What changed in this filing

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Item 1. Business

2026-02-18 compared with 2025-02-19 · 33 added, 34 removed, 198 unchanged (25% of the section changed)

3 unchanged sentences

We are transforming the used car buying and selling experience by giving consumers what they want - a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction.

Our differentiated business model combines a comprehensive online sales experience with a vertically integrated supply chain, designed to sell high-quality vehicles to our customers transparently and efficiently at a low

The automotive retail industry is large – with approximately 37 million used auto retail transactions in the United States (“U.S.”) in 2024 according to Cox Automotive – and highly fragmented – with the top 10 used auto retailers in the U.S.

accounting for less than 10% of the market share in 2023 according to Automotive News.

accounting for less than 10% of the market share in 2024.

These dynamics create an exceptional opportunity for disruption that our custom-built business model can capitalize on to remain well-positioned for long term growth.

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Vehicle Acquisition.

We primarily acquire our used vehicle inventory directly from customers, used car auctions, and wholesale used vehicle suppliers, including retail marketplace partners.

We primarily acquire our used vehicle inventory directly from customers, used car auctions, including by use of our growing digital auction platform, and wholesale used vehicle suppliers, including retail marketplace partners.

Acquiring inventory directly from customers when they trade in or sell us their vehicles in a one-way transaction eliminates auction fees and provides for a more diverse set of vehicles.

After answering a few questions about the vehicle condition and features, our online tool provides customers with an automated, conditional offer for their existing vehicle that can be applied to any vehicle purchase or paid directly without an associated vehicle purchase.

Our online tool then allows customers to schedule a time to have their existing vehicle picked up at their home, and receive payment.

Our online tool then allows customers to schedule a time to have their existing vehicle picked up at their home, or drop it off at a Carvana location, and receive payment.

We designed this process to be convenient, seamless, and to eliminate the need for a customer to visit a dealership or negotiate a private sale.

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Customers who choose to apply for our in-house financing fill out a short prequalification form, and, if approved, are nearly instantaneously presented with an interactive set of conditional financing terms generated by our proprietary credit scoring and deal structuring algorithms for every vehicle in our inventory.

Our financing tool intuitively and transparently shows the relationship between down payment, monthly payment and loan term to assist the customer in selecting the best payment plan tailored to their specific needs.

Our financing tool is designed to intuitively and transparently show the relationship between down payment, monthly payment, and loan term to assist the customer in selecting a payment plan tailored to their specific needs.

This pre-approval involves a short process that does not impact customers’ credit unless they pursue a purchase and finance the transaction.

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Nationwide Logistics Network and Distinctive Fulfillment Experience.

We have developed proprietary logistics software and an in-house nationwide delivery network which is aimed at allowing us to predictably and efficiently transport cars while providing customers with a distinctive fulfillment experience.

We have developed proprietary logistics software and an in-house nationwide delivery network designed to predictably and efficiently transport cars and provide customers with a distinctive fulfillment experience.

Our logistics network and technologies that support it are based on a "hub and spoke" model, which connects Reconditioning Sites to vending machines and hubs via our fleet of multi-car and single-car haulers.

This allows us to efficiently manage locations, routes, route capacities, trucks, and drivers while also dynamically optimizing for speed and cost.

This proprietary logistics infrastructure enables us to offer our customers and

operations team highly accurate predictions of vehicle availability, to minimize delays, and promote a seamless and reliable customer experience.

This proprietary logistics infrastructure enables us to offer our customers and operations team highly accurate predictions of vehicle availability, to minimize delays, and promote a seamless and reliable customer experience.

We offer customers in our markets a home delivery option that is typically conducted by a Carvana employee on a branded hauler.

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We preapprove these terms utilizing "soft credit checks" which do not impact a customer’s credit unless they complete a purchase and financing transaction.

Our proprietary credit and underwriting platform is trained on over ten years of Carvana-originated loans, giving us information to make credit decisions aimed to optimize risk, vehicle characteristics, deal structure, and customer credit.

Our proprietary credit and

underwriting platform is trained on over ten years of Carvana-originated loans, giving us information to make credit decisions aimed to optimize risk, vehicle characteristics, deal structure, and customer credit.

We believe this significantly enhances the quality of the loans that we generate and the value we can capture when we sell them through securitization transactions or to our financing partners.

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We have developed proprietary logistics software and an in-house delivery network that differentiates us from competitors, and which is designed to predictably and efficiently transport cars while providing customers with a distinctive fulfillment experience.

Our home delivery and pickup is typically conducted by a Carvana employee on a branded hauler, as soon as the same day in certain markets.

Our home delivery and pickup is typically conducted by a Carvana employee on a branded hauler, as soon as the same day in certain markets, depending on availability and location.

Customers in certain markets can also pick up or drop off their vehicles at one of our patented car vending machines, or at another customer-facing location.

Our vending machines provide an attractive and unique pickup experience for our customers and develop brand awareness while lowering our variable fulfillment expenses.

Following the

opening of a vending machine in one of our markets, our market penetration has typically seen a meaningful increase while our variable operating costs per vehicle sold have typically decreased.

Following the opening of a vending machine in one of our markets, our market penetration has typically seen a meaningful increase while our variable operating costs per vehicle sold have typically decreased.

Scaled Used Vehicle Infrastructure

As of December 31, 2024, we leverage a network of Reconditioning Sites throughout the U.S.

As of December 31, 2025, we continued to leverage our growing network of Reconditioning Sites throughout the U.S.

and proprietary software for our vehicle reconditioning and logistics activities that required significant investment in time and capital to develop.

This infrastructure gives us capacity to inspect and recondition more than 1 million cars per year at full utilization.

This infrastructure gives us capacity to inspect and recondition approximately 1.5 million cars per year at full utilization.

Scale Driving Powerful Network Effects

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As we evolve, we believe we will continue to improve profitability associated with these revenues and expand our offering of complementary products.

However, all of these additional revenue opportunities are derived from retail vehicle unit sales and, as a result, our business strategies are primarily focused on this metric.

Our ability to generate retail vehicle sales is a function of our market penetration in existing markets, the number of markets we operate in, and our ability to build and maintain our brand by offering great value, transparency, and outstanding customer service.

Since the launch of our first market twelve years ago, our vertically integrated, customer-centered offering has enabled us to become one of the largest and fastest growing used automotive retailers in the U.S.

Because these additional opportunities originate with retail unit sales, our business strategy continues to center on growing retail units.

Our ability to grow retail unit sales depends on penetrating existing markets, prudently expanding our geographic footprint, and strengthening our brand by delivering great value, transparency, and outstanding customer service.

We continue to prioritize initiatives that raise conversion, improve delivery speed, and streamline customer support, each of which we believe reinforces brand trust and drives sustained demand.

Since the launch of our first market thirteen years ago, our vertically integrated, customer-centered offering has enabled us to become one of the largest and fastest growing used automotive retailers in the U.S.

as of December 31, 2025.

In 2022 and 2023, as a result of changes in the economy, the market, and the industry, we shifted our focus to driving profitability through fundamental operating efficiency.

We believe these profitability initiatives allowed us to deliver substantial cost efficiency improvements and build a strong operational foundation for future growth.

Throughout 2024, we remained focused on driving operational efficiency and profitability while also shifting towards the long-term phase of driving profitable growth.

In this early stage, we are pursuing growth at a rate that seeks to balance the long-term benefits of scale with the continued opportunities we see to further enhance customer experiences.

We have physical infrastructure for continued growth, which gives us capacity to recondition over approximately 1 million vehicles per year.

Further, the acquisition of ADESA US Auction, LLC in 2022 provided us with 56 additional locations that could be built out to increase our reconditioning capacity.

Six of these ADESA auction sites have been built out to provide IRC capabilities, and the remaining sites provide continued potential for further growth.

With more than 36 million transactions in 2023, according to Cox Automotive, the used vehicle retail market represents a massive, highly fragmented industry, of which Carvana currently holds only approximately 1% of the market share.

Throughout 2025, we remained focused on profitable growth and fundamental operating efficiency, balancing long-term benefits of scale with the continued opportunities we see to further enhance customer experiences.

We have physical infrastructure for continued growth, which gives us capacity to recondition approximately 1.5 million vehicles per year.

Further, the acquisition of ADESA US Auction, LLC in 2022 provided us with 56 additional locations, which we have been building out to increase our reconditioning capacity and the number of inventory pools closer to customers.

We are integrating ADESA sites to combine retail and wholesale capabilities within single locations over time, enhancing both retail production and wholesale disposition.

As of December 31, 2025, 16 of these ADESA auction sites have been built out to provide IRC capabilities, and the remaining sites provide continued potential for further growth.

With more than 37 million transactions in 2024, according to Cox Automotive, the used vehicle retail market represents a massive, highly fragmented industry, of which Carvana currently has an estimated market share of only approximately 1.6%.

We believe we are well positioned to benefit from secular e-commerce trends.

According to Federal Reserve Economic Data (FRED), e-commerce as a share of non-automotive retail has risen steadily for over 20 years and made up approximately 18% of all non-automotive retail transactions as of 2023.

According to Federal Reserve Economic Data (FRED), e-commerce as a share of non-automotive retail has risen steadily for over 20 years and made up approximately 20%

of all non-automotive retail transactions as of 2025.

Within the automotive retail industry, e-commerce adoption has lagged behind that of other retail segments, but we believe that as customers continue becoming more accustomed to making larger purchases online, e-commerce will make up an increasing share of automotive retail as it has in other retail segments.

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We believe our brand development efforts meaningfully impact our ability to acquire new customers.

We intend to continue attracting new customers through advertising, customer referrals, customers selling us their vehicles, public relations, and social media.

We intend to continue attracting new customers through advertising, customer referrals, customers selling us their vehicles, public relations, partnerships with celebrities, and social media.

We operate 39 vending machines across the country which have catalyzed word-of-mouth publicity and increased awareness of our brand.

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These positive reactions create opportunities for repeat customers and a strong referral network.

Develop New Products

We plan to continue leveraging our existing e-commerce and logistics infrastructure to increase monetization opportunities by introducing new complementary products and services.

Develop New Products and Expand Lines of Business

We plan to continue leveraging our existing e-commerce and logistics infrastructure to increase monetization opportunities by introducing new complementary products and services or expanding into new lines of business.

The car purchasing and ownership cycle provides many opportunities to add value for our customers, such as VSCs and auto insurance, and our technology expertise and process automation position us well to provide these services in differentiated ways.

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We typically utilize a combination of brand building as well as direct response channels to efficiently seed and scale our local markets.

Our paid advertising efforts include, but are not limited to, advertisements through national and local television, search engine marketing, inventory site listing, social media, retargeting, organic referral, display, out-of-home, digital video, digital radio, direct mail, and branded pay-per-click channels.

Our paid advertising efforts include, but are not limited

to, advertisements through national and local television, search engine marketing, inventory site listing, social media, retargeting, organic referral, display, out-of-home, digital video, digital radio, direct mail, and branded pay-per-click channels.

We believe our strong customer focus ensures customer loyalty which can drive both repeat purchases and referrals.

20 unchanged sentences

• an automated delivery tower, or vending machine, including customer experience enhancements such as automatically generated video (suitable for posting to social media) that captures the customer’s pick-up experience;

• artificial intelligence technology used to power chatbots that streamline customer communication paths and assist customers and customer advocates in navigating the purchase process, to improve internal work efficiencies, and to enhance our recruitment and hiring processes;

• artificial intelligence technology ("AI") used to power chatbots that streamline customer communication paths and assist customers and customer advocates in navigating the purchase process, to improve internal work efficiencies, and to enhance our recruitment and hiring processes;

• sophisticated predictive models and application programming interfaces developed for our automobile finance services and consumer lending applications, process, and terms.

3 unchanged sentences

As of December 31, 2025, we hold 51 issued U.S.

patents, which cover our vending machine technology, photo technology, website user interface technology, personalization methods for displaying digital media and imaging technology,

search and display technology, and artificial intelligence technology, and five issued international patents covering our photo technology.

These patents have been held for between eight years and less than one year.

patents, which cover our vending machine technology, photo technology, website user interface technology, personalization methods for displaying digital media and imaging technology, search and display technology, and artificial intelligence technology, and six issued international patents covering our photo technology.

These patents have been held for between ten years and less than one year.

As of December 31, 2025, we have 28 domestic trademark registrations and six international trademarks in active use, including registrations for "Carvana," the Carvana design mark, the Carvana logo, and various slogans, and we are the registered holder of a variety of domestic and international domain names, including "carvana.com."

64 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business