Carvana Co.

Hello and welcome to the Caravana second quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I'll now 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 2026 earnings conference call. Please note that this call is being webcast and can be accessed along with our Q2 shareholder letter and supplemental financial tables on the investor relations section of the company's corporate website at investors.carvana.com. Joining me on the call today are Ernie Garcia, Chief Executive Officer, and Mark Jenkins, Chief Financial Officer. Before we get started, I would like to remind you that this discussion contains forward-looking statements within the meaning of the 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 these factors can be found in the risk factors section of Carvana's most recent forms 10-K and 10-Q. These forward-looking statements are based on current expectations as of today, and Carvana assumes no obligation to update or revise them. Our commentary today will include non-GAAP financial metrics. GAAP reconciliations can be found in the shareholder letter posted on our IR website. And with that said, I'd like to turn the call over to Ernest Garcia. Ernie?

Thanks, Meg, and thanks everyone for joining the call. The second quarter was another exciting quarter for Carvana. We sold almost 200,000 cars in the quarter. The power of compounding is clear in that number as it is almost double the number of cars we sold just two years ago. That sales volume puts us at just 2% market share of the used car market and 1.5% of the auto retail market as a whole. These numbers make the size of our opportunity exceedingly clear. In Q2, we also crossed over $3 billion adjusted EBITDA annual run rate for the first time. And that adjusted EBITDA isn't your typical growth company variety, as is apparent based on how much flows further down the income statement. Our operating income and net income run rates were about $2.7 billion and $2 billion respectively. In the shareholder letter, we shared some simple data related to the inventory growth and sales growth by region that looks detailed at first but that tells a much bigger story. Over the last couple years, we've been rapidly adding retail production capacity to ADESTA sites and existing inspection centers. This has led to variation in inventory growth rates in different parts of the country. The two regions where we added the most production capacity, the Midwest and the Northeast, grew inventory by 57%. In those markets, sales grew in the second quarter by 54%. In the two regions where we added the least incremental production capacity over the last year, the West and the Southeast, we grew inventory by 17%. In those regions, sales grew by 30% in the second quarter. The middle two regions are also reported in the letter and validate this strong correlation. The correlation of this data is driven by the positive feedback in our model we've discussed so many times before in conceptual form. When we grow inventory, any given customer is more likely to find a car they love and conversion goes up. When conversion goes up, marketing dollars get more efficient, and as a result, our marketing algorithms allocate more dollars to these markets and more customers in these markets come to our site. With more cars closer to more customers, delivery times go down, shipping fees reduce, logistics efficiency goes up, and conversion goes up again, restarting the loop as this causes us to grow inventory further. These simple data points clearly show all that positive feedback and action. It's only possible because of the machine we've built. And it drives our strategy and prioritization. Building this machine and the unmatched customer experiences it delivers is the key to our future success. And the bigger it is, the wider the moat. Our midterm goal is to build this machine to sell 3 million cars per year at 13.5% adjusted EBITDA margin by 2030 to 2035. When we announced this goal with our Q1 2025 results, we needed to grow to about six times our scale in order to achieve it. Now, five quarters later, we need to grow to under four times our current scale in order to achieve it. The path is very clear, and there's a lot of execution to do. We have to keep building, we have to keep hiring, we have to keep training, we have to keep caring, and we have to continually improve every part of the machine. We've been doing all those things for the last 13 years. We aren't going to stop. We are still just getting started. The march continues. Mark?