Carvana Co.

Good afternoon and welcome to the Carvana Second Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Meg Kehan, Investor Relations. Please go ahead.

Thank you. Good afternoon, ladies and gentlemen, and thank you for joining us on Carvana's second quarter 2025 earnings conference call. Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website at investors.carvana.com. The second quarter shareholder letter is also posted on the IR website. Additionally, we posted a set of supplemental financial tables for Q2, which can be found on the events and presentations page of our IR website. Joining me on the call today are Ernie Garcia, Chief Executive Officer, and Mark Jenkins, Chief Financial Officer. Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meanings of federal securities laws, including but not limited to Carvana's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. A detailed discussion of the material factors that cause actual results to differ from forward-looking statements can be found in the risk factor sections of Carvana's most recent Form 10-K and Form 10-Q. The forward-looking statements and risks in this conference call are based on current expectations as of today, and Carvana assumes no obligation to update or revise them, whether as a result of new developments or otherwise. Our commentary today will include non-GAAP financial metrics. Unless otherwise specified, all references to GPU and SG&A will be to the non-GAAP metrics, and all references to EBITDA will be to adjusted EBITDA. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our shareholder letter issued today, a copy of which can be found on our IR website. And with that said, I'd like to turn the call over to Ernie Garcia. Ernie?

Thanks Meg, and thanks everyone for joining the call. The second quarter was another exciting quarter for Carvana. There are many financial highlights that we hit in the letter and we will hit throughout the call, but I want to spend this time focusing on a subset to discuss their implications for the future. We were once again the fastest growing and most profitable automotive retailer, again by significant margins. Based on our best available data, the market grew by less than 5% in units in the quarter, compared to our growth rate of 41%. We believe this growth rate speaks clearly to the desirability of our offering and our team's ongoing execution. When looking at our adjusted EBITDA margin, we once again set a new record for automotive retail and improved by 200 basis points year over year. This makes our model twice as profitable as other publicly reporting automotive retailers on this basis. Excitingly, not only are we the most profitable by adjusted EBITDA margin, But for the first time, we are also the most profitable as measured by GAAP operating income and net income dollars, another significant milestone along our path to becoming the largest and most profitable automotive retailer. Hitting these milestones and rapidly moving through the various definitions of profitability carry significant meaning. It means that when we set a completely different course for automotive retail 12 years and $10 billion ago, our underlying belief was correct. Customers were ready for something new, and something tailor-made to serve their modern preferences generates a completely different customer response and completely different financial performance. That alone is extremely exciting and positions us very well for the future. But there's more to the story. Part of what is enabling this rapid growth at a scale of $4.8 billion of quarterly revenue and $500 million of quarterly GAAP operating income is that the market we are changing is enormous. We are currently about 1.5% of the US used car market and approximately 1% of the total US car market. We are also excited by the long runway and incredible potential we have. In addition, we benefit from unique competitive dynamics. Despite being so early in our maturation, we are already the second largest retailer of used cars, with our eyes fixed firmly on becoming the largest soon. Our industry has structurally different and more favorable competitive dynamics than other large verticals, and we believe this bodes well for our ability to play a very outsized role in our industry in the long run. And lastly, what we are doing is hard. Hard is the ultimate competitive moat. Our business requires a complex mix of highly varied capabilities to deliver a simple and efficient customer experience. The difficulty of our business was a liability when we started, but today it's a valuable asset. Big swings have always had that property, and we have always taken big swings. To drive our success over the long term, there are three primary areas where we will be putting our focus. Number one, driving significant growth over a long period of time. Number two, constantly improving the machine through fundamental gains across all areas of the business. Over time, we plan to share the majority of these gains with our customers, the same way many great consumer brands have before us. Number three, building additional foundational capabilities that will make our platform even stronger and will help us drive remarkable outcomes for our customers, our partners, and ourselves over the long term. These efforts will continue to drive us toward our next goal of selling 3 million cars per year, 13.5% adjusted EBITDA margin in the next 5 to 10 years. The path from here is straightforward. To call on the metaphor, we've made it from zero to one. Now we're focused on a very big N. To get there, we'll remain ambitious. We'll remain focused on giving customers the simplest, most efficient, most fun, and most satisfying experience we can give them, and we'll continue to work hard with people that we're proud to work alongside. The march continues. Mark?