Carvana will stop issuing earnings outlooks and move its long-term target to GAAP margin

Carvana (NYSE: CVNA), the online used-car retailer, said it will stop giving quarterly and annual financial outlooks starting with its fourth-quarter 2026 earnings call and will shift its long-term target to a GAAP operating margin, according to its third-quarter shareholder letter.

What happened

In the letter, filed with the SEC on October 28, Carvana said that "beginning with our Q4 2026 earnings call, we do not plan to provide quarterly or annual financial outlooks." It said it will instead focus its forward-looking communication "on our longer-term goals and our progress toward achieving them."

The company also said that in 2027 it plans to move its primary reporting from non-GAAP measures such as adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, with adjustments) to their GAAP counterparts. It said that at its current scale, "GAAP profitability metrics, including Operating income and Net income, have become a simpler and clearer framing for our targets and execution."

Its mid-term goal will be restated as selling 3 million retail units a year at a 12.5% operating margin between 2030 and 2035. Carvana said it views that as equivalent, on a GAAP basis, to the 13.5% adjusted EBITDA margin target it introduced in early 2025.

For the fourth quarter, the company said it expects a sequential increase in retail units sold and adjusted EBITDA at the higher end of its previously communicated range of $2.7 billion to $3.0 billion for 2026, "as long as the environment remains stable."

The quarter behind the change

Carvana sold 217,385 retail units in the third quarter, 39% more than a year earlier and its first quarter above 200,000. Revenue was $8.040 billion, up 42%. Carvana said the used-car industry was approximately flat over the same period.

Net income was $483 million, up $220 million, for a 6.0% net income margin compared with 4.7% a year earlier. That figure includes a $53 million loss on the early redemption of senior secured notes due 2030. GAAP operating income was $714 million, up $162 million, with an operating margin of 8.9% compared with 9.8%.

Adjusted EBITDA was $800 million, up $163 million, but its margin fell to 10.0% from 11.3%. Gross profit per unit fell $365 to $6,997. Carvana said the decline mainly reflected its decision to give customers lower loan rates relative to benchmark rates, and lower wholesale gross profit per unit. It estimated that elevated fuel prices and rapidly rising benchmark interest rates together cut unit economics by about $200 per unit.

The scale Carvana describes

The company said its current retail run rate is 870,000 units a year, about 2% of the used-car market and about 1.5% of the overall car market. It said its margins have been about twice the industry average for ten quarters in a row.

All of these comparisons are the company's own, drawn from its shareholder letter, and FinanceInTime has not checked the industry figures independently.

What to watch

The first earnings call without a financial outlook will be the one for the fourth quarter of 2026. Carvana's letter does not give its date. The company said it will keep reporting progress against its longer-term goals, and that its 2027 reporting will center on GAAP total gross profit per unit, SG&A expense, operating income and net income.