative reaction is likely a direct response to the earnings per share miss, as investors weigh the cost of the company's rapid growth against its profitability. The market's focus on EPS over revenue highlights investor sensitivity to bottom-line performance in the current economic environment.
Looking ahead, Carvana provided an optimistic outlook for the fourth quarter. The company expects to sell more than 150,000 retail units and projects that its full-year 2025 adjusted EBITDA will reach or exceed the high end of its previously communicated range of $2.0 to $2.2 billion. This forward guidance suggests management confidence in maintaining strong operational performance through the end of the year.
Press Release Summary
The core message from Carvana's third-quarter announcement centered on achieving "industry-leading growth and profitability" while crossing a $20 billion annual revenue run rate for the first time. Founder and CEO Ernie Garcia attributed this success to the company's vertically integrated model, which he stated drives advantages in speed, selection, and efficiency. The record revenue and unit sales, coupled with solid profitability metrics, form the foundation of management's positive narrative, even as the stock market reacted to the specific EPS discrepancy.
For a detailed look at Carvana's historical earnings, future estimates, and analyst projections, you can review the complete data here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
