AI Takeaway
Carvana delivered explosive Q1 FY2026 revenue growth of 52.0% YoY to $6.43B, with operating income surging 47.5% to $581M, though net income growth lagged at 15.7% and operating cash flow declined sharply by 53.9%.
Revenue
$6.43B
++51.98% YoY
Gross Margin
19.8%
-2.19% YoY
Operating Income
$581M
++47.46% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue jumped 52.0% YoY from $4.23B to $6.43B in Q1 FY2026, reflecting strong unit sales growth and improved retail pricing power as Carvana continues to scale its used-vehicle e-commerce platform.
Source: Source: 10-Q Income Statement
Gross profit grew 36.8% YoY to $1.27B, but gross margin contracted approximately 220 basis points from 21.95% to 19.76%, indicating that cost of revenue grew faster (56.3%) than revenue (52.0%), likely reflecting higher vehicle acquisition and reconditioning costs.
Source: Source: 10-Q Income Statement
Operating income rose 47.5% YoY to $581M, with operating margin relatively stable at 9.03% vs. 9.31% prior year. SG&A grew 29.0% to $690M, well below revenue growth of 52%, demonstrating meaningful operating leverage.
Source: Source: 10-Q Income Statement
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Upgrade to unlockOperating cash flow declined 53.9% YoY to $107M even as net income grew 15.7%, indicating substantial cash consumption from inventory expansion. Rapid scaling of vehicle inventory requires significant upfront capital, and any slowdown in vehicle sales could leave Carvana with excess inventory and liquidity pressure.
Source: Source: 10-Q Cash Flow Statement & Balance Sheet
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Upgrade to unlockReported EPS of $0.34 versus the $0.30 analyst consensus — a +12.0% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $6.43B | $4.23B | +51.98% |
Cost of Revenue | $5.16B | $3.3B | +56.25% |
Gross Profit | $1.27B | $929M | +36.81% |
Operating Income | $581M | $394M | +47.46% |
Net Income | $250M | $216M | +15.74% |
SG&A Expense | $690M | $535M | +28.97% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $13.77B | $8.88B | +55.11% |
Current Assets | $7.2B | $5.14B | +40.10% |
Total Liabilities | $9.14B | $7.11B | +28.63% |
Current Liabilities | $1.76B | $1.35B | +30.73% |
Stockholders' Equity | $3.72B | $1.5B | +147.34% |
Cash & Equivalents | $2.41B | $1.86B | +29.71% |
Long-Term Debt | $4.85B | $5.27B | -8.03% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $107M | $232M | -53.88% |
Investing Cash Flow | $-31M | $-35M | +11.43% |
Financing Cash Flow | $7M | $-53M | +113.21% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 19.8% | 22.0% | -2.19% |
Operating Margin | 9.0% | 9.3% | -0.28% |
Net Margin | 3.9% | — | — |
ROE | 6.7% | — | — |
ROA | 1.8% | — | — |
Current Ratio | $4.087 | — | — |
Debt to Equity | $2.457 | — | — |
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Carvana's revenue grew 52.0% YoY to $6.43B in Q1 FY2026, up from $4.23B in the prior year period. This growth was driven by strong used vehicle unit sales and continued expansion of Carvana's e-commerce platform.
The headline takeaway is explosive top-line growth of 52% to $6.43B with operating income up 47.5% to $581M, demonstrating strong operating leverage. However, gross margin compressed ~220 bps to 19.76% and operating cash flow fell sharply by 53.9% to $107M, signaling working capital pressures from rapid inventory scaling.
Yes, Carvana reported net income of $250M in Q1 FY2026, up 15.7% YoY, and operating income of $581M, up 47.5% YoY. However, net margin remains thin at 3.89% due to significant interest expense on the company's $4.85B long-term debt.
Key risks include gross margin compression as cost of revenue grew faster than revenue (56.3% vs. 52.0%), a sharp 53.9% decline in operating cash flow driven by inventory build, and an elevated debt-to-equity ratio of 2.46x despite ongoing debt reduction. These factors could pressure profitability if revenue growth slows.
Carvana's near-term liquidity is strong with a current ratio of 4.09x and $2.41B in cash, and stockholders' equity surged 147.3% YoY to $3.72B. However, the company still carries $4.85B in long-term debt and generated only $107M in operating cash flow, suggesting financial health is improving but leverage remains a key watchpoint.