Revenue rose 42% to $8.04 billion, well above forecasts, and adjusted EBITDA reached $800 million. The online car retailer now expects full-year adjusted EBITDA at the high end of its range.
Carvana's per-share earnings came in below forecasts. Almost everything else in its report was above them.
The online used-car retailer sold 217,385 retail units in the third quarter, up 39% from a year earlier. Revenue rose 42% to $8.04 billion, against the $7.67 billion analysts expected. Net income was $483 million and GAAP operating income $714 million. Adjusted EBITDA was $800 million, a margin of 10.0%.
Earnings were 39 cents a share, below the 44 cents analysts expected.
The guidance
Carvana said it expects full-year adjusted EBITDA at the high end of its $2.7 billion to $3.0 billion range. The third quarter alone contributed $800 million.
Volume, not just price
The growth came from volume. Unit sales rose 39% and revenue 42%, which means most of the increase reflects more cars sold rather than higher prices. That suggests Carvana may be taking share from traditional dealers.
The reaction
Carvana closed Wednesday at $59.05 and was indicated near $64.58 early Thursday, up about 9%, on an extended-hours quote with no reported volume.
The per-share miss appears not to have mattered to buyers. Investors focused on units, revenue and the profit outlook, the measures that show whether Carvana's growth is translating into earnings power.
Share gains or a peak?
The growth case: unit sales are rising at nearly 40% a year, margins are at 10% on an adjusted basis, and the company is tracking to the top of its profit range.
The caution: the earnings miss shows that costs and other items below operating income still matter, used-car demand is sensitive to interest rates and credit, and a stock that moves 9% on one quarter can move as sharply in reverse.
What to watch
Fourth-quarter unit growth, retail gross profit per unit, credit performance on the loans Carvana originates and sells, and results from CarMax and traditional dealer groups.