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Item 8. Financial Statements and Supplementary Data

2026-02-18 compared with 2025-02-19 · 459 added, 487 removed, 1250 unchanged (43% of the section changed)

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We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

Critical audit matters are matters arising from the current period audit of the financial statements that are communicated or required to be communicated to the audit committee and that:

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Realizability of deferred tax assets

As described further in Note 14 — Income Taxes to the consolidated financial statements, the Company recognized a decrease in the deferred tax asset valuation allowance of $2.2 billion during the year ended December 31, 2025, primarily related to a release of its valuation allowance attributable to certain deferred tax assets.

Deferred tax assets are reduced by a valuation allowance if, based on the weight of all available positive and negative evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

We identified the evaluation of assumptions used in determining changes in the Company’s valuation allowance, specifically related to the weighting of positive and negative evidence attributable to certain deferred tax assets, as a critical audit matter.

The principal considerations for our determination of the realizability of certain deferred tax assets as a critical audit matter included the subjective auditor judgment required and the assistance of individuals with specialized skills and knowledge in the evaluation of the weighting of the available positive and negative evidence supporting the release of the Company’s valuation

allowance attributable to certain deferred tax assets.

Our audit procedures related to the realizability of certain deferred tax assets included the following, among others:

• We tested the relevant design and operating effectiveness of internal controls over income taxes, including those over management’s deferred tax asset realizability assessment.

• With the assistance of individuals with specialized skills and knowledge, we evaluated management’s determination that the positive evidence supporting the release of the valuation allowance attributable to certain deferred tax assets outweighed the negative evidence in forming their conclusion.

Probability Assessment of the Tax Receivable Agreement (“TRA”) Liability

As described further in Note 14 — Income Taxes to the consolidated financial statements, the Company has a Tax Receivable Agreement (“TRA”) with its LLC Unitholders, whereby the Company will be required to make cash payments to such LLC Unitholders equal to 85% of any tax benefits realized.

The Company recognized a change in its TRA liability of $2.2 billion during the year ended December 31, 2025.

TRA liabilities are recognized if, based on the weight of all available information, in management’s judgment it is probable that it will be paid.

We identified the evaluation of assumptions used in determining changes in the Company’s TRA liability, specifically related to the weighting of all available information attributable to the TRA liability, as a critical audit matter.

The principal consideration for our determination of this critical audit matter included the subjective auditor judgment required and the assistance of individuals with specialized skills and knowledge in the evaluation in the weighting of all available information supporting the recognition of TRA liabilities.

Our primary audit procedures performed to address this critical audit matter included the following, among others:

• We tested the design and operating effectiveness of internal controls, including those over management’s weighting of all available information supporting the estimation and recognition of the TRA liabilities.

• With the assistance of individuals with specialized skills and knowledge, we evaluated management’s determination that the weight of all available information supported the recognition of the TRA liability.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2015.

Southfield, Michigan

Newport Beach, California

February 18, 2026

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/s/ GRANT THORNTON LLP

Southfield, Michigan

Newport Beach, California

February 18, 2026

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Intangible assets, net 47 34

Goodwill 10 —

Deferred tax assets 3,064 3

Total assets $ 13,201 $ 8,484

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Accounts payable and accrued liabilities, including $ 21 and $ 17 , respectively, due to related parties

$ 1,100 $ 856

Short-term revolving facilities 58 67

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Operating lease liabilities, excluding current portion, including $ 5 and $ 10 , respectively, from leases with related parties

Other liabilities, including $ 48 and $ 11 , respectively, due to related parties

Tax receivable agreement liability, including $ 1,721 and $ 48 , respectively, due to related parties

Other liabilities

Total liabilities 8,998 7,109

Commitments and contingencies (Note 16)

Stockholders' equity (deficit):

Stockholders' equity:

Preferred stock, $ 0.01 par value - 50,000 shares authorized;

none issued and outstanding as of December 31, 2024 and 2023

none issued and outstanding as of each of December 31, 2025 and 2024

Class A common stock, $ 0.001 par value - 500,000 shares authorized, 142,230 and 133,271 shares issued and outstanding as of December 31, 2025 and 2024, respectively

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Non-controlling interests 762 115

Total stockholders' equity (deficit) 1,375 ( 384 )

Total liabilities & stockholders' equity (deficit) $ 8,484 $ 7,071

Total stockholders' equity 4,203 1,375

Total liabilities & stockholders' equity $ 13,201 $ 8,484

See accompanying notes to consolidated financial statements.

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2,308 1,874 1,796

Goodwill impairment — — 847

Other operating expense, net 3 12 8

Operating income (loss) 1,881 990 ( 80 )

Interest expense

Interest expense, net

Loss (gain) on debt extinguishment 16 12 ( 878 )

Other (income) expense, net ( 73 ) ( 9 ) 56

Net income (loss) before income taxes 400 175 ( 2,893 )

Other expense (income), net 2,250 ( 73 ) ( 9 )

Net (loss) income before income taxes ( 890 ) 400 175

Income tax (benefit) provision ( 2,785 ) ( 4 ) 25

Net income (loss) 404 150 ( 2,894 )

Net income 1,895 404 150

Net income (loss) attributable to non-controlling interests 488 194 ( 300 )

Net income (loss) attributable to Carvana Co.

Net income attributable to Carvana Co.

1,407 210 450

Net income (loss) attributable to Class A common stockholders $ 210 $ 450 $ ( 1,587 )

Net earnings (loss) per share of Class A common stock - basic $ 1.72 $ 4.12 $ ( 15.74 )

Net earnings (loss) per share of Class A common stock - diluted $ 1.59 $ 0.75 $ ( 15.74 )

Net income attributable to Class A common stockholders $ 1,407 $ 210 $ 450

Net earnings per share of Class A common stock - basic $ 10.22 $ 1.72 $ 4.12

Net earnings per share of Class A common stock - diluted $ 8.45 $ 1.59 $ 0.75

Weighted-average shares of Class A common stock outstanding - basic

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Balance, December 31, 2022 106,037 $ — 82,900 $ — $ 1,558 $ ( 2,076 ) $ ( 535 ) $ ( 1,053 )

Net loss — — — — — ( 1,587 ) ( 1,307 ) ( 2,894 )

Issuance of Class A common stock, net of underwriters' discounts and commissions and offering expenses 15,625 — — — 1,227 — — 1,227

Adjustments to the non-controlling interests related to equity offering — — — — ( 554 ) — 554 —

Exchanges of LLC Units and adjustments to non-controlling interests related to RSU vesting and NQSO exercises 46 — — — 1 — ( 1 ) —

Establishment of deferred tax assets related to increases in tax basis in Carvana Group — — — — 22 — — 22

Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group — — — — ( 22 ) — — ( 22 )

Contribution of Class A common stock from related party ( 128 ) — — — — — — —

Issuance of Class A common stock to settle vested restricted stock units 390 — — — — — — —

Issuance of Class A common stock under ESPP 86 — — — 1 — — 1

Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes — — — — ( 8 ) — — ( 8 )

Options exercised 88 — — — 3 — — 3

Equity-based compensation — — — — 93 — — 93

Balance, December 31, 2022 106,037 $ — 82,900 $ — $ 1,558 $ ( 2,076 ) $ ( 535 ) $ ( 1,053 )

Net income (loss)

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33 — — — — — — —

Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes

( 30 ) — — — ( 15 ) — — ( 15 )

Class A Common Stock Class B Common Stock

Shares Amount Shares Amount Additional Paid-in Capital Accumulated Deficit Non-controlling Interests Total Stockholders' Equity (Deficit)

RSUs surrendered in lieu of withholding taxes ( 30 ) — — — ( 15 ) — — ( 15 )

Options exercised

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Issuance of Class A common stock under ESPP 10 — — — 1 — — 1

Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes — $ — — $ — $ ( 19 ) $ — $ — $ ( 19 )

RSUs surrendered in lieu of withholding taxes — — — — ( 19 ) — — ( 19 )

Options exercised 440 — — — 7 — — 7

Class A Common Stock Class B Common Stock

Shares Amount Shares Amount Additional Paid-in Capital Accumulated Deficit Non-controlling Interests Total Stockholders' Equity (Deficit)

Equity-based compensation — — — — 102 — — 102

Balance, December 31, 2024 133,271 $ — 79,119 $ — $ 2,676 $ ( 1,416 ) $ 115 $ 1,375

Net income — $ — — $ — $ — $ 1,407 $ 488 $ 1,895

Issuance of Class A common stock, net of underwriters' discounts and commissions and offering expenses 1,476 — — — 536 — — 536

Adjustments to the non-controlling interests related to equity offerings — — — — ( 187 ) — 187 —

Exchanges of LLC Units and adjustments to non-controlling interests related to RSU vesting and NQSO exercises 3,281 — ( 3,010 ) — 24 — ( 24 ) —

Tax payments made on behalf of members — — — — — — ( 4 ) ( 4 )

Establishment of deferred tax assets related to increases in tax basis in Carvana Group — — — — 277 — — 277

Issuance of Class A common stock to settle vested restricted stock units

2,901 — — — — — — —

Issuance of Class A common stock under ESPP

6 — — — 2 — — 2

RSUs surrendered in lieu of withholding taxes — — — — ( 30 ) — — ( 30 )

Options exercised

1,295 — — — 45 — — 45

Equity-based compensation

— — — — 107 — — 107

Balance, December 31, 2025 142,230 $ — 76,109 $ — $ 3,450 $ ( 9 ) $ 762 $ 4,203

See accompanying notes to consolidated financial statements.

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Cash Flows from Operating Activities:

Net income (loss) $ 404 $ 150 $ ( 2,894 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Net income $ 1,895 $ 404 $ 150

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense 275 305 352

Goodwill impairment — — 847

Equity-based compensation expense 96 91 73

Deferred income taxes ( 2,784 ) 2 ( 4 )

Tax receivable agreement expense 2,200 67 14

Loss on disposal of property and equipment 3 12 8

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Amortization of debt issuance costs 10 15 24

Unrealized (gain) loss on warrants to acquire Root Class A common stock ( 115 ) ( 3 ) 80

Unrealized loss (gain) on warrants to acquire common stock 64 ( 115 ) ( 3 )

Unrealized gain on beneficial interests in securitizations ( 12 ) ( 23 ) ( 14 )

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Other liabilities ( 21 ) ( 21 ) ( 22 )

Net cash provided by (used in) operating activities 918 803 ( 1,324 )

Net cash provided by operating activities 1,036 918 803

Cash Flows from Investing Activities:

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Payments of debt issuance costs ( 17 ) ( 4 ) ( 69 )

Payments of tax made on behalf of non-controlling members ( 4 ) — —

Net proceeds from issuance of Class A common stock and LLC Units 536 1,264 453

Tax receivable agreement payments ( 17 ) — —

Proceeds from equity-based compensation plans 48 7 —

Tax withholdings related to restricted stock units and awards ( 19 ) ( 15 ) ( 8 )

Net cash provided by (used in) financing activities 261 ( 868 ) 3,899

Tax withholdings related to restricted stock units ( 30 ) ( 19 ) ( 15 )

Net cash (used in) provided by financing activities ( 137 ) 261 ( 868 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 669 1,166 ( 34 )

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The Company is transforming the used car sales experience by giving consumers what they want - a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction.

Using the website or mobile application, customers can complete all phases of a used vehicle transaction, including financing their purchase, trading in their current vehicle, and purchasing complementary products such as vehicle service contracts ("VSC"), GAP waiver coverage, and auto insurance.

Primarily using the Company's website or mobile application, customers can complete all phases of a used vehicle transaction, including financing their purchase, trading in their current vehicle, and purchasing complementary products such as vehicle service contracts ("VSC"), GAP waiver coverage, and auto insurance.

Each element of the Company's business, from inventory procurement to fulfillment and overall ease of the online transaction, has been built for this singular purpose.

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There are two classes of common ownership interests in Carvana Group, Class A common units (the "Class A Units") and Class B common units (the "Class B Units").

As further discussed in Note 11 — Stockholders' Equity (Deficit), the Class A Units and Class B Units (collectively, the "LLC Units") do not hold voting rights, which results in Carvana Group being considered a variable interest entity ("VIE").

As further discussed in Note 10 — Stockholders' Equity, the Class A Units and Class B Units (collectively, the "LLC Units") do not hold voting rights, which results in Carvana Group being considered a variable interest entity ("VIE").

Due to Carvana Co.'s power to control and its significant economic interest in Carvana Group, it is considered the primary beneficiary of the VIE and the Company consolidates the financial results of Carvana Group.

As of December 31, 2025, Carvana Co.

owned approximately 62.3 % of Carvana Group and the LLC Unitholders (as defined in Note 11 — Stockholders' Equity (Deficit)) owned the remaining 37.7 %.

owned approximately 64.7 % of Carvana Group and the LLC Unitholders (as defined in Note 10 — Stockholders' Equity) owned the remaining 35.3 %.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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All intercompany balances and transactions have been eliminated.

Certain prior period amounts have been reclassified to conform to current period presentation to account for the additions of other operating expense, net and operating income (loss) in our accompanying consolidated statements of operations.

The Company has incurred losses in prior periods and may incur additional losses in the future as it continues to focus on driving profitable growth through operating efficiency.

Historically, the Company's capital and liquidity needs were primarily satisfied through its debt and equity financings, operating cash flows, and short-term revolving facilities.

During the year ended December 31, 2024, the Company (i) repurchased and cancelled $ 370 million of principal amount of 2028 Senior Secured Notes (as defined below);

(ii) redeemed $ 100 million of principal amount of 2028 Senior Secured Notes;

(iii) received net cash

Certain prior period amounts have been reclassified to conform to current period presentation to account for the additions of deferred tax assets and tax receivable agreement liability, previously presented within other assets and other liabilities, respectively, in the accompanying consolidated balance sheets.

Historically, the Company's capital and liquidity needs have been primarily satisfied through its debt and equity financings, operating cash flows, and short-term revolving facilities.

During the year ended December 31, 2025, the Company (i) repurchased and cancelled $ 52 million of principal amount of 2028 Senior Secured Notes and voluntarily redeemed $ 559 million of principal amount of 2028 Senior Secured Notes;

(ii) extended and upsized five of its short-term revolving credit

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

proceeds of $ 1.3 billion from its "at-the-market offering" program (the "ATM Program");

and (iv) amended certain revolving credit facilities primarily to extend maturities.

In January 2025, the Company (i) amended its Master Purchase and Sale Agreement (as defined below) for the purchaser to purchase up to a maximum of $ 4.0 billion of principal balances of finance receivables from the amendment date through January 2026;

and (ii) extended another of its short-term revolving credit facilities through April 2026.

facilities through April 2026, August 2026, October 2026, February 2027, and November 2027, respectively;

(iii) entered into a new short-term revolving credit facility to fund up to $ 600 million of certain finance receivables through March 2027;

(iv) entered into bilateral, independent definitive loan purchase agreements with three independent, third-party loan purchasers, under which the purchasers may purchase up to $ 4 billion and $ 8 billion of principal balance of finance receivables through October 2027 and December 2027, respectively;

(v) further amended the Ally MPSA to increase the commitment by Ally to purchase up to $ 6.0 billion of principal balances of finance receivables between October 28, 2025 and October 27, 2026;

and (vi) amended its Floor Plan Facility with the Ally Parties to renew the line of credit at $ 1.5 billion until April 30, 2027.

Management believes that current working capital, cash flows from operations, and expected continued or new financing arrangements will be sufficient to fund operations for at least one year from the financial statement issuance date.

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Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates, which could have a material impact on the carrying values of the Company’s assets and liabilities and the results of operations.

Comprehensive Income (Loss)

During the years ended December 31, 2024, 2023, and 2022, the Company did no t have any other comprehensive income (loss) and, therefore, the net income (loss) and comprehensive income (loss) were the same for all periods presented.

Comprehensive Income

During the years ended December 31, 2025, 2024, and 2023, the Company did no t have any other comprehensive income and, therefore, the net income and comprehensive income were the same for all periods presented.

Cash and Cash Equivalents

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The allowance for doubtful accounts is estimated based upon historical experience, current economic conditions, and other factors and is evaluated periodically.

The allowance for doubtful accounts was $ 9 million as of both December 31, 2024 and 2023.

The allowance for doubtful accounts was $ 6 million and $ 9 million as of December 31, 2025 and 2024, respectively.

Finance Receivables Held for Sale, Net

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The Company records a valuation allowance to report finance receivables at the lower of unpaid principal balance or fair value.

To determine the fair value of finance receivables the Company utilizes industry-standard modeling, such as discounted cash flow analysis, factoring in the Company’s historical experience, the credit quality of the underlying receivables, loss trends and recovery rates, as well as the overall economic environment.

For purposes of determining the valuation allowance, finance receivables are evaluated collectively to determine the allowance as they represent a large group of smaller-balance homogeneous loans.

The allowance was $ 38 million and $ 59

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

million as of December 31, 2024 and 2023, respectively.

For purposes of determining the valuation allowance, finance receivables are evaluated collectively to determine the allowance as they represent a large group of smaller-balance homogeneous loans.

The allowance was $ 28 million and $ 38 million as of December 31, 2025 and 2024, respectively.

Principal balances of finance receivables are charged-off when the Company is unable to sell the finance receivable and the related vehicle has been repossessed and liquidated or the receivable has otherwise been deemed uncollectible.

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The Company compares the sum of estimated undiscounted future cash flows expected to result from the use of the asset to the carrying value of the asset.

When the carrying value of the asset exceeds its estimated undiscounted future cash flows, the Company recognizes an impairment charge for the amount by the which the carrying value of the asset exceeds the fair value of the asset.

When the carrying value of the asset exceeds its estimated undiscounted future cash flows, the Company recognizes an impairment charge for the amount by which the carrying value of the asset exceeds the fair value of the asset.

The Company periodically reassesses the useful lives of its long-lived assets when events or circumstances indicate that useful lives have significantly changed from the previous estimate.

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Goodwill and Intangible Assets

Intangible assets are recognized and recorded at their acquisition date fair values.

Definite-lived intangible assets consist of developed technology, customer relationships, and non-compete agreements and are generally amortized on a straight-line basis over their estimated useful lives.

Goodwill represents the excess purchase price over the fair value of the net assets acquired.

Goodwill and indefinite-lived franchise rights are not amortized but are tested annually on December 1 or more frequently when events or circumstances

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the period over which expected cash flows are used to measure the fair value of the intangible asset at acquisition.

The Company periodically reassesses the useful lives of its definite-lived intangible assets when events or circumstances indicate that useful lives have significantly changed from the previous estimate.

No impairment charges related to intangible assets were recognized during the years ended December 31, 2024, 2023, or 2022.

Goodwill represents the excess purchase price over the fair value of the net assets acquired.

Goodwill is not amortized but is tested annually or more frequently when events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

change that would more likely than not reduce the fair value of a reporting unit or franchise rights below its carrying amount.

The Company has one operating segment, which is its reporting unit;

therefore, management analyzes goodwill associated with all of its operations when analyzing for potential impairment.

therefore, management analyzes goodwill and indefinite-lived franchise rights associated with all of its operations when analyzing for potential impairment.

When conducting annual or interim impairment assessments, if applicable, a two-step process is used.

First, an optional qualitative evaluation is performed as to whether it is more likely than not that the fair value of the Company's sole reporting unit is less than its carrying value, using an assessment of relevant events and circumstances.

In performing this assessment, the Company is required to make assumptions and judgments including, but not limited to, an evaluation of macroeconomic conditions as they relate to the business, industry and market trends, as well as the overall future financial performance of the reporting unit.

If it is determined that it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no additional tests are performed.

However, if the Company concludes otherwise or elects not to perform the qualitative assessment, the Company performs a second step consisting of a quantitative assessment of goodwill impairment.

This assessment requires the Company to compare the fair value of its reporting unit with its carrying value.

First, an optional qualitative evaluation is performed as to whether it is more likely than not that the fair value of the Company's sole reporting unit or franchise rights is less than its carrying value, using an assessment of relevant events and circumstances.

If it is determined that it is not more likely than not that the fair value of the reporting unit or franchise rights is less than its carrying value, no additional tests are performed.

However, if the Company concludes otherwise or elects not to perform the qualitative assessment, the Company performs a second step consisting of a quantitative assessment of goodwill or indefinite-lived franchise rights impairment.

This assessment requires the Company to compare the fair value of its reporting unit or franchise rights with its carrying value.

If the carrying amount exceeds the fair value, an impairment charge will be recognized.

In performing this assessment, the Company is required to make assumptions and judgments including, but not limited to, financial projections, discount rate, and future market conditions.

During the year ended December 31, 2022, the Company performed a quantitative goodwill impairment test for the Company's reporting unit and as a result recorded a non-cash goodwill impairment charge of $ 847 million, which is reflected as Goodwill impairment in the accompanying consolidated statements of operations.

No impairment charges related to goodwill or indefinite-lived franchise rights were recognized during the year ended December 31, 2025.

Intangible assets are recognized and recorded at their acquisition date fair values.

The Company determined the useful lives of its definite-lived intangible assets based on multiple factors including technological obsolescence, the make-up of the acquired customer base and expected attrition, and the period over which expected cash flows are used to measure the fair value of the intangible asset at acquisition.

Indefinite-lived intangible assets consist of franchise rights.

The Company determined the fair values of franchise rights using the multi-period excess earnings method of the income approach based on multiple factors including revenue growth rates.

No impairment charges related to intangible assets were recognized during the years ended December 31, 2025, 2024, or 2023.

The Company determines if an arrangement is a lease at inception by evaluating if the asset is explicitly or implicitly identified or distinct, if the Company will receive substantially all of the economic benefit or if the lessor has an economic benefit and the ability to substitute the asset.

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The Company consolidates VIEs when it is deemed to be the primary beneficiary.

The Company sponsors asset-backed securitization transactions.

These transactions often result in the creation of securitization trusts, which are VIEs.

To comply with Regulation RR of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Risk Retention Rules") the Company retains at least a 5% interest in the credit risk of the underlying finance receivables, which it accomplishes by retaining at least a 5% interest in each security issued by the

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

securitization trusts.

The Company sponsors asset-backed securitization transactions.

These transactions often result in the creation of securitization trusts, which are VIEs.

Typically, this includes notes and certificates, which are presented as beneficial interests in securitizations on the accompanying consolidated balance sheets.

Other current assets consist of various items, including, among other items, software licenses and subscriptions, prepaid expenses, the estimated reserve for vehicle inventory returns, sales tax receivables, the current portion of the purchase price adjustment receivables based on the performance of the Company's finance receivables, and deposits.

Other assets consist of various items, including, among other items, investment in equity instruments and derivative assets related to Root Warrants (each as further discussed in Note 18 — Fair Value of Financial Instruments), the purchase price adjustment receivables based on the performance of the Company's finance receivables, collateral for insurance, deferred tax assets, and debt issuance costs on revolving debt instruments.

Other current assets consist of various items, including, among other items, software licenses and subscriptions, prepaid expenses, the estimated reserve for vehicle inventory returns, sales and income tax receivables, the current portion of the purchase price adjustment receivables based on the performance of the Company's finance receivables, and deposits.

Other assets consist of various items, including, among other items, investment in equity instruments and derivative and other assets related to warrants (each as further discussed in Note 17 — Fair Value of Financial Instruments), collateral for insurance, and debt issuance costs on revolving debt instruments.

Accrued Liabilities

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Other Liabilities

As of December 31, 2024 and 2023, other current liabilities primarily consist of the current portion of operating lease liabilities, deferred revenue associated with Root Warrants (as further discussed in Note 18 — Fair Value of Financial Instruments), and tax receivable agreement ("TRA") liability (as further discussed in Note 15 — Income Taxes).

Other liabilities consist of various items to be recognized beyond one year, including the deferred revenue associated with Root Warrants, and tax receivable agreement ("TRA") liability.

As of December 31, 2025 and 2024, other current liabilities primarily consist of the current portion of operating lease liabilities, deferred revenue associated with warrants (as further discussed in Note 17 — Fair Value of Financial Instruments), and the current portion of the tax receivable agreement ("TRA") liability.

Other liabilities consist of various items to be recognized beyond one year, including the deferred revenue associated with warrants.

Revenue Recognition

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Retail vehicle sales also include service revenue from retail marketplace transactions, which are retail marketplace partner vehicles sold to customers through Carvana, where the Company recognizes revenue on the sale of the vehicle on a net basis.

The amount of consideration received for retail vehicle sales includes noncash consideration representing the value of trade-in vehicles, if applicable, as stated in the contract.

The amount of consideration received for retail vehicle sales includes non-cash consideration representing the value of trade-in vehicles, if applicable, as stated in the contract.

Prior to the delivery of the vehicle, the payment is received or financing has been arranged.

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These vehicles sold to wholesalers are primarily acquired from customers and do not meet the Company’s quality standards to list and sell through its website.

The Company satisfies its performance obligation for wholesale sales and revenues when the wholesale purchaser obtains control of the underlying vehicle, which is upon delivery or pick up at an auction when the transfer of title, risks and rewards of ownership, and control pass to the wholesale purchaser.

The Company recognizes revenue at the amount it expects to receive for the used wholesale vehicle,

The Company satisfies its performance obligation for wholesale sales and revenues when the wholesale purchaser obtains control of the underlying vehicle, which is

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

which is the fixed price determined at the auction, or for wholesale marketplace transactions, at the amount it expects to receive for auction and service fees charged in facilitating the transaction.

upon delivery or pick up at an auction when the transfer of title, risks and rewards of ownership, and control pass to the wholesale purchaser.

The Company recognizes revenue at the amount it expects to receive for the used wholesale vehicle, which is the fixed price determined at the auction, or for wholesale marketplace transactions, at the amount it expects to receive for auction and service fees charged in facilitating the transaction.

The purchase price of the wholesale vehicle is typically due and collected within 30 days of delivery of the wholesale vehicle and auction fees are typically due within two days of a completed sale.

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For the years ended December 31, 2025, 2024, and 2023, all transfers of finance receivables met the requirements for sale treatment.

The Company records the gain on the sale of a finance receivable upon receipt of proceeds, in an amount equal to the fair value of the net proceeds received less the carrying amount of the finance receivable.

The Company records the gain on the sale of a finance receivable in an amount equal to the fair value of the net proceeds received less the carrying amount of the finance receivable.

The net proceeds received for gain on loan sale consists primarily of cash proceeds received at the time of sale.

The Company has made customary representations related to the sales of finance receivables.

Any significant estimated post-sale obligations or contingent obligations to the purchaser of the receivables would be accrued if probable and estimable in accordance with ASC 450, Contingencies .

Any such obligations are considered in the Company's determination of the accounting for the transfers of the finance receivables under ASC 860 .

Any significant estimated post-sale obligations or contingent obligations to the purchaser of the receivables

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

would be accrued if probable and estimable in accordance with ASC 450, Contingencies .

Any such obligations are considered in the Company's determination of the accounting for the transfers of the finance receivables under ASC 860 .

Cost of Sales

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The Company provides matching contributions of 40 % up to the first 6 % of an employee’s compensation, which vests evenly over the employee’s initial five-year service period.

On January 1, 2022, the plan was amended whereby prospective participants' employer matching contributions vest evenly over the employee's initial four-year service period.

Employer contributions to the plan, net of forfeitures, were $ 8 million for each the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

years ended December 31, 2024, 2023, and 2022.

January 1, 2022, the plan was amended whereby prospective participants' employer matching contributions vest evenly over the employee's initial four-year service period.

Employer contributions to the plan, net of forfeitures, were $ 8 million for each of the years ended December 31, 2025, 2024, and 2023.

Employer contributions are included in selling, general, and administrative expenses in the accompanying consolidated statements of operations.

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Because of this, the Company has determined that it currently operates with one operating segment and therefore one reportable segment.

The CODM is the chief executive officer and focuses on consolidated results, specifically consolidated net income (loss), in assessing operating performance and allocating resources.

The CODM is the chief executive officer and focuses on consolidated results, specifically consolidated net income, in assessing operating performance and allocating resources.

Furthermore, the Company offers similar products and services and uses similar processes to sell those products and services to similar classes of customers throughout the United States ("U.S.").

The amounts presented in each revenue line item in the accompanying consolidated statements of operations represent categories of revenue disaggregated by product and customer type.

The amounts presented in each revenue line item in the accompanying consolidated statements of operations represent categories of revenue disaggregated by product and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

customer type.

The measure of segment assets is reported on the accompanying consolidated balance sheets as total assets.

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for all periods presented.

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Segment information for the years ended December 31, 2025, 2024, and 2023 are as follows:

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Market occupancy

Goodwill impairment

Other operating expense, net

Operating income (loss) 1,881 990 ( 80 )

Interest expense

Interest expense, net

Loss (Gain) on debt extinguishment

Other (income) expense, net

16 12 ( 878 )

Net income (loss) before income taxes

Other expense (income), net

2,250 ( 73 ) ( 9 )

Net (loss) income before income taxes

( 890 ) 400 175

Income tax (benefit) provision

Net income (loss)

( 2,785 ) ( 4 ) 25

$ 1,895 $ 404 $ 150

(1) Other costs include all other selling, general and administrative expenses such as IT expenses, corporate occupancy, professional services and insurance, limited warranty, and title and registration.

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Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment.

The Company reduces the carrying amounts of deferred tax assets by a valuation allowance if, based on the evidence available, both positive and negative, as well as the objectivity and verifiability of that evidence, it is more likely than not that some portion or all of the Company's deferred tax assets will not be realized.

The assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods by jurisdiction, the Company's experience with loss carryforwards not expiring unutilized, and all tax planning alternatives that may be available.

See Note 15 — Income Taxes for additional information.

Tax Receivable Agreement

The Company's TRA liability is determined and recorded in accordance with ASC 450, Contingencies , which requires the determination of whether the liability is both probable and reasonably estimable.

The primary consideration is the Company's usage of deferred tax assets, which currently have a full valuation allowance applied against them.

As such, the Company recorded a TRA liability of $ 82 million and $ 14 million as of December 31, 2024 and 2023, respectively, which represents the portion of the liability that is probable and reasonably estimable.

For the remaining $ 2.0 billion TRA liability as of December 31, 2024, the Company determined that it was more likely than not that its deferred tax assets subject to the TRA would not be realized.

During the year ended December 31, 2025, management performed an assessment of the recoverability of deferred tax assets.

This assessment considered both positive and negative evidence related to the likelihood of realization of the deferred tax assets.

These objective and subjective factors included, but were not limited to, a recent history of sustained profitability and utilization of deferred tax assets, which is objective and verifiable, and anticipated future earnings, including consideration of historical and future excess tax benefits related to equity-based compensation.

After evaluating the weight of all available evidence, management determined, based on the accounting standards applicable to such assessment, that there was sufficient evidence as a result of the aforementioned considerations to conclude it was more likely than not that its deferred tax assets will be realizable.

During the year ended December 31, 2025, the Company (i) released $ 2.2 billion of its valuation allowance through income tax (benefit) provision in the accompanying consolidated statements of operations;

(ii) established $ 277 million of deferred tax assets related to increases in tax basis in Carvana Group through additional paid-in capital in the accompanying consolidated statements of stockholders' equity (deficit);

(iii) and recorded $ 547 million of income tax benefit as a result of current year activity through income tax (benefit) provision in the accompanying consolidated statements of operations.The Company will continue to monitor the need for a valuation allowance against its deferred tax assets.

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Tax Receivable Agreement

The Company's TRA liability is determined and recorded in accordance with ASC 450, Contingencies , which requires the determination of whether the liability is both probable and reasonably estimable.

The primary consideration is the Company's usage of deferred tax assets, for which the Company has utilized and expects to utilize in the future and therefore no longer have a full valuation allowance applied against them.

As such and in connection with the Company's conclusion that it was more likely than not that its deferred tax assets subject to the TRA would be realized, the Company determined it was probable its remaining TRA liability related to the tax savings it expects to realize from utilization of such deferred tax assets will be paid.

As such, during the year ended December 31, 2025, the Company recorded TRA expense of $ 2.2 billion which was recorded to other expense (income), net in the accompanying consolidated statements of operations.

As of December 31, 2025 and 2024, the Company recorded a TRA liability of $ 2.3 billion and $ 82 million, respectively, of which $ 1.7 billion and $ 61 million, respectively, is due to related parties.

As of December 31, 2025 and 2024, $ 37 million and $ 17 million, respectively, is included in other current liabilities and $ 2.2 billion and $ 65 million, respectively, are included in other liabilities on the accompanying consolidated balance sheets.

Adoption of New Accounting Standards

In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update “ASU” 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires the disclosure of significant segment expenses that are regularly provided to the CODM.

The amendments also require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

These amendments apply regardless of the Company having one operating segment.

The Company adopted ASU 2023-07 in its fourth quarter of 2024 using a retrospective transition method.

Accounting Standards Issued But Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the FASB issued Accounting Standards Updates ("ASU") 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

The update will be effective for annual periods beginning after December 15, 2025.

The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires entities to disclose certain additional information including, among other items, purchases of inventory, employee compensation, depreciation, and intangible asset amortization included within each consolidated statements of operations expense caption.

The update will be effective for annual reporting periods beginning after December 15, 2026.

The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.

The Company assessed all other Accounting Standards Updates issued but not yet adopted and determined they are not relevant to the Company or are not expected to have a material impact upon adoption.

NOTE 3 — BUSINESS COMBINATIONS

Acquisition of ADESA U.S.

Physical Auction Busines s

On May 9, 2022, the Company completed its acquisition of 100 % of the equity interests in the U.S.

physical auction business of ADESA from Openlane, Inc., fka KAR Auction Services, Inc.

for approximately $ 2.2 billion in cash (the "ADESA Acquisition").

Proceeds from the issuance and sale of the 2030 Senior Unsecured Notes (as defined below) were used to fund the acquisition.

The acquisition included 56 auction sites throughout the U.S.

with 6.5 million square feet of buildings on more than 4,000 acres of land, significantly expanding the Company's infrastructure and enhancing its customer offering by facilitating a broader selection of vehicles and faster delivery times.

Identifiable intangible assets acquired consist of the following (in millions):

Fair Value Useful Life

Customer relationships $ 50 10 years

Developed technology $ 29 3 years

Customer relationships were valued using the multi-period excess earnings method of the income approach.

Developed technology was valued using the replacement cost method of the cost approach.

Significant assumptions used in the valuations were forecasted revenues and attrition rate and are classified as Level 3 due to the lack of observable market data.

No residual values were assigned to the customer relationships and developed technology intangible assets and they are amortized on an economic useful life basis commensurate with future anticipated cash flows and straight line, respectively.

As of December 31, 2024, the remaining weighted-average amortization period for the intangible assets acquired was 4.6 years.

Real property was valued using market comparable transactions of the market approach, for which the key assumption is the similarity of the acquired property to market comparable transactions.

Personal property was valued using the replacement cost method of the cost approach, for which the key assumptions are the costs of similar personal property in new condition and economic obsolescence rates.

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The acquisition resulted in the recognition of $ 838 million of goodwill, which is deductible for tax purposes and represents the future economic benefits expected to arise from anticipated synergies and intangible assets that do not qualify for separate recognition, including an assembled workforce, non-contractual relationships and other agreements.

For the years ended December 31, 2023 and 2022, the Company recognized $ 856 million and $ 490 million, respectively, of wholesale sales and revenues, $ 770 million and $ 472 million, respectively, of cost of sales, and a net loss of $ 83 million and $ 101 million, respectively, from ADESA operations, which includes $ 122 million and $ 83 million, respectively, of depreciation and amortization, including acquired intangible assets amortization expense of $ 15 million for each year.

The following unaudited pro forma combined results of operations information for the year ended December 31, 2022 has been prepared as if the ADESA Acquisition occurred on January 1, 2022:

Year ended December 31, 2022

(in millions)

Revenues $ 13,903

Net loss ( 3,024 )

Net loss attributable to non-controlling interests ( 1,343 )

Net loss attributable to Carvana Co.

Net loss per share of Class A common stock - basic and diluted $ ( 15.89 )

Weighted-average shares of Class A common stock - basic and diluted 105,808

The unaudited pro forma combined results of operations information reflect the following pro forma adjustments:

Year ended December 31, 2022

(in millions)

Interest expense $ 123

Lease expense $ 5

Depreciation and amortization expense $ 13

Intercompany revenues and cost of sales $ ( 7 )

The unaudited pro forma combined results of operations information is provided for informational purposes only and is not necessarily intended to represent the results that would have been achieved had the ADESA Acquisition been consummated on January 1, 2022 or indicative of the results that may be achieved in the future.

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The Company adopted ASU 2023-09 in its fourth quarter of 2025 using a retrospective transition method.

Accounting Standards Issued But Not Yet Adopted

The Company assessed all Accounting Standards Updates ("ASU") issued during the year ended December 31, 2025 but not yet adopted and determined they are not relevant to the Company or are not expected to have a material impact upon adoption.

The Company is currently evaluating the impact of ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , and ASU 2025-06, Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software on the presentation of its consolidated financial statements and accompanying notes.

NOTE 3 — PROPERTY AND EQUIPMENT, NET

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Depreciation and amortization expense on property and equipment in selling, general and administrative expense was $ 150 million, $ 147 million, and $ 166 million during the years ended December 31, 2025, 2024, and 2023, respectively.

NOTE 5 — INTANGIBLE ASSETS

The following table summarizes intangible assets, net as of December 31, 2024 and 2023:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 — GOODWILL AND INTANGIBLE ASSETS, NET

During the year ended December 31, 2025, the Company separately acquired five franchise dealerships for total purchase consideration of $ 160 million, comprised of $ 101 million in cash and $ 59 million in trade vehicle floor plan payables.

The purchase price was allocated to net tangible assets of $ 64 million, indefinite-lived franchise rights of $ 27 million, and goodwill of $ 10 million, which is deductible for tax purposes.

The acquisitions were not material to the Company's financial condition or results of operations.

The following table summarizes goodwill and intangible assets, net as of December 31, 2025 and 2024:

(in millions)

1 unchanged sentence

Developed technology 31 41

Franchise rights

Intangible assets, acquired cost 108 91

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 — ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

NOTE 5 — ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following table summarizes accounts payable and accrued liabilities as of December 31, 2025 and 2024:

2 unchanged sentences

Accrued interest expense

Reserve for returns and cancellations 121 75

Accrued compensation and benefits 103 92

Sales taxes and vehicle licenses and fees 102 87

Reserve for returns and cancellations 75 57

Accrued insurance 85 63

Trade floor plan payables 64 —

Customer deposits 51 63

Accrued advertising costs 31 18

Income tax liability

Other accrued liabilities 169 126

Total accounts payable and accrued liabilities

$ 1,100 $ 856

In connection with the franchise dealership acquisitions, the Company entered into a Master Loan and Security Agreement (the "Trade Floor Plan Facility") with Stellantis Financial Services, Inc.

("SFS") to finance certain of its purchases of new vehicle inventory, and such financed inventory secures the Trade Floor Plan Facility.

The line of credit under the Trade Floor Plan Facility is $ 214 million, allocated among sub-advance limits for each dealership location and type of vehicle inventory, and the interest rate is based on one-month term SOFR plus an applicable margin, which ranges from 2.25 % to 3.25 % depending on the relative amount of retail sales funded by SFS.

Under the Trade Floor Plan Facility, repayment of amounts drawn for the purchase of a vehicle should generally be made within several days after selling or otherwise disposing of the vehicle.

Outstanding principal balances related to vehicles held in inventory for more than 11 months are due in full on the first day of the 12th month after a vehicle was initially financed.

Prepayments may be made without incurring a premium or penalty.

The Trade Floor Plan Facility also requires monthly interest payments and a minimum $ 37 million restricted cash balance.

NOTE 6 — RELATED PARTY TRANSACTIONS

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In November 2014, the Company and DriveTime Automotive Group, Inc.

(together with its consolidated affiliates, collectively, "DriveTime"), a related party of the Company due to Ernest Garcia II, Ernest Garcia III, and entities controlled by one or both of them (collectively the "Garcia Parties") controlling and owning substantially all of the interests in DriveTime, entered into a lease agreement, which currently governs the occupation of two inspection and reconditioning centers in Blue Mound, Texas and Delanco, New Jersey.

The lease for the Blue Mound, Texas location expires in 2029, with two five-year renewal options, and the lease for the Delanco, New Jersey location expires in 2026, with no current renewal options.

The Company makes monthly lease payments based on DriveTime's actual rent expense.

In addition, the Company is responsible for the actual insurance costs, tenant improvements required to conduct operations, and real estate taxes.

(together with its consolidated affiliates, collectively, "DriveTime"), a related party of the Company due to Ernest Garcia II, Ernest Garcia III, and entities controlled by one or both of them (collectively the "Garcia Parties") controlling and owning substantially all of the interests in DriveTime, entered into a lease agreement, governing the occupation of two inspection and reconditioning centers in Blue Mound, Texas and Delanco, New Jersey.

The lease for the Blue Mound, Texas location expires in 2029, with two five-year renewal options.

Pursuant to that lease agreement, the Company has made monthly lease payments based on DriveTime's actual rent expense and the Company was responsible for the actual insurance costs, tenant improvements required to conduct operations, and real estate taxes.

In March 2025, we assumed DriveTime's lease at the Blue Mound, Texas locations.

The lease for the Delanco, New Jersey location expires in 2032, with no further renewal options.

In February 2017, the Company entered into a lease agreement with DriveTime for sole occupancy of a fully operational inspection and reconditioning center in Winder, Georgia.

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Total costs related to these operating lease agreements, including those noted above, were $ 2 million, $ 3 million, and $ 3 million, for the years ended December 31, 2025, 2024, and 2023, respectively, allocated between inventory and selling, general, and administrative expenses.

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Office Leases

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In connection with the purchase, Verde assumed that lease.

The lease has an initial term of ten years expiring in 2029, subject to the right to exercise

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two five-year extension options.

The lease has an initial term of ten years expiring in 2029, subject to the right to exercise two five-year extension options.

The rent expense incurred under the lease with Verde was $ 1 million during each of the years ended December 31, 2025, 2024, and 2023.

Wholesale Vehicle Sales

Wholesale Vehicle Sales and Purchases

DriveTime purchases wholesale vehicles from the Company through competitive auctions that are open to other dealers.

As a result, the Company recognized $ 27 million, $ 12 million, and $ 10 million of wholesale sales and revenues from DriveTime during the years ended December 31, 2025, 2024, and 2023, respectively.

The Company purchased $ 12 million, $ 4 million and $ 2 million of vehicles from DriveTime through competitive auctions that are open to other dealers during the years ended December 31, 2025, 2024, and 2023 respectively.

Wholesale Marketplace Revenues

DriveTime sells vehicles to, and purchases vehicles from, third parties through the Company's wholesale marketplace platform.

DriveTime sells vehicles to, and purchases vehicles from, third parties and the Company through the Company's wholesale marketplace platform.

These transactions occur through competitive auctions in which all registered buyers and sellers are able to bid on and purchase, or list and sell, wholesale vehicles.

In addition, beginning in September 2023, certain auction locations provide DriveTime with reconditioning services.

As a result, the Company recognized $ 16 million, $ 9 million, and $ 2 million of wholesale sales and revenues from DriveTime during the years ended December 31, 2024, 2023, and 2022, respectively, and $ 2 million and less than $ 1 million of cost of sales to DriveTime related to reconditioning services during the years ended December 31, 2024 and 2023, respectively.

In addition, beginning in September 2023, certain auction locations generally provide customers, including DriveTime, with reconditioning services.

As a result, the Company recognized $ 12 million, $ 16 million, and $ 9 million of wholesale sales and revenues from DriveTime during the years ended December 31, 2025, 2024, and 2023, respectively.

The Company recognized less than $ 1 million, $ 2 million, and less than $ 1 million of cost of sales to DriveTime related to reconditioning services during the years ended December 31, 2025, 2024, and 2023, respectively.

Retail Vehicle Acquisitions and Reconditioning

1 unchanged sentence

The purchase price of each vehicle was equal to the wholesale price of the vehicle plus a fee for transportation and reconditioning services.

As of December 31, 2024 and 2023, zero and less than $ 1 million, respectively, related to these vehicles and reconditioning services were included in vehicle inventory in the accompanying consolidated balance sheets.

The Company also recognized less than $ 1 million, $ 4 million, and $ 22 million of cost of goods sold during the years ended December 31, 2024, 2023, and 2022, respectively, related to these vehicles.

As of December 31, 2024, the Company had no amounts included in vehicle inventory related to these vehicles and reconditioning services in the accompanying consolidated balance sheets.

The Company recognized less than $ 1 million and $ 4 million of cost of goods sold during the years ended December 31, 2024 and 2023, respectively, related to these vehicles.

Master Dealer Agreement

3 unchanged sentences

The Master Dealer Agreement further allows the Company to receive payments for excess reserves based on the performance of the VSCs versus the reserves held by the VSC administrator, once a required claims period for such VSCs has passed.

During the years ended December 31, 2024, 2023, and 2022, the Company recognized $ 193 million, $ 138 million, and $ 176 million, respectively, of commissions earned on VSCs sold to its customers and administered by DriveTime, net of a reserve for estimated contract cancellations, and payments for excess reserves to which it expects to be entitled, which are included in other sales and revenues in the accompanying consolidated statements of operations.

During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 338 million, $ 193 million, and $ 138 million, respectively, of commissions earned on VSCs sold to its customers and administered by DriveTime, net of a reserve for estimated contract cancellations, and payments for excess reserves to

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which it expects to be entitled, which are included in other sales and revenues in the accompanying consolidated statements of operations.

Beginning in 2017, DriveTime also administers the Company's limited warranty provided to all customers.

6 unchanged sentences

Finally, in December 2022, the Company entered into a profit sharing agreement with DriveTime with regard to the Transferred Contracts (the "Profit Sharing Agreement").

The Company recognized $ 7 million in revenue during each of the years ended December 31, 2024 and 2023, and $ 3 million during the year ended 2022 under the Profit Sharing Agreement.

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The Company recognized $ 9 million in revenue during the year ended December 31, 2025, and $ 7 million in revenue during each of the years ended December 31, 2024 and 2023 under the Profit Sharing Agreement.

Servicing and Administrative Fees

DriveTime provides servicing and administrative functions associated with the Company's finance receivables.

Servicing and administrative functions are outsourced services in which DriveTime has developed significant expertise.

The Company incurred expenses of $ 6 million, $ 10 million, and $ 13 million for the years ended December 31, 2025, 2024, and 2023, respectively, related to these services.

The Company sold no finance receivables to DriveTime in each of the years ending December 31, 2017 through December 31, 2025.

Aircraft Time Sharing Agreement

7 unchanged sentences

Tax Receivable Agreement Liability

As further discussed in Note 15 — Income Taxes, as of December 31, 2024 and 2023, the Company recorded a tax receivable agreement ("TRA") liability of $ 82 million and $ 14 million, respectively, of which $ 61 million and $ 11 million, respectively, is due to related parties.

As further discussed in Note 14 — Income Taxes, as of December 31, 2025 and 2024, the Company recorded a tax receivable agreement liability of $ 2.3 billion and $ 82 million, respectively, of which $ 1.7 billion and $ 61 million, respectively, is due to related parties.

Refer to Note 14 — Income Taxes for further discussion of the TRA.

During the year ended December 31, 2025, the Company made TRA payments of $ 17 million, of which $ 13 million was paid to related parties.

Tax Payments on Behalf of Non-Controlling Members

As further discussed in Note 14 — Income Taxes, during the year ended December 31, 2025, the Company made mandatory composite and non-resident withholding tax payments on behalf of non-controlling members of $ 4 million, of which $ 3 million was paid on behalf of related parties.

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Contributions of Class A Common Stock From Ernest Garcia III

5 unchanged sentences

Garcia contributed to the Company, at the end of each fiscal quarter, the number of shares of Class A common stock, granted pursuant to the CEO Milestone Gift, that had vested during such quarter.

The shares contributed shall be shares of Class A common stock that Mr.

The shares contributed were shares of Class A common stock that Mr.

Garcia individually owned, at no charge.

8 unchanged sentences

The Company used the proceeds therefrom to partially fund the cash tender offer to purchase a portion of the 2025 Senior Unsecured Notes (as defined in Note 9 — Debt Instruments).

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NOTE 7 — FINANCE RECEIVABLE SALE AGREEMENTS

2 unchanged sentences

forward flow agreements and fixed pool loan sales, including securitization transactions.

Master Purchase and Sale Agreement

In December 2016, the Company entered into a master purchase and sale agreement (the "Master Purchase and Sale Agreement" or "MPSA") with Ally Bank and Ally Financial Inc.

(collectively the "Ally Parties").

Pursuant to the MPSA, the Company sells finance receivables meeting certain underwriting criteria under a committed forward flow arrangement without recourse to the Company for their post-sale performance.

On January 11, 2024, the Company and the Ally Parties amended the MPSA to reestablish the commitment by the Ally Parties to purchase up to $ 4.0 billion of principal balances of finance receivables between January 11, 2024 and January 10, 2025.

During the years ended December 31, 2024, 2023, and 2022, the Company sold $ 3.0 billion, $ 3.6 billion, and $ 3.8 billion, respectively, in principal balances of finance receivables under the MPSA and had $ 1.0 billion of unused capacity as of December 31, 2024.

On January 3, 2025, the Company and the Ally Parties amended the MPSA to, among other things, reestablish the commitment by the Ally Parties to purchase up to $ 4.0 billion of principal balances of finance receivables between January 3, 2025 and January 2, 2026.

The Company completes loan sales without recourse for their post-sale performance and makes customary representations and warranties as part of these transactions.

Ally Master Purchase and Sale Agreement

In December 2016, the Company entered into a master purchase and sale agreement (the "Ally MPSA") with Ally Bank and Ally Financial Inc.

(together "Ally").

Pursuant to the Ally MPSA, the Company sells finance receivables meeting certain underwriting criteria under a committed forward flow arrangement without recourse to the Company for their post-sale performance.

On January 3, 2025, the Company and Ally amended the Ally MPSA to reestablish the commitment by Ally to purchase up to $ 4.0 billion of principal balances of finance receivables between January 3, 2025 and January 2, 2026, and further amended the Ally MPSA on April 29, 2025 to reestablish the commitment by Ally to purchase up to $ 4.0 billion of principal balance of finance receivables between April 30, 2025 and April 29, 2026.

On October 28, 2025, the Ally MPSA was further amended to increase the commitment by Ally to purchase up to $ 6.0 billion of principal balance of finance receivables between October 28, 2025 and October 27, 2026, with all other terms and conditions remaining unchanged from the preceding Ally MPSA.

During the years ended December 31, 2025, 2024, and 2023, the Company sold $ 4.7 billion, $ 3.0 billion, and $ 3.6 billion, respectively, in principal balances of finance receivables under the Ally MPSA and had $ 4.9 billion of unused capacity as of December 31, 2025.

Securitization Transactions

2 unchanged sentences

Upon sale of the finance receivables to the securitization trusts, the Company recognizes a gain or loss on sales of finance receivables.

The net proceeds from the sales are the fair value of the assets obtained as part of the transactions and typically include cash and at least 5% of the beneficial interests issued by the securitization trusts to comply with the Risk Retention Rules, as defined and further discussed in Note 9 — Securitizations and Variable Interest Entities.

The net proceeds from the sales are the fair value of the assets obtained as part of the

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transactions and typically include cash and at least 5% of the beneficial interests issued by the securitization trusts to comply with the Risk Retention Rules, as defined and further discussed in Note 8 — Securitizations and Variable Interest Entities.

During the years ended December 31, 2025, 2024 and 2023, the Company sold $ 3.5 billion, $ 3.8 billion and $ 2.8 billion, respectively, in principal balances of finance receivables through securitization transactions.

Fixed Pool Loan Sales

During the year ended December 31, 2024, the Company completed fixed pool loan sales of $ 1.5 billion in principal balances of finance receivables to an unrelated third party on terms substantially similar to the Company’s securitization transactions and sales under the MPSA.

There were no fixed pool loan sales other than securitization transactions during the years ended December 31, 2023 or 2022.

During the year ended December 31, 2025, the Company entered into three separate definitive loan purchase agreements with three separate independent, third-party purchasers for the sale of up to a total of $ 12 billion of principal balance of finance receivables through the fourth quarter of 2027.

These agreements formalize existing relationships with loan purchasers and establish defined expectations for loan sale volume and sale procedures throughout the respective agreement periods.

During the year ended December 31, 2025, and 2024, the Company completed fixed pool loan sales of $ 4.2 billion and $ 1.5 billion, respectively, in principal balances of finance receivables to unrelated third parties.

There were no fixed pool loan sales other than securitization transactions during the years ended December 31, 2023.

The Company had $ 11.3 billion of unused capacity under the definitive loan purchase agreements as of December 31, 2025.

Gain on Loan Sales

The total gain related to finance receivables sold to financing partners and pursuant to securitization transactions was $ 755 million, $ 434 million, and $ 411 million during the years ended December 31, 2024, 2023, and 2022, respectively, which is included in other sales and revenues in the accompanying consolidated statements of operations.

The total gain related to finance receivables sold to financing partners and pursuant to securitization transactions was $ 1.2 billion, $ 755 million, and $ 434 million during the years ended December 31, 2025, 2024, and 2023, respectively, which is included in other sales and revenues in the accompanying consolidated statements of operations.

NOTE 8 — SECURITIZATIONS AND VARIABLE INTEREST ENTITIES

4 unchanged sentences

The beneficial interests retained by the Company include, but are not limited to, rated notes and certificates of the securitization trusts.

The holders of the certificates issued by the

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securitization trusts have rights to cash flows only after the holders of the notes issued by the securitization trusts have received their contractual cash flows.

The holders of the certificates issued by the securitization trusts have rights to cash flows only after the holders of the notes issued by the securitization trusts have received their contractual cash flows.

The securitization trusts have no direct recourse to the Company’s assets, and holders of the securities issued by the securitization trusts can look only to the assets of the securitization trusts that issued their securities for payment.

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The following table summarizes the carrying value and total exposure to losses of its assets related to unconsolidated VIEs with which the Company has continuing involvement, but is not the primary beneficiary at December 31, 2025 and 2024.

Total exposure represents the estimated loss the Company would incur under severe, hypothetical circumstances, such as if the value of the interests in the securitization trusts and any associated collateral declined to zero.

Total exposure represents the estimated loss the Company would incur under severe, hypothetical circumstances, such as if the value

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of the interests in the securitization trusts and any associated collateral declined to zero.

The Company believes the possibility of this is remote.

23 unchanged sentences

Floor plan facility $ 58 $ 67

Finance receivable facilities — 555

Financing of beneficial interests in securitizations

Real estate financing 485 485

Transportation fleet financing

Total asset-based financing 940 906

7 unchanged sentences

Total included in long-term debt, net $ 4,747 $ 5,148

(1) Includes $ 105 million and $ 185 million of accrued paid-in-kind ("PIK") interest as of December 31, 2024 and 2023, respectively.

(1) Includes zero and $ 105 million of accrued paid-in-kind ("PIK") interest as of December 31, 2025 and 2024, respectively.

Accrued PIK interest increases the principal amount of Senior Secured Notes on each semi-annual interest payment date.

4 unchanged sentences

Floor Plan Facility

The Company previously entered into a floor plan facility with the Ally Parties to finance its vehicle inventory, which was secured by Carvana LLC's vehicle inventory, general intangibles, accounts receivable, and finance receivables (as amended, the "Floor Plan Facility").

The Company previously entered into a floor plan facility with Ally to finance its vehicle inventory, which was secured by Carvana LLC's vehicle inventory, general intangibles, accounts receivable, and finance receivables (as amended, the "Floor Plan Facility").

On September 1, 2023, the Company amended the Floor Plan Facility in connection with the issuance of the Senior Secured Notes (as defined below) to provide for an additional exclusive grant of collateral over certain deposit accounts and the cash on deposit in those accounts in favor of the lender and to amend certain other affirmative and negative covenants.

The Company amended and restated the Floor Plan Facility on November 1, 2023, to resize the line of credit to $ 1.5 billion through April 30, 2025 and to lower the interest rate to (i) a prime rate plus 0.10 % when amounts drawn under the facility are under 50 % of the then current inventory balance and (ii) a prime rate plus 0.50 % when amounts drawn are over 50 %.

Under the Floor Plan Facility, repayment of amounts drawn for the purchase of a vehicle should generally be made within several days after selling or otherwise disposing of the vehicle.

Outstanding balances related to vehicles held in inventory for more than 120 days require monthly principal payments equal to 10 % of the original principal amount of that vehicle until the remaining outstanding balance is equal to the lesser of (i) 50 % of the original principal amount or (ii) 50 % of the wholesale value.

Prepayments may be made without incurring a premium or penalty.

Additionally, the Company is permitted to make prepayments to the lender to be held as principal payments under the Floor Plan Facility and subsequently reborrow such amounts.

The Floor Plan Facility also requires monthly interest payments and restricted cash requirements on a sliding scale whereby at least 12.5 % of the total principal amount owed to the lender is required to be held as restricted cash if amounts

The Company further amended the Floor Plan Facility on April 29, 2025 to renew the line of credit at $ 1.5 billion until April 30, 2027.

Under the amendment, the interest rate on the Floor Plan Facility was reduced to (i) a prime rate minus 0.70 % when amounts drawn under the Floor Plan Facility are less than 25 % of the then current inventory balance, (ii) a prime rate minus 0.50 % when amounts drawn under the Floor Plan Facility are 25 % or more but less than 50 % of the then current inventory balance, or (iii) a prime rate plus 0.10 % when amounts drawn under the Floor Plan Facility are 50 % or more of the then current inventory balance.

The Floor Plan Facility also requires monthly interest payments and restricted cash requirements on a sliding scale whereby at least 5 % of the total principal amount owed to the lender is required to be held as restricted cash if amounts drawn are under 25 % of the then current inventory balance, increasing to 12.5 % to be held as restricted cash if amounts drawn are between 25 % and 49.99 % of the then current inventory balance, and further increasing to 25 % to be held as restricted cash if amounts drawn are equal to or greater than 50 % of the then current inventory balance.

The Company is also required to pay the lender an availability fee based on the average unused capacity during the prior calendar quarter under the amended Floor Plan Facility.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

drawn are under 50 % of the then current inventory balance, which requirement increases to (i) 17.5 % required to be held as restricted cash if amounts drawn are between 50 % and 59.99 %, (ii) 22.5 % required to be held as restricted cash if amounts drawn are between 60 % and 69.99 %, and (iii) 25 % required to be held as restricted cash if amounts drawn are equal to or over 70 %.

The Company is also required to pay the lender an availability fee based on the average unused capacity during the prior calendar quarter under the Floor Plan Facility.

As of December 31, 2024, the Company had $ 67 million outstanding under the facility, unused capacity of $ 1.4 billion, and held $ 8 million in restricted cash related to this facility.

As of December 31, 2025, the Company had $ 58 million outstanding under the Floor Plan Facility, unused capacity of $ 1.4 billion, and held $ 3 million in restricted cash related to the Floor Plan Facility.

During the year ended December 31, 2025, the Company's effective interest rate on the Floor Plan Facility was 5.77 %.

As of December 31, 2023, the Company had $ 113 million outstanding under the Floor Plan Facility, unused capacity of $ 1.4 billion, and held $ 14 million in restricted cash related to this facility.

For the year ended December 31, 2023, the Company's effective interest rate on the facility was 7.86 %.

As of December 31, 2024, the Company had $ 67 million outstanding under the Floor Plan Facility, unused capacity of $ 1.4 billion, and held $ 8 million in restricted cash related to the Floor Plan Facility.

During the year ended December 31, 2024, the Company's effective interest rate on the Floor Plan Facility was 6.85 %.

Finance Receivable Facilities

1 unchanged sentence

In January 2020, the Company entered into an agreement pursuant to which a lender agreed to provide a revolving credit facility to fund certain finance receivables originated by the Company.

In 2023, the Company amended its agreement to, among other things, adjust the line of credit to $ 500 million.

In January 2024, the maturity date was extended to January 19, 2025, which date was further extended on January 15, 2025, for a maturity date of April 15, 2026.

In 2023, the Company amended its agreement to, among other things, adjust the line of credit to $ 500 million, and in January 2025, the maturity date was extended to April 15, 2026.

In February 2020, the Company entered into an agreement pursuant to which a second lender agreed to provide a $ 500 million revolving credit facility to fund certain finance receivables originated by the Company.

In December 2021, the Company amended its agreement to, among other things, increase the line of credit to $ 600 million and in December 2023, the maturity date was extended to December 8, 2025.

In December 2021, the Company amended its agreement to, among other things, increase the line of credit to $ 600 million and in November 2025, the maturity date was extended to November 24, 2027.

In April 2021, the Company entered into an agreement pursuant to which a third lender agreed to provide a $ 500 million revolving credit facility to fund certain finance receivables originated by the Company.

In December 2021, the Company amended its agreement to, among other things, increase this line of credit to $ 600 million, and in April 2024 the maturity date was extended to October 10, 2025.

In December 2021, the Company amended its agreement to, among other things, increase this line of credit to $ 600 million, and in October 2025 the maturity date was extended to October 9, 2026.

In March 2022, the Company entered into an agreement pursuant to which a fourth lender agreed to provide a $ 500 million revolving credit facility to fund certain finance receivables originated by the Company.

In August 2024, the Company amended its agreement to extend the maturity date to August 7, 2025.

In May 2023, the Company entered into an agreement pursuant to which a fifth lender agreed to provide a $ 500 million revolving credit facility to fund certain finance receivables originated by the Company until May 31, 2024.

In May 2024, the Company amended its agreement to extend the maturity date to August 15, 2025.

In August 2025, the Company amended its agreement to, among other things, increase the line of credit to $ 600 million and extend the maturity date to August 6, 2026.

In August 2025, the Company amended its agreement to, among other things, increase the line of credit to $ 600 million and extend the maturity date to February 14, 2027.

In September 2025, the Company entered into an agreement pursuant to which a sixth lender agreed to provide a $ 600 million revolving credit facility to fund certain finance receivables originated by the Company until March 29, 2027.

The Finance Receivable Facilities require that any undistributed amounts collected on the pledged finance receivables be held as restricted cash.

2 unchanged sentences

The subsidiaries that entered into these Finance Receivable Facilities are each wholly-owned, special purpose entities whose assets are not available to the general creditors of the Company.

As of December 31, 2024 and 2023, the Company had zero and $ 555 million, respectively, outstanding under these Finance Receivable Facilities, unused capacity of $ 2.7 billion and $ 2.1 billion, respectively, and held $ 2 million and $ 8 million, respectively, in restricted cash related to these Finance Receivable Facilities.

As of December 31, 2025 and 2024, the Company had zero outstanding under these Finance Receivable Facilities each period, unused capacity of $ 3.5 billion and $ 2.7 billion, respectively, and held $ 2 million each period in restricted cash related to these Finance Receivable Facilities.

During the years ended December 31, 2025 and 2024, the Company's effective interest rate on these Finance Receivable Facilities was 5.64 % and 7.39 %.

4 unchanged sentences

The Company has issued various tranches of Senior Secured Notes (collectively, the "Senior Secured Notes") as further described below:

Senior Secured Notes

Senior Secured Notes December 31,

2025 December 31,

17 unchanged sentences

Interest on each of the Senior Secured Notes is payable semi-annually on February 15 and August 15, and commenced on February 15, 2024.

On February 15, 2025, the Company paid interest for the 2028 and 2030 Senior Secured Notes in cash of $ 28 million and $ 91 million, respectively, and as required by the indentures governing the Senior Secured Notes, and increased the principal amount of the 2031 Senior Secured Notes in connection with the payment of interest in kind of $ 139 million.

On August 15, 2025, the Company paid interest for the 2028 and 2030 Senior Secured Notes in cash of $ 25 million and $ 91 million, respectively, and as required by the indentures governing the Senior Secured Notes, increased the principal amount of the 2031 Senior Secured Notes in connection with the payment of interest in kind of $ 148 million.

Accrued cash interest expense on the 2028 Senior Secured Notes, the 2030 Senior Secured Notes, and the 2031 Senior Secured Notes is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.

On February 15, 2024 and as required by the indentures governing the Senior Secured Notes, the Company increased the principal amount of the 2028, 2030, and 2031 Senior Secured Notes in connection with the payment of interest in kind of $ 53 million, $ 88 million, and $ 111 million, respectively.

Further, on August 15, 2024 and as required by the indentures governing the Senior Secured Notes, the Company increased the principal amount of the 2028, 2030, and 2031 Senior Secured Notes in connection with the payment of interest in kind of $ 47 million, $ 101 million, and $ 130 million, respectively.

On February 15, 2025, the Company paid interest for the 2028 and 2030 Senior Secured Notes in cash, and intends to continue to pay cash interest for the 2028 and 2030 Senior Secured Notes at the next semi-annual payment date on August 15, 2025.

As a result, beginning on August 15, 2024, the Company is accruing PIK interest only on the 2031 Senior Secured Notes.

Cash interest expense on the 2028 and 2030 Senior Secured Notes is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.

The Company may redeem some or all of each series of Senior Secured Notes at any time prior to certain specified redemption dates (the "Secured Early Redemption Dates") and at 100 % of the principal amount outstanding plus applicable make-whole premiums set forth in each respective indenture, plus any accrued and unpaid interest to the redemption date.

Prior to the Secured Early Redemption Dates, the Company may also redeem up to 35 % of the original aggregate principal amount of the 2028 and 2030 Senior Secured Notes at a redemption price equal to 109 % of the principal amount outstanding, together with accrued and unpaid interest to, but not including, the date of redemption, using the net cash proceeds of certain equity offerings.

Finally, on or after the Secured Early Redemption Dates, the Company may redeem its Senior Secured Notes in whole or in part at redemption prices set forth in each respective indenture, plus accrued and unpaid interest up to but excluding the redemption date.

If the Company experiences certain change of control events, it must make an offer to purchase all of the Senior Secured Notes at 101 % of the principal amount thereof, plus any accrued and unpaid interest, to the repurchase date.

During the year ended December 31, 2024, the Company repurchased $ 370 million of principal amount of the 2028 Senior Secured Notes in the open market for $ 384 million which included $ 8 million of accrued interest.

Additionally, during the year ended December 31, 2024, the Company redeemed $ 100 million of principal amount of the 2028 Senior Secured Notes for $ 108 million which included $ 3 million of accrued interest.

The repurchased notes were cancelled upon receipt.

Further, on August 15, 2024, as required by the indentures governing the Senior Secured Notes, the Company increased the principal amount of the 2028, 2030, and 2031 Senior Secured Notes in connection with the payment of interest in kind of $ 47 million, $ 101 million, and $ 130 million, respectively.

During the year ended December 31, 2025, as permitted by the indenture governing the 2028 Senior Secured Notes, the Company voluntarily redeemed $ 559 million of principal amount of the 2028 Senior Secured Notes for $ 578 million, which included $ 13 million of premium and $ 6 million of accrued interest.

Additionally, during the year ended December 31, 2025, the Company repurchased $ 52 million of principal amount of the 2028 Senior Secured Notes in the open market for $ 55 million, which included less than $ 1 million of accrued interest.

The repurchased and redeemed notes were cancelled upon receipt.

The repurchases and redemption are treated as an extinguishment of debt, with any realized discount (premium) recognized as a gain (loss) on debt extinguishment in the accompanying consolidated statements of operations, net of transaction fees and write-offs of related unamortized debt issuance costs and unamortized premium.

As a result of the repurchases and redemption, during the year ended December 31, 2025, the Company recognized a net loss on debt extinguishment of $ 16 million which included $ 1 million of transaction fees and write-offs of related unamortized debt issuance costs and unamortized premium.

During the year ended December 31, 2024, as permitted by the indenture governing the 2028 Senior Secured Notes, the Company repurchased $ 370 million of principal amount of the 2028 Senior Secured Notes in the open market for $ 384 million which included $ 8 million of accrued interest.

Additionally, during the year ended December 31, 2024, the Company redeemed

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 100 million of principal amount of the 2028 Senior Secured Notes for $ 108 million which included $ 3 million of accrued interest.

The repurchased and redeemed notes were cancelled upon receipt.

As a result of the repurchases and redemption, during the year ended December 31, 2024, the Company recognized a net loss on debt extinguishment of $ 12 million which included $ 2 million of transaction fees and write-offs of related unamortized debt issuance costs and unamortized premium.

The Company may redeem some or all of its 2031 Senior Secured Notes at any time prior to August 15, 2028 (the "Secured Early Redemption Date") at 100 % of the principal amount outstanding plus applicable make-whole premiums set forth in each respective indenture, plus any accrued and unpaid interest to the redemption date.

The Company may also redeem its Senior Secured Notes (on or after the Secured Early Redemption Date, with regard to the 2031 Senior Secured Notes) in whole or in part at redemption prices set forth in each respective indenture, plus accrued and unpaid interest up to but excluding the redemption date.

The Senior Secured Notes mature as specified in the table above unless earlier repurchased or redeemed and are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by all of the domestic restricted subsidiaries of the Company (other than, subject to certain exceptions, any subsidiary that constitutes an "immaterial subsidiary," "captive insurance subsidiary," "securitization subsidiary" or "permitted joint venture").

1 unchanged sentence

The indentures to the Senior Secured Notes contain restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things and subject to certain exceptions, incur additional debt or issue preferred stock, create new liens, create restrictions on intercompany payments, pay dividends and make other distributions in respect of the Company's capital stock, redeem or repurchase the Company’s capital stock or prepay subordinated indebtedness, make certain investments or certain other restricted payments, guarantee indebtedness, designate unrestricted subsidiaries, sell certain kinds of assets, enter into certain types of transactions with affiliates, and effect mergers or consolidations.

On September 1, 2023, the Company completed a series of transactions whereby it exchanged validly tendered senior unsecured notes for newly issued senior secured notes (the "Exchange Offers").

Concurrently with the Exchange Offers, the Company also completed a cash tender offer to purchase any and all of the Company's outstanding 2025 Senior Unsecured Notes for cash at a purchase price equal to 85.0 % of the aggregate principal amount thereof (the "Cash Tender Offer" and together with the Exchange Offers, the "Offers").

Upon consummation of the Offers, the Company exchanged Senior Unsecured Notes with an aggregate outstanding principal amount of $ 5.5 billion for $ 4.2 billion in aggregate principal amount of newly issued senior secured notes (collectively the "Senior Secured Notes"), paid $ 341 million in cash for validly tendered 2025 Senior Unsecured Notes, and paid $ 146 million in cash related to accrued and unpaid interest for validly tendered Senior Unsecured Notes.

Additionally, the Company wrote off $ 66 million of debt issuance costs in connection with the Offers.

The Company assessed the Offers to determine whether the transactions represent debt modifications or debt extinguishments under ASC 470.

As a result of certain lenders that participated in the Offers, the Company determined that a majority of the Offers were a debt extinguishment and the remainder of the Offers were a debt modification, which resulted in a gain on debt extinguishment of $ 878 million.

As a result, during the year ended December 31, 2023, the Company initially recognized a $ 40 million premium which is reflected as an addition to the principal balance of the Senior Secured Notes and will be amortized against interest expense over the respective lives of the Senior Secured Notes.

The aggregate principal amounts of the Senior Unsecured Notes that were validly tendered and accepted by the Company in the Offers are set forth in the table below.

Principal Amount Validly Tendered and Accepted

Allocation to Senior Secured Notes Issued

Senior Unsecured Notes

Outstanding Principal Prior to Exchange

Accepted as % of Outstanding

Cash Tender Offer Payment

2028 Senior Secured Notes

2030 Senior Secured Notes

2031 Senior Secured Notes

Total Senior Secured Notes

(in millions, except percentages)

2025 Senior Unsecured Notes

$ 500 $ 402 80.3 % $ 341 $ — $ — $ — $ —

2027 Senior Unsecured Notes

600 568 94.7 % — 102 153 181 436

2028 Senior Unsecured Notes

600 578 96.3 % — 90 135 160 385

2029 Senior Unsecured Notes

750 724 96.6 % — 110 165 195 470

2030 Senior Unsecured Notes

3,275 3,248 99.2 % — 679 1,018 1,205 2,902

$ 5,725 $ 5,520 96.4 % $ 341 $ 981 $ 1,471 $ 1,741 $ 4,193

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Senior Unsecured Notes

The Company has issued various tranches of Senior Unsecured Notes (the "Senior Unsecured Notes") each under a separate indenture, as further described below:

17 unchanged sentences

Total included in long-term debt, net $ 106 $ 106

On October 1, 2025, the Company repaid $ 98 million of its 2025 Senior Unsecured Notes upon maturity using cash on hand.

Each of the 2025, 2027, 2028 and 2029 Senior Unsecured Notes were issued pursuant to an indenture entered into by and among the Company, each of the guarantors party thereto and U.S.

Bank National Association, as trustee.

The 2030 Senior Unsecured Notes were issued pursuant to an indenture entered into by and among the Company, each of the guarantors party thereto and U.S.

The 2030 Senior Unsecured Notes were issued pursuant to an indenture entered into by and among the Company, each of the guarantors party

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

thereto and U.S.

Bank Trust Company, National Association, as trustee.

4 unchanged sentences

Prior to the Unsecured Early Redemption Dates, the Company may also redeem up to 35 % of the aggregate principal amount at a redemption price equal to 100 % plus the respective interest rate specified in the table above, together with accrued and unpaid interest to, but not including, the date of redemption, with the net cash proceeds of certain equity offerings.

With respect to the 2030 Senior Unsecured Notes, the Company may, at its option, redeem in the aggregate up to 10 % of the original aggregate principal amount of the 2030 Senior Unsecured Notes during the period from, and including, May 1, 2025 to, but excluding May 1, 2027, at a redemption price equal to 105.125 % of the 2030 Senior Unsecured Notes to be redeemed, plus accrued and unpaid interest thereon to the relevant redemption rate.

Finally, on or after the Unsecured Early Redemption Dates, the Company may redeem some or all of the Senior Unsecured Notes in whole or in part at redemption prices set forth in each respective indenture, plus accrued and unpaid interest up to but excluding the redemption date.

As discussed above, on September 1, 2023, the Company completed the Offers, including the Exchange Offers to exchange an outstanding principal amount of $ 5.1 billion of the Senior Unsecured Notes for newly issued Senior Secured Notes, and the Cash Tender Offer to purchase an outstanding principal amount of $ 402 million of the 2025 Senior Unsecured Notes, leading to a total reduction of an aggregate outstanding principal amount of $ 5.5 billion of the Senior Unsecured Notes.

In connection with the Exchange Offers, the Company obtained consents from holders of each series of Senior Unsecured Notes to amend the indentures governing the notes to eliminate substantially all of the restrictive covenants as well as certain events of default and related provisions therein, and on August 30, 2023, the Company and the trustee entered into supplemental indentures to effect such amendments.

Real Estate Financing

1 unchanged sentence

As of December 31, 2025, none of these transactions have qualified for sale accounting due to meeting the criteria for finance leases, or forms of continuing involvement, such as repurchase options or renewal periods that extend the lease for substantially all of the asset's remaining useful life, and are therefore accounted for as financing transactions.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

These arrangements require monthly payments and have initial terms of 20 to 25 years.

4 unchanged sentences

Beginning in June 2019, the Company entered into secured borrowing facilities through which it finances certain retained beneficial interests in securitizations whereby the Company sells such interests and agrees to repurchase them for their fair value at a stated time of repurchase.

As of December 31, 2024 and 2023, the Company had pledged $ 354 million and $ 293 million, respectively, of its beneficial interests in securitizations as collateral under the repurchase agreements with expected repurchases ranging from October 2025 to December 2032.

As of December 31, 2025 and 2024, the Company had pledged $ 374 million and $ 354 million, respectively, of its beneficial interests in securitizations as collateral under the repurchase agreements with expected repurchases ranging from March 2026 to June 2033.

The securitization trusts distribute payments related to the Company's pledged beneficial interests in securitizations directly to the lenders, which reduces the beneficial interests in securitizations and the related debt balance.

2 unchanged sentences

The outstanding balance of these facilities, net of unamortized debt issuance costs, was $ 371 million and $ 351 million, as of December 31, 2025 and 2024, respectively, of which $ 148 million and $ 136 million, respectively was included in current portion of long-term debt in the accompanying consolidated balance sheets.

Transportation Fleet Financing

On October 20, 2025, the Company entered into a loan and security agreement (the "Loan Agreement") with Citizens Bank, N.A.

("Citizens Bank"), which provides for up to $ 250 million in aggregate principal amount of loans to finance certain equipment for its transportation fleet.

All loans extended under the Loan Agreement are secured by a first priority lien on the transportation fleet and will mature within four to seven years depending on the attributes of the financed equipment.

At maturity, a final payment of unamortized principal will be due to Citizens Bank.

These outstanding loans will bear interest at a rate based on the applicable SOFR swap rate, with tenors ranging from two and a half to four years , plus an applicable margin

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ranging from 2.80 % to 2.95 % depending on the maturity of the loan.

The Company has the option to prepay the outstanding balances of the loans prior to the Maturity Date.

As of December 31, 2025, the outstanding liability under the Loan Agreement, net of unamortized debt issuance costs, was $ 23 million, of which $ 4 million was included in current portion of long-term debt in the accompanying consolidated balance sheets.

Principal Maturities

The following table summarizes the aggregate principal maturities due in each period for Senior Secured Notes (excluding any accrued PIK interest), Senior Unsecured Notes, real estate financing, and financing of beneficial interests in securitizations as of December 31, 2024.

The following table summarizes the aggregate principal maturities due in each period for Senior Secured Notes, Senior Unsecured Notes, real estate financing, financing of beneficial interests in securitizations, and transportation fleet financing as of December 31, 2025.

Maturities related to financing of beneficial interests in securitizations are estimated based on expected timing of payments from the securitization trusts to the lender.

4 unchanged sentences

As of December 31, 2025, the Company was in compliance with all debt covenants.

NOTE 11 — STOCKHOLDERS' EQUITY (DEFICIT)

NOTE 10 — STOCKHOLDERS' EQUITY

Classes of Common Stock and LLC Units

1 unchanged sentence

Each share of Class A common stock generally entitles its holder to one vote on all matters to be voted on by stockholders.

Each share of Class B common stock held by the Garcia Parties generally entitles its holder to ten votes on all matters to be voted on by stockholders, for so long as the Garcia Parties maintain direct or indirect beneficial ownership of at least 25 % of the outstanding shares of Carvana Co.'s Class A common stock determined on an as-exchanged basis assuming that all of the Class A Units were exchanged for Class A

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

common stock.

All other shares of Class B common stock generally entitle their holders to one vote per share on all matters to be voted on by stockholders.

8 unchanged sentences

The Company may issue shares of Class B common stock only to the extent necessary to maintain these ratios.

Shares of Class B common stock are transferable only if an Original LLC Unitholder elects to exchange them, together with 1.25 times as many LLC Units, for consideration from the Company.

Shares of Class B common stock are transferable only if an Original LLC Unitholder elects to exchange them, together with

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.25 times as many LLC Units, for consideration from the Company.

Such consideration from the Company can be, at the Company's election, either shares of Class A common stock or cash.

4 unchanged sentences

and Moelis & Company LLC to establish an ATM Program, and on July 31, 2024, the Company refreshed the ATM Program by entering into an Amended and Restated Distribution Agreement with Barclays Capital Inc., Citigroup Global Markets Inc., Moelis & Company LLC, and Virtu Americas LLC.

Under the ATM Program as of December 31, 2024, the Company could sell up to the greater of (i) shares of Class A common stock representing an aggregate offering price of $ 1.0 billion or (ii) an aggregate of 35 million shares of Class A common stock, from time to time.

On February 19, 2025, the Company further refreshed the ATM Program by entering into a Second Amended and Restated Distribution Agreement with Barclays Capital Inc., Citigroup Global Markets Inc., and Virtu Americas LLC.

Under the ATM Program the Company could sell up to the greater of (i) shares of Class A common stock representing an aggregate offering price of $ 1.0 billion or (ii) an aggregate of 21 million shares of Class A common stock, from time to time.

As of December 31, 2025, $ 461 million of aggregate offering price remained available to be sold under the ATM Program.

The Company uses the net proceeds from the ATM Program to purchase Class A Units.

There can be no assurance that the Company will sell further shares of Class A common stock through the ATM Program.

The following table summarizes the activity under the ATM Program for the years ended December 31, 2025 and 2024.

December 31, 2024 December 31, 2023

Years Ended December 31,

(in millions, except share and per share amounts)

3 unchanged sentences

$ 539 $ 1,274

(1) Net proceeds were $ 1.264 billion and $ 327 million, respectively, after deducting $ 10 million and $ 9 million, respectively, of commissions and other offering expenses incurred.

(1) Net proceeds were $ 536 million and $ 1.264 billion, respectively, after deducting $ 3 million and $ 10 million, respectively, of commissions and other offering expenses incurred.

Private Placement

On July 17, 2023, the Company entered into a Transaction Support Agreement pursuant to which, among other things, and subject to certain conditions, the Garcia Parties committed to purchase up to $ 126 million of equity in the Company.

In satisfaction of that commitment, on August 18, 2023, the Company entered into a Securities Purchase Agreement with the Garcia Parties providing for the purchase of an aggregate of 3.4 million Class A Units, together with 2.7 million shares of Class B common stock, at a price equivalent to $ 46.31 per share of Class A common stock.

The price equivalent of $ 46.31 per share of Class A common stock was equal to the weighted average sale price per share of Class A common stock sold under the ATM Program through August 18, 2023.

As further described below, Class B common stock is exchangeable for an equivalent

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

number of shares of Class A common stock, which exchange must be accompanied by 1.25 times as many Class A Units.

As exchanged, the price per Class A Unit was $ 37.048 .

The Company may, at its election, pay consideration for such exchange in either shares of Class A common stock or in cash.

The Company used the proceeds therefrom to partially fund the Cash Tender Offer as discussed in Note 10 — Debt Instruments.

The Company used the proceeds therefrom to partially fund the cash tender offer to purchase a portion of the 2025 Senior Unsecured Notes (as defined in Note 9 — Debt Instruments).

Exchange Agreement

4 unchanged sentences

The number of exchangeable Class B Units is determined based on the value of Carvana Co.'s Class A common stock and the applicable participation threshold.

Finally, in connection with each exchange, in order to preserve the required four-to-five ratio between the number of shares of Class A common stock issued and outstanding by Carvana Co.

Finally, in connection with each exchange, in order to preserve the required four-to-five ratio between the number of shares of

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Class A common stock issued and outstanding by Carvana Co.

and the number of Class A Units owned by Carvana Co., an equivalent number of LLC units to the LLC units exchanged are issued to Carvana Co.

The exchanges affected pursuant to the Exchange Agreement during the years ended December 31, 2025 and 2024 were as follows:

December 31, 2024 December 31, 2023

Years Ended December 31,

(in thousands)

8 unchanged sentences

As of December 31, 2025 and 2024, Carvana Co.

held 4.5 million and 4.4 million Class A Non-Convertible Preferred Units, respectively.

held 4.0 million and 4.5 million, respectively, of Class A Non-Convertible Preferred Units.

When Carvana Co.

2 unchanged sentences

repays or otherwise retires, one Class A Non-Convertible Preferred Unit is canceled and retired.

During the year ended December 31, 2024, the Company cancelled and retired 0.47 million of Class A Non-Convertible Preferred Units in conjunction with the repurchases and redemption of 2028 Senior Secured Notes as discussed in Note 10 — Debt Instruments and issued 0.53 million of Class A Non-Convertible Preferred Units in conjunction with the PIK interest payments the Company was required to make on each of February 15 and August 15, 2024.

During the year ended December 31, 2023, the Company cancelled and retired 5.5 million of Class A Non-Convertible Preferred Units in conjunction with the exchange of a portion of its Senior Unsecured Notes for new Senior Secured Notes.

Tax Asset Preservation Plan

On January 16, 2023, the Company entered into a Section 382 Rights Agreement, which was later amended and restated (the “Tax Asset Preservation Plan”).

On June 3, 2024, the Company determined that the Tax Asset Preservation Plan was no longer necessary for the preservation of material valuable Tax Attributes (as defined therein) and set a final expiration date of June 4, 2024, upon which date the preferred share purchase rights expired and the Tax Asset Preservation Plan terminated.

In connection therewith, the associated Series B Preferred Stock underlying the preferred share purchase rights was eliminated by

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

filing of a Certificate of Elimination with the State of Delaware on June 5, 2024, returning such Preferred Stock to authorized but undesignated shares.

During the year ended December 31, 2025, the Company cancelled and retired 0.7 million of Class A Non-Convertible Preferred Units in conjunction with the repurchases and redemption of 2028 Senior Secured Notes and the payoff at maturity of 2025 Senior Unsecured Notes as discussed in Note 9 — Debt Instruments and issued 0.3 million of Class A Non-Convertible Preferred Units in conjunction with the PIK interest payments the Company was required to make on each of February 15 and August 15, 2025.

During the year ended December 31, 2024, the Company cancelled and retired 0.5 million of Class A Non-Convertible Preferred Units in conjunction with the repurchases and redemption of the 2028 Senior Secured Notes as discussed in Note 9 — Debt Instruments and issued 0.5 million of Class A Non-Convertible Preferred Units in conjunction with the PIK interest payments the Company was required to make on each of February 15 and August 15, 2024.

NOTE 11 — NON-CONTROLLING INTERESTS

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Activity related to the Company's equity compensation plans may result in a change in ownership which will impact the amount recorded as non-controlling interest and additional paid-in capital.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The non-controlling interest related to the Class B Units is determined based on the respective participation thresholds and the share price of Class A common stock on an as-converted basis.

To the extent that the number of as-converted Class B Units change or Class B Units are forfeited, the resulting difference in ownership will be accounted for as equity transactions adjusting the non-controlling interest and additional paid-in capital.

During the years ended December 31, 2024, 2023, and 2022, the total adjustments related to exchanges of LLC Units and non-controlling interest related to restricted stock unit ("RSU") vesting and stock option ("NQSO") exercises were an increase in non-controlling interests and a corresponding decrease in additional paid-in capital of $ 33 million, and a decrease in non-controlling interests and a corresponding increase in additional paid-in capital of $ 1 million, and $ 1 million, respectively, which have been included in exchanges of LLC Units and adjustments to non-controlling interests related to RSU vesting and NQSO exercises in the accompanying consolidated statements of stockholders' equity (deficit).

During the years ended December 31, 2025, 2024, and 2023, the total adjustments related to exchanges of LLC Units and non-controlling interest related to restricted stock unit ("RSU") vesting and stock option ("NQSO") exercises were a decrease in non-controlling interests and a corresponding increase in additional paid-in capital of $ 24 million, an increase in non-controlling interests and a corresponding decrease in additional paid-in capital of $ 33 million, and a decrease in non-controlling interests and a corresponding increase in additional paid-in capital of $ 1 million, respectively, which have been included in exchanges of LLC Units and adjustments to non-controlling interests related to RSU vesting and NQSO exercises in the accompanying consolidated statements of stockholders' equity (deficit).

During the years ended December 31, 2025, 2024, and 2023, Carvana Co.

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owned 64.7 % of Carvana Group with the LLC Unitholders owning the remaining 35.3 %.

The net income (loss) attributable to the non-controlling interests on the accompanying consolidated statements of operations represents the portion of the net income (loss) attributable to the economic interest in Carvana Group held by the non-controlling LLC Unitholders calculated based on the weighted average non-controlling interests' ownership during the periods presented.

The net income (loss) attributable to the non-controlling interests on the accompanying consolidated statements of operations represents the portion of the net income attributable to the economic interest in Carvana Group held by the non-controlling LLC Unitholders calculated based on the weighted average non-controlling interests' ownership during the periods presented.

Years Ended December 31,

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Decrease as a result of issuances of Class A and B common stock $ ( 187 ) $ ( 515 ) $ ( 83 )

(Decrease) Increase as a result of exchanges of LLC Units and adjustments to non-controlling interests related to RSU vesting and NQSO exercises ( 33 ) 1 1

Increase (decrease) as a result of exchanges of LLC Units and adjustments to non-controlling interests related to RSU vesting and NQSO exercises 24 ( 33 ) 1

Total transfers to non-controlling interests $ ( 163 ) $ ( 548 ) $ ( 82 )

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — EQUITY-BASED COMPENSATION

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Equity-based compensation, net of capitalized amounts $ 96 $ 91 $ 73

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the years ended December 31, 2025, 2024, and 2023, the Company capitalized $ 8 million, $ 9 million, and $ 7 million, respectively, of equity-based compensation to property and equipment related to software development and $ 3 million, $ 2 million, and $ 1 million, respectively, to inventory related to reconditioning and inbound transportation of vehicles.

All other equity-related compensation is included in selling, general, and administrative expenses in the accompanying consolidated statements of operations.

Equity-based compensation expense in cost of sales was $ 3 million, $ 1 million, and zero during the years ended December 31, 2025, 2024, and 2023, respectively.

Equity-based compensation expense in selling, general and administrative expense was $ 96 million, $ 91 million, and $ 73 million during the years ended December 31, 2025, 2024, and 2023, respectively.

As of December 31, 2025, unrecognized equity-based compensation related to outstanding awards and the related weighted-average period over which it is expected to be recognized subsequent to December 31, 2025 is presented in the table below.

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The number of shares authorized for issuance under the 2017 Incentive Plan is subject to an automatic annual increase (the "Automatic Increase") of the lesser of two percent of the Company's outstanding Class A common stock or an amount determined by the Compensation and Nominating Committee of the Board.

On each of January 1, 2025 and 2024, the number of shares authorized for issuance under the 2017 Incentive Plan increased by two percent of the then outstanding Class A common stock under the Automatic Increase.

In addition, on May 1, 2023, the Company's stockholders approved an amendment to the 2017 Incentive Plan to further increase the number of shares available under the 2017 Incentive Plan by 20 million shares (the "Amendment Increase").

After taking into account the January 1, 2024 Automatic Increase and the Amendment Increase, as of December 31, 2024, 17 million shares of Class A common stock are available for issuance under the 2017 Incentive Plan, which the Company may grant as stock options, stock appreciation rights, restricted stock awards, restricted stock units and other equity-based awards to employees, directors, officers, and consultants.

On January 1, 2025, the number of shares authorized for issuance under the 2017 Incentive Plan increased by two percent of the then outstanding Class A common stock under the Automatic Increase.

As of December 31, 2025, 20 million shares remained available for future equity-based award grants under this plan, which the Company may grant as stock options, stock appreciation rights, restricted stock awards, restricted stock units and other equity-based awards to employees, directors, officers, and consultants.

The majority of equity granted by the Company vests over four-year periods based on continued employment with the Company.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Awards and Restricted Stock Units

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RSUs are settled in shares of Class A common stock on a one -to-one basis within thirty days of vesting.

RSA and RSU activity during the years ended December 31, 2024, 2023, and 2022 was as follows:

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RSA and RSU activity during the years ended December 31, 2025, 2024, and 2023 were as follows:

Number of RSAs/RSUs (in thousands) Weighted-Average Grant-Date Fair Value

Outstanding at January 1, 2023

2,652 $ 52.62

Granted 10,392 $ 13.13

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The Company is authorized to grant up to 0.5 million shares of Class A common stock under the ESPP.

During the years ended December 31, 2024, 2023 and 2022, the Company issued 10,396 , 32,790 and 86,352 shares of Class A common stock, respectively, and as of December 31, 2024, 367,968 shares of Class A common stock remained

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

available for future issuance.

During each of the three years ended December 31, 2024, 2023 and 2022, the Company recognized less than $ 1 million of equity-based compensation expense related to the ESPP.

During the years ended December 31, 2025, 2024 and 2023, the Company issued 5,982 , 10,396 and 32,790 shares of Class A common stock, respectively, and as of December 31, 2025, 361,986 shares of Class A common stock remained available for future issuance.

During each of the years ended December 31, 2025, 2024 and 2023, the Company recognized less than $ 1 million of equity-based compensation expense related to the ESPP.

Non-Qualified Stock Options

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The options typically vest 25 % on the anniversary of the grant date and in equal monthly installments thereafter for a total vesting period of four years and expire ten years after the grant date.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock option activity during the years ended December 31, 2025, 2024, and 2023 was as follows:

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1,402 $ 22.97 7.4 $ 559

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company determined the grant-date fair value of the options granted during the years ended December 31, 2024, 2023, and 2022 using the Black-Scholes valuation model with the following weighted-average assumptions:

The Company did not grant any options during the year ended December 31, 2025.

During the years ended December 31, 2024 and 2023, the Company determined the grant-date fair value of the options granted using the Black-Scholes valuation model with the following weighted-average assumptions:

Years Ended December 31,

2024 2023 2022

Expected volatility (1)

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Expected term (in years) (2)

6.00 6.30 6.28

Risk-free interest rate 4.1 % 3.6 %

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During 2018, the Company granted certain employees Class A Units with service-based vesting over two - to four-year periods and a grant-date fair value of $ 18.58 per Class A Unit.

The grantees entered into the Exchange Agreement under which each LLC Unitholder (and certain permitted transferees thereof) may receive shares of the Company's Class A common stock in exchange for their LLC Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting.

The grantees entered into the Exchange Agreement under which each LLC Unitholder (and certain permitted transferees thereof) may receive shares of the Company's Class A common stock in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

exchange for their LLC Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting.

A summary of the Class A Unit activity for the years ended December 31, 2025, 2024, and 2023 is as follows:

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Exchanged — n/a

Forfeited ( 6 ) $ 18.58

Forfeited — n/a

Outstanding at December 31, 2023

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Expected to vest as of December 31, 2025

NOTE 14 — NET EARNINGS (LOSS) PER SHARE

Basic and diluted net earnings (loss) per share is computed by dividing the net earnings (loss) attributable to Class A common stockholders by the weighted-average shares of Class A common stock outstanding during the period.

Diluted net earnings (loss) per share is computed by giving effect to all potentially dilutive shares.

Potentially dilutive shares have been excluded from the computation of diluted net earnings (loss) per share when their effect is anti-dilutive.

Net earnings (loss) for all periods presented is attributable only to Class A common stockholders, due to no activity related to convertible preferred stock during those periods.

NOTE 13 — NET EARNINGS PER SHARE

Basic and diluted net earnings per share is computed by dividing the net earnings attributable to Class A common stockholders by the weighted-average shares of Class A common stock outstanding during the period.

Diluted net earnings per share is computed by giving effect to all potentially dilutive shares.

Potentially dilutive shares have been excluded from the computation of diluted net earnings per share when their effect is anti-dilutive.

Net earnings for all periods presented is attributable only to Class A common stockholders, due to no activity related to convertible preferred stock during those periods.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the calculation of basic and diluted net earnings (loss) per share during the years ended December 31, 2024, 2023, and 2022:

The following table presents the calculation of basic and diluted net earnings per share during the years ended December 31, 2025, 2024, and 2023:

Years Ended December 31,

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(in millions, except number of shares, which are reflected in thousands, and per share amounts)

Net income (loss) $ 404 $ 150 $ ( 2,894 )

Net income $ 1,895 $ 404 $ 150

Net income (loss) attributable to non-controlling interests 488 194 ( 300 )

Net income (loss) attributable to Carvana Co.

Net income attributable to Carvana Co.

Class A common stockholders - basic 1,407 210 450

Impact on net income of assumed conversions from LLC Units 488 — ( 300 )

Net income (loss) attributable to Carvana Co.

Net income attributable to Carvana Co.

Class A common stockholders - diluted

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Stock Options (1)

3,182 3,173 979

Restricted Stock Units and Awards (1)

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Class A Units (2)

77,760 — 83,976

Class B Units (2)

1,397 — 1,485

Weighted-average shares of Class A common stock outstanding - diluted 224,277 132,206 200,578

Net earnings (loss) per share of Class A common stock - basic $ 1.72 $ 4.12 $ ( 15.74 )

Net earnings (loss) per share of Class A common stock - diluted $ 1.59 $ 0.75 $ ( 15.74 )

Net earnings per share of Class A common stock - basic $ 10.22 $ 1.72 $ 4.12

Net earnings per share of Class A common stock - diluted $ 8.45 $ 1.59 $ 0.75

(1) Calculated using the treasury stock method, if dilutive

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Shares of Class B common stock do not share in the losses or income of the Company and are therefore not participating securities.

As such, separate presentation of basic and diluted net earnings (loss) per share of Class B common stock under the two-class method has not been presented.

As such, separate presentation of basic and diluted net earnings per share of Class B common stock under the two-class method has not been presented.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents potentially dilutive securities, as of the end of the period, excluded from the computations of diluted net earnings (loss) per share of Class A common stock for the years ended December 31, 2024, 2023, and 2022, respectively:

The following table presents potentially dilutive securities, as of the end of the period, excluded from the computations of diluted net earnings per share of Class A common stock for the years ended December 31, 2025, 2024, and 2023, respectively:

Years Ended December 31,

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(in thousands)

365 976 1,265

Restricted Stock Units and Awards (1)

Class A Units (2)

83,509 — 82,963

Class B Units (2)

1,763 — 1,559

(1) Represents number of instruments outstanding at the end of the period that were evaluated under the treasury stock method for potentially dilutive effects and were determined to be anti-dilutive.

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NOTE 14 — INCOME TAXES

As described in Note 1 — Business Organization and Note 11 — Stockholders' Equity (Deficit), as a result of the IPO, Carvana Co.

As described in Note 1 — Business Organization and Note 10 — Stockholders' Equity, as a result of the IPO, Carvana Co.

began consolidating the financial results of Carvana Group.

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federal and certain state and local income taxes.

Any taxable income or loss generated by Carvana Group is passed through to and included in the taxable income or loss of its members, including Carvana Co., based on its allocable share held in Carvana Group.

was formed on November 29, 2016 and did not engage in any operations prior to the IPO.

is taxed as a corporation and is subject to U.S.

federal, state and local income taxes with respect to its allocable share of any taxable income or loss of Carvana Group, as well as any stand-alone income or loss generated by Carvana Co.

Net income (loss) before income taxes was $ 400 million, $ 175 million, and $( 2.9 ) billion for the years ended December 31, 2024, 2023, and 2022, respectively.

The Company had an income tax (benefit) provision of $( 4 ) million, $ 25 million, and $ 1 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Any taxable income or loss generated by Carvana Group is passed through to and included in the taxable income or loss of its members (LLC Unitholders), including Carvana Co., based on its allocable share held in Carvana Group.

Nonetheless, many states require that partnerships make mandatory tax payments on behalf of members who are non-residents of the respective states.

Accordingly, if Carvana Group generates taxable income and is required to remit income tax on behalf of its members, it will make payments to the states through composite tax returns and non-resident withholding.

These payments are treated as distributions to the affected members because the amounts remitted are a payment of income tax on behalf of the affected members.

Payments on behalf of non-controlling members of $ 4 million for the year ended December 31, 2025 are included as reductions to the non-controlling interests in the accompanying consolidated statements of stockholders' equity (deficit).

Payments on behalf of Carvana Co.

Sub LLC are recorded through the income tax provision in the accompanying consolidated statements of operations.

Net (loss) income before income taxes was $( 890 ) million, $ 400 million, and $ 175 million for the years ended December 31, 2025, 2024, and 2023, respectively.

The Company had an income tax (benefit) provision of $( 2.8 ) billion, $( 4 ) million, and $ 25 million for the years ended December 31, 2025, 2024, and 2023, respectively.

During the year ended December 31, 2025, management performed an assessment of the recoverability of deferred tax assets.

This assessment considered both positive and negative evidence related to the likelihood of realization of the deferred tax assets.

(iii) and recorded $ 547 million of income tax benefit as a result of current year activity through income tax (benefit) provision in the accompanying consolidated statements of operations.

The Company will continue to monitor the need for a valuation allowance against its deferred tax assets.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of income tax (benefit) provision are as follows:

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Federal - Total

( 2,320 ) ( 3 ) 21

State - Current 3 ( 1 ) 4

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State - Total

( 465 ) ( 1 ) 4

Income tax (benefit) provision

$ ( 2,785 ) $ ( 4 ) $ 25

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the U.S.

federal rate to the Company’s effective income tax rate is as follows:

As described in Note 2 — Summary of Significant Accounting Policies, the Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures on a retrospective basis.

The following table presents a reconciliation of the (benefit) provision for income taxes to the amount computed by applying the 21% statutory U.S.

federal income tax rate to (loss) income before income taxes:

Years Ended December 31,

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federal income taxes at statutory rate $ ( 187 ) 21.0 % $ 84 21.0 % $ 37 21.0 %

Federal tax credits ( 6 ) 0.7 % ( 1 ) ( 0.3 ) % ( 2 ) ( 1.3 ) %

Non-taxable or non-deductible items:

(Income) Loss attributable to non-controlling interests ( 99 ) 11.1 % ( 42 ) ( 10.6 ) % 61 34.9 %

State taxes 1 0.3 % 19 10.9 % ( 64 ) 2.2 %

Excess tax benefits related to stock-based compensation ( 154 ) 17.3 % ( 68 ) ( 17.0 ) % — — %

Valuation allowance ( 10 ) ( 2.5 ) % ( 96 ) ( 54.9 ) % 398 ( 13.7 ) %

Disallowed interest 16 ( 1.8 ) % 15 3.8 % 5 2.9 %

Benefit of tax credits ( 2 ) ( 0.5 ) % ( 2 ) ( 1.1 ) % — — %

Executive compensation deduction limitation 55 ( 6.2 ) % 17 4.4 % — — %

Other 1 ( 0.1 ) % 2 0.4 % 1 0.9 %

Changes in valuation allowance ( 1,946 ) 218.7 % ( 9 ) ( 2.2 ) % ( 81 ) ( 46.1 ) %

State taxes ( 465 ) 52.2 % ( 2 ) ( 0.5 ) % 4 2.0 %

Income tax (benefit) provision $ ( 2,785 ) 312.9 % $ ( 4 ) ( 1.0 ) % $ 25 14.3 %

For the years ended December 31, 2025, 2024, and 2023, state and local income taxes in California, New Jersey, Florida, and Georgia, comprised the majority (greater than 50 percent) of the tax effect in this category.

For the year ended December 31, 2025, Illinois also comprised the majority of the tax effect in this category.

For the year ended December 31, 2024, Arizona and Massachusetts also comprised the majority of the tax effect in this category.

For the year ended December 31, 2023, Arizona also comprised the majority of the tax effect in this category.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents income taxes paid, net of refunds received, by jurisdiction for the following years:

Years Ended December 31,

2025 2024 2023

(in millions)

Federal $ 4 $ ( 3 ) $ 23

State and local

Indiana $ 1 $ — $ —

Maryland 1 — —

Pennsylvania ( 1 ) — 1

Total $ 6 $ — $ 27

The amount of income taxes paid in Indiana and Maryland during the years ending December 31, 2024 and 2023 does not meet the 5% disaggregation threshold.

Deferred income taxes reflect the net tax effects of temporary differences between the tax basis in an asset or liability and its reported amount under GAAP.

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Cancellation of debt income 276 241

Tax receivable agreement liability 566 20

Total gross deferred tax assets 3,067 2,244

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Total deferred tax assets and liabilities $ 3,064 $ 3

As of both December 31, 2024 and 2023, the Company had federal and state net operating loss carry forwards of $ 1.2 billion.

As of December 31, 2025 and 2024, the Company had federal and state net operating loss carry forwards of $ 1.4 billion and $ 1.2 billion, respectively.

All federal net operating losses can be carried forward indefinitely, certain state net operating losses can be carried forward indefinitely, and others can be carried forward between 8 and 20 years.

As described in Note 11 — Stockholders' Equity (Deficit), the Company acquires LLC Units in connection with exchanges with LLC Unitholders.

During the years ended December 31, 2024 and 2023, the Company recognized a gross deferred tax asset of $ 280 million and less than $ 1 million, respectively, associated with the difference in basis in its investment in Carvana Group related to these acquisitions of LLC Units.

Additionally, as described in Note 11 — Stockholders' Equity (Deficit), the Company issues shares under the ATM Program and utilizes the proceeds from the issuance of Class A common stock to

As described in Note 10 — Stockholders' Equity, the Company acquires LLC Units in connection with exchanges with LLC Unitholders.

During the years ended December 31, 2025 and 2024, the Company recognized a gross deferred tax asset of $ 277 million and $ 280 million, respectively, associated with the difference in basis in its investment in Carvana Group related to these acquisitions of LLC Units.

Additionally, as described in Note 10 — Stockholders' Equity, the Company issues shares under the ATM Program and utilizes the proceeds from the issuance of Class A common stock to purchase Class A Units in

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

purchase Class A Units in Carvana Group.

Carvana Group.

During the years ended December 31, 2025 and 2024, the Company recognized a gross deferred tax asset of $ 1 million and $ 9 million, respectively, associated with the difference in basis in its investment in Carvana Group related to these acquisitions of LLC Units.

As described in Note 10 — Debt Instruments, during the year ended December 31, 2023, the Company completed the Exchange Offers, whereby it exchanged validly tendered Senior Unsecured Notes for newly issued Senior Secured Notes.

tax purposes the Company recognized cancellation of debt income (“CODI”) on the difference between the adjusted issue price of the debt exchanged and the fair market value of the new debt issued.

As a result, during the year ended December 31, 2023, the Company recognized $ 1.4 billion of CODI for tax purposes.

As described in Note 3 — Business Combinations, the Company acquired ADESA on May 9, 2022.

The Company made an election under Section 336(e) of the United States Internal Revenue Code of 1986, as amended (the “Code”) to treat the acquisition as a deemed asset acquisition for income tax purposes and as such received a step up in asset basis and is able to amortize the acquired Goodwill under Section 197 of the Code over a 15-year period.

The total Goodwill amortization expense was $ 56 million for each of the years ended December 31, 2024 and 2023, and $ 37 million for the year ended December 31, 2022.

During the year ended December 31, 2024, management performed an assessment of the recoverability of deferred tax assets.

This assessment considered both objective and subjective factors.

These factors included, but were not limited to, a history of taxable losses in prior years, excess tax benefits related to equity-based compensation, and future reversal of existing temporary differences.

After evaluating all available evidence, management determined, based on the accounting standards applicable to such assessment, that there was sufficient evidence as a result of the Company’s cumulative losses to conclude it was more likely than not that its deferred tax assets would not be realized and has maintained a full valuation allowance against its deferred tax assets.

Given the improvement in the Company's operating results and depending on the amount of equity-based compensation tax deductions available in the future, among other factors, a release of the deferred tax asset valuation allowance may be possible in the next few years.

Release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax provision for the period the release is recorded.

The Company recognizes uncertain income tax positions when it is more-likely-than-not the position will be sustained upon examination.

As of the year ended December 31, 2024 and 2023, the Company has no t identified any uncertain tax positions and has no t recognized any related reserves.

The Company's effective tax rate for the years ended December 31, 2024 and 2023 was a benefit of 1.0 % and an expense of 14.3 %, respectively.

The Company's effective tax rate for the years ended December 31, 2025 and 2024 was a benefit of 312.9 % and 1.0 %, respectively.

Tax Receivable Agreement

expects to obtain an increase in its share of the tax basis in the net assets of Carvana Group when LLC Units are exchanged by the LLC Unitholders and other qualifying transactions.

As described in Note 11 — Stockholders' Equity (Deficit), each change in outstanding shares of Class A common stock results in a corresponding increase or decrease in Carvana Co.'s ownership of LLC Units.

As described in Note 10 — Stockholders' Equity, each change in outstanding shares of Class A common stock results in a corresponding increase or decrease in Carvana Co.'s ownership of LLC Units.

The Company intends to treat any exchanges of LLC Units as direct purchases of LLC interests for U.S.

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To the extent that the Company is unable to timely make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid.

If the Internal Revenue Service or a state or local taxing authority challenges the tax basis adjustments that give rise to payments under the TRA and the tax basis adjustments are subsequently disallowed, the recipients of payments under the

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

agreement will not reimburse the Company for any payments the Company previously made to them.

Any such disallowance would be taken into account in determining future payments under the TRA and would, therefore, reduce the amount of any such future payments.

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or (iii) the Company elects an early termination of the TRA, then the TRA will terminate and the Company's obligations, or the Company's successor’s obligations, under the TRA will accelerate and become due and payable, based on certain assumptions, including an assumption that the Company would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA and that any LLC Units that have not been exchanged are deemed exchanged for the fair market value of the Company's Class A common stock at the time of termination.

As of December 31, 2024 and 2023, the Company recorded a TRA liability of $ 82 million and $ 14 million, respectively, of which $ 61 million and $ 11 million, respectively, will be paid to related parties.

As of December 31, 2024 and 2023, $ 17 million and zero , respectively, is included in other current liabilities and $ 65 million and $ 14 million, respectively, is included in other liabilities on the accompanying consolidated balance sheets.

For the remaining $ 2.0 billion TRA liability as of December 31, 2024, the Company has concluded, based on applicable accounting standards, that it was more likely than not that its deferred tax assets subject to the TRA would not be realized;

therefore, the Company has not recorded an additional liability related to the tax savings it may realize from utilization of such deferred tax assets.

If utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA which will be recognized as expense within its consolidated statements of operations.

In connection with the Company's conclusion that it was more likely than not that its deferred tax assets subject to the TRA would be realized, the Company determined it was probable its remaining TRA liability related to the tax savings it expects to realize from utilization of such deferred tax assets will be paid.

Uncertain Tax Positions

Based on the Company's analysis of tax positions taken on income tax returns filed, no uncertain tax positions existed as of December 31, 2024, 2023, and 2022.

was formed in November 2016 and did not engage in any operations prior to the IPO and associated organizational transactions.

1 unchanged sentence

federal and state income tax purposes.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Carvana Group, LLC is treated as a partnership for U.S.

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These returns are subject to examination by the taxing authorities in the respective jurisdictions, generally for three or four years after they were filed.

The Company recognizes uncertain income tax positions when it is more-likely-than-not the position will be sustained upon examination.

As of December 31, 2025 and 2024, the Company has no t identified any uncertain tax positions and has no t recognized any related reserves.

NOTE 15 — LEASES

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Operating Leases

As of December 31, 2024, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, inspection and reconditioning centers, auction locations, storage, parking, and corporate offices.

As of December 31, 2025, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, inspection and reconditioning centers, auction locations, storage, parking, dealerships, and corporate offices.

The initial terms expire at various dates between 2026 and 2038.

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Refer to Note 6 — Related Party Transactions for further discussion of operating leases with related parties.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Finance Leases

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The Company's finance leases are included in current portion of long-term debt and long-term debt on the accompanying consolidated balance sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease Costs and Activity

The Company's lease costs and activity during the years ended December 31, 2025, 2024, and 2023 were as follows:

Years Ended December 31,

2025 2024 2023

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Fixed lease costs to related parties 3 4 5

Variable short-term lease costs to related parties — — 1

Total operating lease costs $ 66 $ 65 $ 71

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Principal payments on finance lease liabilities $ 94 $ 81 $ 115

(1) The year ended December 31, 2022 includes $ 28 million of lease termination fees, net of amounts written off for the corresponding operating lease right-of-use assets and operating lease liabilities which were terminated.

AND SUBSIDIARIES

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As such, the Company accrues for such repairs based on actual claims incurred to-date and repair reserves based on historical trends.

The liability was $ 21 million and $ 16 million, as of December 31, 2024 and 2023, respectively, and is included in accounts payable and other accrued liabilities in the accompanying consolidated balance sheets.

The expense was $ 116 million, $ 87 million, and $ 144 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

The liability was $ 25 million and $ 21 million, as of December 31, 2025 and 2024, respectively, and is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.

The expense was $ 154 million, $ 116 million, and $ 87 million for the years ended December 31,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2025, 2024, and 2023, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

Purchase Obligations

The Company has purchase obligations for certain customary services related to operating a wholesale auction business of $ 109 million in aggregate over the next four years , as of December 31, 2024.

The Company has purchase obligations for certain customary services related to operating a wholesale auction business of $ 84 million in aggregate over the next three years , as of December 31, 2025.

These purchase obligations are recorded as liabilities when the services are rendered.

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From time to time, the Company is involved in various claims, legal actions, and governmental inquiries.

For example, the Company is currently a party to legal and regulatory disputes, including intellectual property disputes, putative class action lawsuits, and shareholder derivative lawsuits, alleging, among other things, patent infringement, the violation of federal securities and antitrust laws and state laws regarding consumer protection, stockholders' rights, and the titling and registration of vehicles sold to its customers.

For example, the Company is currently a party to legal and regulatory disputes, including intellectual property disputes and putative class action lawsuits, alleging, among other things, patent infringement, the violation of federal securities laws and state laws regarding consumer protection, stockholders' rights, labor and employment, and the titling and registration of vehicles sold to its customers.

These disputes include, but are not limited to, Carvana, LLC v.

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5:21-cv-05400-EGS);

and Syretta Harvin et al.

Syretta Harvin et al.

Carvana, LLC et al.

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2:23-cv-02068-MRP);

In 2024, In re Carvana Co.

Stockholders Litigation , Delaware Chancery Court (Case No.

2020-0415-KSJM) was dismissed, all charges against Company officers and directors brought in In re Carvana Co.

Stockholders Litigation , Delaware Chancery Court (Case No.

2023-0600-KSJM) were dismissed, and Michael Cribier v.

Carvana, LLC , United States District Court for the Southern District of California (Case No.

3:24-cv-00094-DMS-JLB) was settled for an immaterial amount.

Additionally, the Attorney General offices of various states, from time to time, conduct inquiries regarding the Company's inspection, reconditioning, advertising, sale, delivery, titling, registration, and post-sale service of retail vehicles.

and Saleem Erakat v Carvana Operations HC LLC , N.D.

3:26-cv-00263-AGT.

The Company works closely with government agencies to respond to these requests and fully cooperates with any such inquiries, which if not amicably resolved, have resulted and may again result in state Attorney General offices filing claims against the Company.

The Company believes the claims or counterclaims against the Company in the legal matters above are not material or are without merit, as may be applicable, and intends to defend the matters vigorously.

As of December 31, 2024 and 2023, the Company has an accrual for unresolved legal matters, including, if applicable, those discussed above, of $ 10 million and $ 3 million, respectively.

The accrual is classified in accounts payable and accrued expenses in the accompanying consolidated balance sheets and selling, general and administrative expenses in the accompanying statements of operations.

If an unfavorable ruling or development were to occur, there exists the possibility of a material adverse impact on the Company's business, results of operations, financial condition, or cash flows.

Securities Class Action

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was filed in the United States District Court for the District of New Jersey against the Company and certain of the Company's executive officers.

The complaint was filed on behalf of a purported class of stockholders and asserts violations of Section 10(b) and 20(a) of the Exchange Act and Rule 10b-5.

The complaint was filed on behalf of a purported class of stockholders and asserts violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934.

as amended (the "Exchange Act") and Rule 10b-5.

The complaint sought unspecified damages and an award of fees, costs, and expenses.

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Carvana Co., et al.

was filed in the United States District Court for the District of New Jersey, alleging similar claims against the same defendants, and seeking the same form of relief.

was filed in the United States District Court for the District of New Jersey, alleging similar claims, and seeking the same form of relief.

The two cases were then consolidated and subsequently transferred to the United States District Court for the District of Arizona (the "Arizona District Court") as In re Carvana Co.

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On December 16, 2024, the Company's motion to dismiss the consolidated complaint, as amended, was granted with respect to alleged violations of Section 20A of the Exchange Act and Section 12(a)(2) of the Securities Act, granted in part and denied in part with respect to alleged violations of Section 10(b) and Rule 10b-5 of the Exchange Act and Section 11 of the Securities Act, and denied with respect to alleged violations of Section 20(a) of the Exchange Act and Section 15 of the Securities Act.

The Company intends to vigorously defend the remaining claims under this action in all respects.

At this time, the Company is not

The Company is engaged in discovery and intends to continue vigorously defending the remaining claims under this action in all respects.

At this time, the Company is not in a position to assess the likelihood of any potential loss or adverse effect on its financial condition or to estimate the amount or range of potential losses, if any, from this action.

As of December 31, 2025 and 2024, the Company had an accrual for unresolved legal matters, including, if applicable, those discussed above, of $ 14 million and $ 10 million, respectively.

If an unfavorable ruling or development were to occur, there exists the possibility of a material adverse impact on the Company's business, results of operations, financial condition, or cash flows.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in a position to assess the likelihood of any potential loss or adverse effect on its financial condition or to estimate the amount or range of potential losses, if any, from this action.

Future litigation may be necessary to defend the Company and its partners by determining the scope, enforceability and validity of third-party proprietary rights or to establish its proprietary rights.

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$ 486 $ — $ — $ 486

Purchase price adjustment receivables

$ 58 $ — $ — $ 58

Root Warrants

$ 120 $ — $ — $ 120

December 31, 2024

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$ 2 $ — $ — $ 2

Root Warrants

$ 120 $ — $ — $ 120

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The Company's beneficial interests in securitizations include rated notes and certificates and other assets, all of which are classified as Level 3 due to the lack of observable market data.

The Company determines the fair value of its rated notes based

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

on non-binding broker quotes.

The Company determines the fair value of its rated notes based on non-binding broker quotes.

The non-binding broker quotes are based on models that consider the prevailing interest rates, recent market transactions, and current business conditions.

The Company determines the fair value of its certificates and other assets using a combination of non-binding market quotes and internally developed discounted cash flow models.

The discounted cash flow models use discount rates based on prevailing interest rates and the characteristics of the specific instruments.

The discounted cash flow models use discount rates based on prevailing interest rates and the characteristics of the specific

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2025 and 2024, the range of discount rates were 5.2 % to 10.0 % and 6.0 % to 10.0 %, respectively, and the weighted average of discount rates were 9.0 % and 9.7 %, respectively.

1 unchanged sentence

The Company elected the fair value option on its beneficial interests in securitizations, which allows it to recognize changes in the fair value of these assets in the period the fair value changes.

Changes in the fair value of the beneficial interests in securitizations are reflected in other (income) expense, net in the accompanying consolidated statements of operations.

Changes in the fair value of the beneficial interests in securitizations are reflected in other expense (income), net in the accompanying consolidated statements of operations.

For beneficial interests in securitizations measured at fair value on a recurring basis, the Company's transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period on a quarterly basis.

There were no transfers out of Level 3 during the years ended December 31, 2024 and 2023.

There were no transfers out of Level 3 during the years ended December 31, 2025 or 2024.

The Company sells certain of its beneficial interests in securitizations that are not required to be retained by the Risk Retention Rules.

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The Company's purchase price adjustment receivables are carried at fair value and classified as other assets and other current assets in the accompanying consolidated balance sheets.

Under the MPSA, the purchaser will make future cash payments to the Company based on the performance of the finance receivables sold.

The fair value of the purchase price adjustment receivables are determined based on the extent to which the Company’s estimated performance of the underlying finance receivables exceeds a mutually agreed upon performance threshold of the underlying finance receivables as of measurement dates specified in the MPSA.

Under the Ally MPSA, the purchaser will make future cash payments to the Company based on the performance of the finance receivables sold.

The Company develops its estimate of future cumulative losses based on the historical performance of finance receivables it originated with similar characteristics as well as general macro-economic trends.

1 unchanged sentence

Due to the lack of observable market data these receivables are classified as Level 3.

The adjustments to the fair value of the purchase price adjustment receivables were a loss of of less than $ 1 million and gain of $ 1 million during the years ended December 31, 2024 and 2023, respectively, and are reflected in other (income) expense, net in the accompanying consolidated statements of operations.

The adjustments to the fair value of the purchase price adjustment receivables were a gain of $ 2 million and a loss of less than $ 1 million during the years ended December 31, 2025 and 2024, respectively, and are reflected in other expense (income), net in the accompanying consolidated statements of operations.

The Company received the final payment associated with these purchase price adjustment receivables in September 2025.

Root Warrants

7 unchanged sentences

In accordance with the provisions of the commercial agreement, the Company received eight tranches of warrants to purchase shares of Root's Class A common stock (the "Root Warrants").

On September 1, 2022, the integrated auto insurance solution, which embedded into the Company's e-commerce platform was completed.

The first tranche of Root Warrants, consisting of 2.4 million shares of Root's Class A common stock, became exercisable upon completion of the integrated solution, and is considered a derivative instrument.

The second tranche of Root Warrants, consisting of 3.2 million shares of Root's Class A common stock, became exercisable on November 14, 2023, and the third tranche, consisting of 1.6 million shares of Root's Class A common stock, became exercisable on May 3, 2024.

Both the second and third tranche of the Root Warrants became exercisable upon the achievement of certain insurance sales metrics through the integrated solution, and are considered derivative investments.

The other tranches vest based on a combination of the arrival of certain dates and further insurance product sales through the integrated solution and are considered derivative instruments.

The Company used a Monte Carlo simulation to estimate the fair value of these Root Warrants, which are classified as Level 3.

Under this Monte Carlo simulation, the primary unobservable input utilized in determining the fair value of the Root Warrants was the expected volatility of Root's class A common stock, which was implied from the historical volatility of their stock.

As of December 31, 2024 and 2023, the expected volatility utilized in the Monte Carlo simulation was 100 % and 85 %, respectively.

At contract inception, the Company recognized an asset of $ 30 million for the Root Warrants and deferred revenue, classified in other assets and other liabilities, respectively in the accompanying consolidated balance sheets.

In 2022, the Company determined it was probable that the volume of insurance products required to earn the Root Warrants would be achieved and recorded an additional $ 75 million of Root Warrants and deferred revenue based on the contract inception date fair value as determined by the Monte Carlo simulation.

As of December 31, 2024 and 2023, the deferred revenue balance was $ 57 million and $ 78 million, respectively, and the Company recognized $ 21 million in Root Warrant revenue during each of the years ended December 31, 2024 and 2023, and $ 7 million during the year ended December 31, 2022.

The Root Warrants and deferred revenue are classified in other assets and other liabilities, respectively, in the accompanying consolidated balance sheets.

Three tranches of Root Warrants, for 2.4 million, 3.2 million, and 1.6 million shares of Root's Class A common stock, respectively, expired on September 1, 2025.

Also on September 1, 2025, a fourth tranche of Root Warrants for 1.4 million shares of Root's Class A common stock became exercisable upon achievement of certain insurance sales metrics through the integrated auto insurance solution embedded into the Company's e-commerce platform.

The remaining four tranches vest based upon achievement of additional defined milestones tied to insurance sales through the integrated solution and are considered derivative instruments.

All remaining tranches of Root Warrants, including the fourth tranche that became exercisable on September 1, 2025, expire September 1, 2027.

Through June 30, 2025, the Company used a Monte Carlo simulation to estimate the fair value of these Root Warrants.

The expiration of the first three tranches of Root Warrants on September 1, 2025, eliminated the prior interdependencies between the different tranches of Root Warrants.

After September 1, 2025, the Company used a Black-Scholes model to estimate the fair value of these Root Warrants, which are classified as Level 3.

The primary unobservable input utilized in determining the fair value of the Root Warrants was the expected volatility of Root's class A common stock, which was implied from the historical volatility of such common stock.

As of December 31, 2025 and 2024, the expected volatility utilized in the valuations was 90 % and 100 %, respectively.

At contract inception, the Company recognized an asset of $ 30 million for the Root Warrants and deferred revenue, classified in other assets and other liabilities, respectively.

As of December 31, 2025 and 2024, the deferred revenue balance was $ 36 million and $ 57 million, respectively, and the Company recognized $ 21 million in Root Warrant revenue during each of the years ended December 31, 2025, 2024, and 2023.

The deferred revenue is recognized over the expected contract performance period within other sales and revenues in the accompanying consolidated statements of operations.

3 unchanged sentences

Opening balance

Unrealized gain

Unrealized (loss) gain

Ending balance

In relation to the Root Warrants, the Company recognized an increase in fair value of $ 115 million and $ 3 million during the years ended December 31, 2024 and 2023, respectively, which are included in other (income) expense, net in the accompanying consolidated statements of operations.

Interest Rate Caps

The Company utilizes non-designated cash flow hedges including interest rate cap agreements to minimize its exposure to interest rate fluctuations on variable rate debt borrowings.

Interest rate caps provide that the counterparty will pay the purchaser at the end of each contractual period in which the index interest rate exceeds the contractually agreed upon cap rate.

During the year ended December 31, 2023, the Company entered into two interest rate cap agreements to limit exposure to interest rate risk on variable rate debt associated with finance receivables.

The two interest rate caps each had cap rates of 5.0 %, notional amounts of $ 364 million and $ 236 million, and expiry dates of July 2027 and April 2027, respectively.

The fair value of the Company's interest rate caps is impacted by the credit risk of both the Company and its counterparty.

The Company has an agreement with its derivative financial instrument counterparty that contains provisions providing that if the Company defaults on the indebtedness associated with its derivative financial instrument, then the Company could also be

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

declared in default on its derivative financial instrument obligation.

In addition, the Company minimizes nonperformance risk on its derivative instrument by evaluating the creditworthiness of its counterparty, which is limited to major banks and financial institutions.

The Company does not apply hedge accounting to the interest rate caps and records all mark-to-market adjustments directly to other (income) expense, net in the accompanying consolidated statements of operations.

The fair value of the interest rate caps is categorized as Level 2 in the fair value hierarchy as they are based on well-recognized financial principles and available market data.

For the year ended December 31, 2023, the Company recognized mark-to-market adjustments of $ 2 million of expense within other (income) expense, net in the accompanying consolidated statements of operations.

The interest rate caps were terminated during the year ended December 31, 2023.

In relation to the Root Warrants, the Company recognized a decrease in fair value of $ 64 million and an increase in fair value of $ 115 million during the years ended December 31, 2025 and 2024, respectively, which are included in other expense (income), net in the accompanying consolidated statements of operations.

Fair Value of Financial Instruments

3 unchanged sentences

The carrying value of the financing of beneficial interests in securitizations was determined to approximate fair value because in the event of a decline in the fair value of the pledged collateral of the financing, the repurchase price of the pledged collateral will be increased by the amount of the decline.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the Senior Notes, which are not carried at fair value on the accompanying consolidated balance sheets, was determined using Level 2 inputs based on quoted market prices for the identical liability.

10 unchanged sentences

Fair value $ 886 $ 670

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 — SUPPLEMENTAL CASH FLOW INFORMATION

6 unchanged sentences

$ 336 $ 115 $ 538

Cash payments for taxes

Non-cash investing and financing activities:

Capital expenditures financed through long-term debt $ 23 $ — $ —

Capital expenditures included in accounts payable and accrued liabilities $ 6 $ 1 $ 1

1 unchanged sentence

Property and equipment acquired under finance leases $ 70 $ 1 $ 51

Warrants to acquire Root Class A common stock $ — $ — $ 75

Equity-based compensation expense capitalized to property and equipment $ 8 $ 9 $ 8

1 unchanged sentence

Reductions of beneficial interests in securitizations and associated long-term debt $ 155 $ 130 $ 110

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of the same amounts shown in the accompanying consolidated statements of cash flows for all periods presented:

4 unchanged sentences

Total cash, cash equivalents and restricted cash $ 2,429 $ 1,760 $ 594

NOTE 20 — SUBSEQUENT EVENTS

Master Purchase and Sale Agreement

Finance Receivable Facilities

On January 15, 2025, the Company amended one of its agreements governing one of its short-term revolving credit facilities to, among other things, extend the maturity date to April 15, 2026.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On February 19, 2025, the Company entered into a Second Amended and Restated Distribution Agreement (the "Second A&R Distribution Agreement") with Barclays Capital Inc., Citigroup Global Markets Inc., and Virtu Americas LLC to further refresh its ATM Program, whereby the Company may sell up to the greater of (i) a number of shares of Class A common stock representing an aggregate offering price of $ 1.0 billion or (ii) an aggregate of 21,016,898 shares of its Class A common stock, from time to time.

In connection therewith, the Company intends to file a Registration Statement on Form S-3 on February 19, 2025 in connection with the offer and sale of shares contemplated by the Second A&R Distribution Agreement.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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 8. Financial Statements and Supplementary Data