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Item 1. Financial Statements

2026-07-29 compared with 2026-04-29 · 273 added, 197 removed, 849 unchanged (36% of the section changed)

3 unchanged sentences

(In millions, except number of shares, which are reflected in thousands, and par values)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Current assets:

29 unchanged sentences

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

none issued and outstanding as of each of March 31, 2026 and December 31, 2025

none issued and outstanding as of each of June 30, 2026 and December 31, 2025

Class A common stock, $ 0.001 par value - 2,500,000 shares authorized;

143,004 and 142,230 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

718,978 and 711,148 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Class B common stock, $ 0.001 par value - 625,000 shares authorized;

76,109 shares issued and outstanding as of each of March 31, 2026 and December 31, 2025

380,547 shares issued and outstanding as of each of June 30, 2026 and December 31, 2025

Additional paid-in capital 3,476 3,449

8 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Sales and operating revenues:

1 unchanged sentence

Wholesale sales and revenues, including $ 13 , $ 9 , $ 26 and $ 17 , respectively, from related parties

1,343 1,024 2,421 1,887

Other sales and revenues, including $ 117 , $ 83 , $ 231 and $ 155 , respectively, from related parties

526 411 1,052 800

Net sales and operating revenues 7,376 4,840 13,808 9,072

Cost of sales, including $ 4 , $ 4 , $ 9 and $ 7 , respectively, to related parties

5,992 3,776 11,153 7,079

Gross profit 1,384 1,064 2,655 1,993

Selling, general and administrative expenses, including $ 12 , $ 8 , $ 22 and $ 15 , respectively, to related parties

704 551 1,394 1,086

Other operating expense, net — 2 — 2

8 unchanged sentences

Net income attributable to Carvana Co.

$ 310 $ 183 $ 560 $ 399

Net earnings per share of Class A common stock - basic $ 0.43 $ 0.27 $ 0.78 $ 0.59

20 unchanged sentences

Balance, March 31, 2025 671,994 $ 1 395,597 $ — $ 2,703 $ ( 1,200 ) $ 269 $ 1,773

Net income — — — — — 183 125 308

Exchanges of LLC Units and adjustments to non-controlling interests related to RSU vesting and NQSO exercises 4,080 — ( 3,275 ) — 5 — ( 5 ) —

Tax payments made on behalf of non-controlling members — — — — — — ( 2 ) ( 2 )

Establishment of deferred tax assets related to increases in tax basis in Carvana Group — — — — 64 — — 64

Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group — — — — ( 64 ) — — ( 64 )

Issuance of Class A common stock to settle vested RSUs 3,476 — — — — — — —

Issuance of Class A common stock under ESPP 15 — — — 1 — — 1

RSUs surrendered in lieu of withholding taxes — — — — ( 9 ) — — ( 9 )

Options exercised 2,925 — — — 16 — — 16

Equity-based compensation — — — — 30 — — 30

Balance, June 30, 2025 682,490 $ 1 392,322 $ — $ 2,746 $ ( 1,017 ) $ 387 $ 2,117

AND SUBSIDIARIES

14 unchanged sentences

Balance, March 31, 2026 715,019 $ 1 380,547 $ — $ 3,478 $ 241 $ 912 $ 4,632

Net income — — — — — 310 203 513

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

Tax payments made on behalf of non-controlling members — — — — — — ( 2 ) ( 2 )

Issuance of Class A common stock to settle vested RSUs 3,566 — — — — — — —

Issuance of Class A common stock under ESPP 22 — — — 2 — — 2

RSUs surrendered in lieu of withholding taxes — — — — ( 36 ) — — ( 36 )

Options exercised 371 — — — 1 — — 1

Equity-based compensation — — — — 28 — — 28

Balance, June 30, 2026 718,978 $ 1 380,547 $ — $ 3,476 $ 551 $ 1,110 $ 5,138

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(Unaudited, in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows from Operating Activities:

64 unchanged sentences

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 March 31, 2026, Carvana Co.

As of June 30, 2026, Carvana Co.

owned approximately 65.0 % of Carvana Group and the LLC Unitholders (as defined in Note 10 — Stockholders' Equity) owned the remaining 35.0 %.

5 unchanged sentences

However, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included within the Company's most recent Annual Report on Form 10-K filed on February 18, 2026.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring items) necessary to present fairly the Company’s financial position as of March 31, 2026, results of operations, changes in stockholders' equity, and cash flows for the three months ended March 31, 2026 and 2025.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring items) necessary to present fairly the Company’s financial position as of June 30, 2026, results of operations, changes in stockholders' equity, and cash flows for the three and six months ended June 30, 2026 and 2025.

Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations.

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On May 5, 2026, the Company's stockholders approved a five-for-one forward stock split of the Company's Class A common stock and Class B common stock (the "Stock Split"), which was effected on May 8, 2026 through the filing of a Certificate of Amendment to the Company's Amended and Restated Certificate of Incorporation.

Stockholders of record as of May 6, 2026 received four additional shares of Class A common stock or Class B common stock, as applicable, for each share held.

In connection with the Stock Split, the number of authorized shares of Class A common stock increased from 500 million to 2.5 billion and the number of authorized shares of Class B common stock increased from 125 million to 625 million.

The par value of $ 0.001 per share was not adjusted and an amount equal to the par value of the additional shares resulting from the Stock Split was reclassified from additional paid-in capital to common stock.

All share and per share data throughout this Quarterly Report on Form 10-Q, including weighted-average shares outstanding, earnings per share, equity-based compensation awards, and LLC unit participation thresholds, have been retroactively adjusted to give effect to the Stock Split for all periods presented.

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 three months ended March 31, 2026, the Company extended and upsized one of its short-term revolving credit facilities through June 2027.

During the three months ended June 30, 2026, the Company entered into a new short-term revolving credit facility to fund certain finance receivables originated by the Company through November 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.

15 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Segment information for the three months ended March 31, 2026 and 2025 are as follows:

Three Months Ended March 31,

Segment information for the three and six months ended June 30, 2026 and 2025 are as follows:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(in millions)

3 unchanged sentences

Compensation and benefits

237 201 482 400

Advertising 121 84 239 156

Market occupancy

274 212 534 423

Other operating expense, net — 2 — 2

14 unchanged sentences

NOTE 3 — PROPERTY AND EQUIPMENT, NET

The following table summarizes property and equipment, net as of March 31, 2026 and December 31, 2025:

The following table summarizes property and equipment, net as of June 30, 2026 and December 31, 2025:

2026 December 31,

10 unchanged sentences

Property and equipment, net $ 2,859 $ 2,814

Depreciation and amortization expense on property and equipment in cost of sales was $ 28 million and $ 31 million during the three months ended March 31, 2026 and 2025, respectively.

Depreciation and amortization expense on property and equipment in selling, general and administrative expense was $ 39 million and $ 37 million during the three months ended March 31, 2026 and 2025, respectively.

Depreciation and amortization expense on property and equipment in cost of sales was $ 27 million during each of the three months ended June 30, 2026 and 2025.

Depreciation and amortization expense on property and equipment in selling, general and administrative expense was $ 40 million and $ 37 million during the three months ended June 30, 2026 and 2025, respectively.

Depreciation and amortization expense on property and equipment in cost of sales was $ 55 million and $ 58 million during the six months ended June 30, 2026 and 2025, respectively.

Depreciation and amortization expense on property and equipment in selling, general and administrative expense was $ 79 million and $ 74 million during the six months ended June 30, 2026 and 2025, respectively.

NOTE 4 — GOODWILL AND INTANGIBLE ASSETS, NET

During the three months ended March 31, 2026, the Company acquired one franchise dealership for total purchase consideration of $ 11 million, comprised of $ 3 million in cash and $ 8 million in trade vehicle floor plan payables.

The purchase price was allocated to tangible assets of $ 8 million and indefinite-lived franchise rights of $ 3 million.

The acquisition was not material to the Company's financial condition or results of operations.

The following table summarizes goodwill and intangible assets, net as of March 31, 2026 and December 31, 2025:

During the six months ended June 30, 2026, the Company separately acquired two franchise dealerships for total purchase consideration of $ 40 million, comprised of $ 19 million in cash and $ 21 million in trade vehicle floor plan payables.

The purchase price was allocated to net tangible assets of $ 29 million, indefinite-lived franchise rights of $ 9 million, and goodwill of $ 2 million.

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 June 30, 2026 and December 31, 2025:

2026 December 31,

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Amortization expense was $ 1 million and $ 5 million during the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, the remaining weighted-average amortization period for definite-lived intangible assets was 2.4 years.

The anticipated annual amortization expense to be recognized in future years as of March 31, 2026 is as follows:

Amortization expense was $ 2 million and $ 4 million during the three months ended June 30, 2026 and 2025, respectively, and $ 3 million and $ 9 million during the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, the remaining weighted-average amortization period for definite-lived intangible assets was 2.3 years.

The anticipated annual amortization expense to be recognized in future years as of June 30, 2026 is as follows:

Expected Future

2 unchanged sentences

NOTE 5 — ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following table summarizes accounts payable and accrued liabilities as of March 31, 2026 and December 31, 2025:

The following table summarizes accounts payable and accrued liabilities as of June 30, 2026 and December 31, 2025:

2026 December 31,

1 unchanged sentence

Accounts payable, including $ 33 and $ 21 , respectively, due to related parties

Reserve for returns and cancellations 144 121

Trade floor plan payables 220 64

Accrued compensation and benefits 132 103

Reserve for returns and cancellations 156 121

Accrued interest expense 138 138

Sales taxes and vehicle licenses and fees 104 102

Accrued insurance 102 85

Accrued interest expense 51 138

Accrued compensation and benefits 71 103

Customer deposits 59 51

23 unchanged sentences

Costs allocated to inventory are recognized as cost of sales when the inventory is sold.

Total costs related to these operating lease agreements, including those noted above, were less than $ 1 million and $ 1 million during the three months ended March 31, 2026 and 2025, respectively, allocated between inventory and selling, general and administrative expenses.

Total costs related to these operating lease agreements, including those noted above, were less than $ 1 million during each of the three months ended June 30, 2026 and 2025 and $ 1 million during each of the six months ended June 30, 2026 and 2025 allocated between inventory and selling, general and administrative expenses.

Office Leases

2 unchanged sentences

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 DriveTime was less than $ 1 million during each of the three months ended March 31, 2026 and 2025.

The rent expense incurred under the lease with DriveTime was less than $ 1 million during each of the three and six months ended June 30, 2026 and 2025.

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 $ 11 million and $ 4 million of wholesale sales and revenues from DriveTime during the three months ended March 31, 2026 and 2025, respectively.

The Company purchased $ 4 million and $ 3 million of vehicles from DriveTime through competitive auctions that are open to other dealers during the three months ended March 31, 2026 and 2025, respectively.

As a result, the Company recognized $ 10 million and $ 6 million of wholesale sales and revenues from DriveTime during the three months ended June 30, 2026 and 2025, respectively, and $ 21 million and $ 10 million during the six months ended June 30, 2026 and 2025, respectively.

The Company purchased $ 4 million and $ 3 million of vehicles from DriveTime through competitive auctions that are open to other dealers during the three months ended June 30, 2026 and 2025, respectively, and $ 8 million and $ 6 million during the six months ended June 30, 2026 and 2025, respectively.

Wholesale Marketplace Revenues

2 unchanged sentences

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

As a result, the Company recognized $ 2 million and $ 4 million of wholesale sales and revenues from DriveTime during the three months ended March 31, 2026 and 2025, respectively.

The Company recognized zero and less than $ 1 million of cost of sales to DriveTime related to reconditioning services during the three months ended March 31, 2026 and 2025, respectively.

Master Dealer Agreement

In December 2016, the Company entered into a master dealer agreement with DriveTime (the "Master Dealer Agreement"), most recently amended in April 2021, pursuant to which the Company may sell VSCs to customers purchasing a vehicle from the Company.

The Company earns a commission on each VSC sold to its customers and DriveTime is obligated by and

As a result, the Company recognized $ 3 million of wholesale sales and revenues from DriveTime during each of the three months ended June 30, 2026 and 2025 and $ 5 million and $ 7 million during the six months ended June 30, 2026 and 2025, respectively.

The Company recognized zero and less than $ 1 million of cost of sales to DriveTime related to reconditioning services during the three months ended June 30, 2026 and 2025, respectively, and zero and less than $ 1 million during the six months ended June 30, 2026 and 2025, respectively.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

subsequently administers the VSCs.

Master Dealer Agreement

The Company earns a commission on each VSC sold to its customers and DriveTime is obligated by and subsequently administers the VSCs.

The Company collects the retail purchase price of the VSCs from its customers and remits the purchase price net of commission to DriveTime.

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 three months ended March 31, 2026 and 2025, the Company recognized $ 111 million and $ 70 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 unaudited condensed consolidated statements of operations.

During the three months ended June 30, 2026 and 2025, the Company recognized $ 113 million and $ 81 million, respectively, and during the six months ended June 30, 2026 and 2025, the Company recognized $ 224 million and $ 151 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 unaudited condensed consolidated statements of operations.

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

The Company pays a per-vehicle fee to DriveTime to administer the limited warranty included with every purchase.

The Company incurred $ 7 million and $ 5 million during the three months ended March 31, 2026 and 2025, respectively, related to the administration of limited warranty.

The Company incurred $ 10 million and $ 6 million during the three months ended June 30, 2026 and 2025, respectively, and $ 17 million and $ 11 million during the six months ended June 30, 2026 and 2025, respectively, related to the administration of limited warranty.

Profit Sharing Agreement

4 unchanged sentences

In March 2026, the Profit Sharing Agreement was amended to include additional vehicle service contracts.

The Company recognized $ 3 million and $ 2 million in revenue during the three months ended March 31, 2026 and 2025, respectively, under the Profit Sharing Agreement.

The Company recognized $ 4 million and $ 2 million in revenue during the three months ended June 30, 2026 and 2025, respectively, and $ 7 million and $ 4 million during the six months ended June 30, 2026 and 2025, respectively, 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 $ 2 million during each of the three months ended March 31, 2026 and 2025 related to these services.

The Company sold no finance receivables to DriveTime or any of its affiliates in each of the three months ended March 31, 2026 and 2025.

During the three months ended March 31, 2026 and 2025, DriveTime, as servicer, exercised its optional clean-up call on certain 2019, 2020, and 2021 securitization trusts.

The Company incurred expenses of $ 2 million and $ 1 million during the three months ended June 30, 2026 and 2025, respectively, and $ 4 million and $ 3 million during the six months ended June 30, 2026 and 2025, respectively, related to these services.

The Company sold no finance receivables to DriveTime or any of its affiliates in each of the six months ended June 30, 2026 and 2025.

During the six months ended June 30, 2026 and 2025, DriveTime, as servicer, exercised its optional clean-up call on certain 2019, 2020, and 2021 securitization trusts.

Optional clean-up calls are customary features of automobile securitization transactions and typically exercised when a loan pool has amortized down to a pre-determined percentage of its original balance.

These clean-up calls resulted in the Company receiving less than $ 1 million during each of the three months ended March 31, 2026 and 2025, attributable to its retained interests in such trusts at the time of exercise.

These clean-up calls resulted in the Company receiving zero during each of the three months ended June 30, 2026 and 2025 and less than $ 1 million and zero during the six months ended June 30, 2026 and 2025, respectively, attributable to its retained interests in such trusts at the time of exercise.

Aircraft Time Sharing Agreement

3 unchanged sentences

Either the Company or DriveTime can terminate the agreement with 30 days’ prior written notice.

The Company reimbursed DriveTime less than $ 1 million under this agreement during each of the three months ended March 31, 2026 and 2025.

Accounts Payable Due to Related Party

As of March 31, 2026 and December 31, 2025, $ 35 million and $ 21 million, respectively, was due to related parties primarily related to the agreements mentioned above, and is included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company reimbursed DriveTime less than $ 1 million under this agreement during each of the three and six months ended June 30, 2026 and 2025.

Accounts Payable Due to Related Party

As of June 30, 2026 and December 31, 2025, $ 33 million and $ 21 million, respectively, was due to related parties primarily related to the agreements mentioned above, and is included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

Tax Receivable Agreement Liability

As further discussed in Note 14 — Income Taxes, as of March 31, 2026 and December 31, 2025, the Company recorded a tax receivable agreement ("TRA") liability of $ 2.2 billion and $ 2.3 billion, respectively, of which $ 1.7 billion in both periods is due to related parties.

As further discussed in Note 14 — Income Taxes, as of June 30, 2026 and December 31, 2025, the Company recorded a tax receivable agreement ("TRA") liability of $ 2.2 billion and $ 2.3 billion, respectively, of which $ 1.7 billion in both periods is due to related parties.

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

During the three months ended March 31, 2026 and 2025, the Company made TRA payments of $ 37 million and $ 17 million, respectively, of which $ 29 million and $ 13 million, respectively, was paid to related parties.

During the six months ended June 30, 2026 and 2025, the Company made TRA payments of $ 37 million and $ 17 million, respectively, of which $ 29 million and $ 13 million, respectively, was paid to related parties.

Tax Payments on Behalf of Non-Controlling Members

5 unchanged sentences

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.

During the three months ended March 31, 2026 and 2025, the Company made mandatory composite and non-resident withholding tax payments on behalf of non-controlling members of $ 2 million in each period, of which $ 1 million and $ 2 million, respectively, was paid on behalf of related parties.

During the three months ended June 30, 2026 and 2025, the Company made mandatory composite and non-resident withholding tax payments on behalf of non-controlling members of $ 2 million in each period, of which $ 2 million and $ 1 million, respectively, was paid on behalf of related parties.

During the six months ended June 30, 2026 and 2025, the Company made mandatory composite and non-resident withholding tax payments on behalf of non-controlling members of $ 4 million in each period, of which $ 3 million in each period was paid on behalf of related parties.

NOTE 7 — FINANCE RECEIVABLE SALE AGREEMENTS

9 unchanged sentences

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 three months ended March 31, 2026 and 2025, the Company sold $ 1.6 billion and $ 0.8 billion, respectively, in principal balances of finance receivables under the Ally MPSA, and had $ 3.3 billion of unused capacity as of March 31, 2026.

On July 27, 2026, the Company and Ally amended the Ally MPSA to, among other things, increase the commitment by Ally to purchase up to $ 8.0 billion of principal balances of finance receivables between July 27, 2026 and July 26, 2027 on substantially similar terms as the preceding Ally MPSA.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During the three months ended June 30, 2026 and 2025, the Company sold $ 2.1 billion and $ 1.2 billion, respectively, in principal balances of finance receivables under the Ally MPSA.

During the six months ended June 30, 2026 and 2025, the Company sold $ 3.7 billion and $ 2.0 billion, respectively, in principal balances of finance receivables under the Ally MPSA, and had $ 1.2 billion of unused capacity as of June 30, 2026.

Securitization Transactions

3 unchanged sentences

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 8 — Securitizations and Variable Interest Entities.

During the three months ended March 31, 2026 and 2025, the Company sold $ 1.0 billion and $ 0.9 billion, respectively, in principal balances of finance receivables through securitization transactions.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During the three months ended June 30, 2026 and 2025, the Company sold $ 1.10 billion and $ 0.7 billion, respectively, in principal balances of finance receivables through securitization transactions.

During the six months ended June 30, 2026 and 2025, the Company sold $ 2.15 billion and $ 1.6 billion, respectively, in principal balances of finance receivables through securitization transactions.

Fixed Pool Loan Sales

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 three months ended March 31, 2026 and 2025, the Company completed fixed pool loan sales of $ 1.4 billion and $ 0.8 billion, respectively, in principal balances of finance receivables to unrelated third parties and had $ 9.9 billion of unused capacity as of March 31, 2026.

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

During the three months ended June 30, 2026 and 2025, the Company completed fixed pool loan sales of $ 1.5 billion and $ 1.2 billion, respectively, in principal balances of finance receivables to unrelated third parties.

During the six months ended June 30, 2026 and 2025, the Company completed fixed pool loan sales of $ 2.9 billion and $ 2.0 billion, respectively, in principal balances of finance receivables to unrelated third parties and had $ 8.7 billion of unused capacity as of June 30, 2026.

Gain on Loan Sales

The total gain related to finance receivables sold to financing partners and pursuant to securitization transactions was $ 354 million and $ 273 million during the three months ended March 31, 2026 and 2025, respectively, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

The total gain related to finance receivables sold to financing partners and pursuant to securitization transactions was $ 349 million and $ 274 million during the three months ended June 30, 2026 and 2025, respectively, and $ 703 million and $ 547 million during the six months ended June 30, 2026 and 2025, respectively, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

NOTE 8 — SECURITIZATIONS AND VARIABLE INTEREST ENTITIES

8 unchanged sentences

The securitization trusts established in connection with asset-backed securitization transactions are VIEs.

For each VIE that the Company establishes in its role as sponsor of securitization transactions, it performs an analysis to determine whether or not it is the primary beneficiary of the VIE.

The Company’s continuing involvement with the VIEs consists of retaining a portion of the securities issued by the VIEs, providing industry standard representations and warranties regarding the underlying finance receivables, and performing ministerial duties as the trust administrator.

As of March 31, 2026, the Company was not the primary beneficiary of these securitization trusts because its retained interests in the VIEs do not have exposures to losses or benefits that could potentially be significant to the VIEs.

As such, the Company does not consolidate the securitization trusts.

The assets the Company retains in the unconsolidated VIEs are presented as beneficial interests in securitizations on the accompanying unaudited condensed consolidated balance sheets, which as of March 31, 2026 and December 31, 2025 were $ 492 million and $ 486 million, respectively.

The Company held no other assets or liabilities related to its involvement with unconsolidated VIEs as of March 31, 2026 and December 31, 2025.

For each VIE that the Company establishes in its role as sponsor of securitization transactions, it performs an analysis to determine whether or not

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 March 31, 2026 and December 31, 2025.

it is the primary beneficiary of the VIE.

As of June 30, 2026, the Company was not the primary beneficiary of these securitization trusts because its retained interests in the VIEs do not have exposures to losses or benefits that could potentially be significant to the VIEs.

As such, the Company does not consolidate the securitization trusts.

The assets the Company retains in the unconsolidated VIEs are presented as beneficial interests in securitizations on the accompanying unaudited condensed consolidated balance sheets, which as of June 30, 2026 and December 31, 2025 were $ 502 million and $ 486 million, respectively.

The Company held no other assets or liabilities related to its involvement with unconsolidated VIEs as of June 30, 2026 and December 31, 2025.

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.

1 unchanged sentence

As such, the total exposure presented below is not an indication of the Company's expected losses.

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Carrying Value Total Exposure Carrying Value Total Exposure

6 unchanged sentences

These securities are interests in securitization trusts, thus there are no contractual maturities.

The amortized cost and fair value of securities available for sale as of March 31, 2026 and December 31, 2025 were as follows:

March 31, 2026 December 31, 2025

The amortized cost and fair value of securities available for sale as of June 30, 2026 and December 31, 2025 were as follows:

June 30, 2026 December 31, 2025

Amortized Cost Fair Value Amortized Cost Fair Value

6 unchanged sentences

NOTE 9 — DEBT INSTRUMENTS

Debt instruments, excluding finance leases, which are discussed in Note 15 — Leases, as of March 31, 2026 and December 31, 2025 consisted of the following:

Debt instruments, excluding finance leases, which are discussed in Note 15 — Leases, as of June 30, 2026 and December 31, 2025 consisted of the following:

2026 December 31,

27 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of March 31, 2026, the Company had $ 79 million outstanding under the Floor Plan Facility, unused capacity of $ 1.4 billion, and held $ 4 million in restricted cash related to the Floor Plan Facility.

During the three months ended March 31, 2026, the Company's effective interest rate on the Floor Plan Facility was 4.35 %.

As of June 30, 2026, the Company had $ 126 million outstanding under the Floor Plan Facility, unused capacity of $ 1.4 billion, and held $ 6 million in restricted cash related to the Floor Plan Facility.

During the three months ended June 30, 2026, the Company's effective interest rate on the Floor Plan Facility was 4.44 %.

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.

13 unchanged sentences

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.

In May 2026, the Company entered into an agreement pursuant to which a seventh lender agreed to provide a $ 500 million revolving credit facility to fund certain finance receivables originated by the Company until November 8, 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 March 31, 2026 and December 31, 2025, the Company had zero outstanding under these Finance Receivable Facilities each period, unused capacity of $ 3.6 billion and $ 3.5 billion, respectively, and held less than $ 1 million and $ 2 million, respectively, in restricted cash related to these Finance Receivable Facilities.

During the three months ended March 31, 2026, the Company's effective interest rate on these Finance Receivable Facilities was 5.06 %.

As of June 30, 2026 and December 31, 2025, the Company had zero outstanding under these Finance Receivable Facilities each period, unused capacity of $ 4.1 billion and $ 3.5 billion, respectively, and held less than $ 1 million and $ 2 million, respectively, in restricted cash related to these Finance Receivable Facilities.

During the three months ended June 30, 2026, the Company's effective interest rate on these Finance Receivable Facilities was 5.69 %.

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

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 March 31,

Senior Secured Notes June 30,

2026 December 31,

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The indentures governing 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.

During the three months ended March 31, 2025, the Company repurchased $ 52 million of principal amount of the then outstanding 2028 Senior Secured Notes in the open market for $ 55 million, which included less than $ 1 million of accrued interest.

During the six months ended June 30, 2025, the Company repurchased $ 52 million of principal amount of the then outstanding 2028 Senior Secured Notes in the open market for $ 55 million, which included less than $ 1 million of accrued interest.

The repurchased notes were canceled upon receipt.

The repurchases are treated as an extinguishment of debt, with any realized discount (premium) recognized as a gain (loss) on debt extinguishment in the accompanying unaudited condensed 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, during the three months ended March 31, 2025, the Company recognized a net loss on debt extinguishment of $ 2 million which included less than $ 1 million of transaction fees and write-offs of related unamortized debt issuance costs and unamortized premium.

As a result of the repurchases, during the six months ended June 30, 2025, the Company recognized a net loss on debt extinguishment of $ 2 million which included less than $ 1 million of transaction fees and write-offs of related unamortized debt issuance costs and unamortized premium.

AND SUBSIDIARIES

15 unchanged sentences

Total principal amount 107 107

current portion

unamortized debt issuance costs

9 unchanged sentences

The Company finances certain purchases and construction of its property and equipment through various sale and leaseback transactions.

As of March 31, 2026, 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.

As of June 30, 2026, 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.

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

Some of the agreements are subject to renewal options of up to 25 years and some are subject to base rent increases throughout the term.

As of both March 31, 2026 and December 31, 2025, the outstanding liability associated with these sale and leaseback arrangements, net of unamortized debt issuance costs, was $ 482 million and was included in long-term debt in the accompanying unaudited condensed consolidated balance sheets.

As of both June 30, 2026 and December 31, 2025, the outstanding liability associated with these sale and leaseback arrangements, net of unamortized debt issuance costs, was $ 482 million and was included in long-term debt in the accompanying unaudited condensed consolidated balance sheets.

Financing of Beneficial Interests in Securitizations

As discussed in Note 8 — Securitizations and Variable Interest Entities, the Company has retained certain beneficial interests in securitizations pursuant to the Company’s obligations as a sponsor under the Risk Retention Rules.

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.

Beginning in June 2019, the Company entered into secured borrowing facilities through which it finances certain retained beneficial interests

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of March 31, 2026 and December 31, 2025, the Company had pledged $ 386 million and $ 374 million, respectively, of its beneficial interests in securitizations as collateral under the repurchase agreements with expected repurchases ranging from May 2026 to June 2033.

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 June 30, 2026 and December 31, 2025, the Company had pledged $ 396 million and $ 374 million, respectively, of its beneficial interests in securitizations as collateral under the repurchase agreements with expected repurchases ranging from September 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.

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In the event of a decline in the fair value of the pledged collateral, the repurchase price of the pledged collateral will be increased by the amount of the decline.

The outstanding balance of these facilities, net of unamortized debt issuance costs, was $ 383 million and $ 371 million as of March 31, 2026 and December 31, 2025, respectively, of which $ 151 million and $ 148 million, respectively, was included in current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

The outstanding balance of these facilities, net of unamortized debt issuance costs, was $ 393 million and $ 371 million as of June 30, 2026 and December 31, 2025, respectively, of which $ 146 million and $ 148 million, respectively, was included in current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

Transportation Fleet Financing

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The Company has the option to prepay the outstanding balances of the loans prior to the maturity date.

As of March 31, 2026 and December 31, 2025, the outstanding liability under the Loan Agreement was $ 47 million and $ 23 million, respectively, of which $ 8 million and $ 4 million, respectively, was included in current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

As of March 31, 2026, the Company was in compliance with all debt covenants.

As of June 30, 2026 and December 31, 2025, the outstanding liability under the Loan Agreement was $ 90 million and $ 23 million, respectively, of which $ 15 million and $ 4 million, respectively, was included in current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

As of June 30, 2026, the Company was in compliance with all debt covenants.

NOTE 10 — STOCKHOLDERS' EQUITY

Classes of Common Stock and LLC Units

Carvana Co.'s amended and restated certificate of incorporation, among other things, authorizes (i) 50 million shares of Preferred Stock, par value $ 0.01 per share, (ii) 500 million shares of Class A common stock, par value $ 0.001 per share, and (iii) 125 million shares of Class B common stock, par value $ 0.001 per share.

On May 5, 2026, the Company's stockholders approved a five-for-one forward Stock Split of its issued and outstanding shares of Class A common stock and Class B common stock, as discussed in Note 2 — Summary of Significant Accounting Policies.

Carvana Co.'s amended and restated certificate of incorporation, among other things, authorizes (i) 50 million shares of Preferred Stock, par value $ 0.01 per share, (ii) 2.5 billion shares of Class A common stock, par value $ 0.001 per share, and (iii) 625 million shares of Class B common stock, par value $ 0.001 per share.

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

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and the number of Class A Units owned by Carvana Co.

(subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities and subject to adjustment as set forth in the exchange agreement (the "Exchange Agreement") further discussed below, and taking into account Carvana Co.

Sub LLC's 0.1 % ownership interest in Carvana, LLC) and (ii) a four-to-five ratio between the number of shares of Class B common stock owned by the original holders of LLC Units prior to the IPO (the "Original LLC Unitholders") and the number of Class A Units owned by the Original LLC Unitholders.

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

(subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities and subject to adjustment as set forth in the exchange agreement (the "Exchange

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Agreement") further discussed below, and taking into account Carvana Co.

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.

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

As of March 31, 2026 and December 31, 2025, there were 274 million and 273 million Class A Units, respectively, and 2 million of Class B Units at each period (as adjusted for the participation thresholds and closing price of Class A common stock on March 31, 2026 and December 31, 2025), issued and outstanding.

As of June 30, 2026 and December 31, 2025, there were 1.4 billion Class A Units and 8.1 million Class B Units in both periods (as adjusted for the participation thresholds and closing price of Class A common stock on June 30, 2026 and December 31, 2025), issued and outstanding.

As discussed in Note 12 — Equity-Based Compensation, Class B Units were issued under the Company’s LLC Equity Incentive Plan (the "LLC Equity Incentive Plan") and are subject to a participation threshold, and are earned over the requisite service period.

3 unchanged sentences

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 March 31, 2026, $ 461 million of aggregate offering price remained available to be sold under the ATM Program.

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 105 million shares of Class A common stock (giving effect to the Stock Split), from time to time.

As of June 30, 2026, $ 461 million of aggregate offering price remained available to be sold under the ATM Program.

The Company has used 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.

There was no activity pursuant to the ATM Program during the three months ended March 31, 2026 and 2025.

There was no activity pursuant to the ATM Program during the three and six months ended June 30, 2026 and 2025.

Exchange Agreement

6 unchanged sentences

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 three months ended March 31, 2026 and 2025 were as follows:

Three Months Ended March 31,

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The exchanges affected pursuant to the Exchange Agreement during the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(in thousands)

LLC Units exchanged by certain LLC Unitholders

— 5,107 166 5,452

Shares of Class B common stock retired

— 3,275 — 3,275

Newly issued Class A common stock

— 4,080 133 4,353

LLC Units received by Carvana Co.

— 5,099 166 5,441

Class A Non-Convertible Preferred Units

In accordance with the Carvana Group, LLC amended and restated LLC Agreement, and in connection with the issuance of Senior Secured Notes or Senior Unsecured Notes by Carvana Co., Carvana Group, LLC is authorized to issue Class A Non-Convertible Preferred Units to Carvana Co.

In each case, the consideration for the capital contribution made or deemed to have

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

been made by Carvana Co.

In each case, the consideration for the capital contribution made or deemed to have been made by Carvana Co.

is equal to the net proceeds of notes issuances.

As of March 31, 2026 and December 31, 2025, Carvana Co.

As of June 30, 2026 and December 31, 2025, Carvana Co.

held 4.0 million of Class A Non-Convertible Preferred Units in both periods.

3 unchanged sentences

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

During the three months ended March 31, 2026, the Company did not cancel and retire or issue any Class A Non-Convertible Preferred Units.

During the three months ended March 31, 2025, the Company canceled and retired 0.1 million of Class A Non-Convertible Preferred Units in conjunction with the repurchases of 2028 Senior Secured Notes and issued 0.1 million of Class A Non-Convertible Preferred Units in conjunction with the PIK interest payments the Company was required to make on February 15, 2025.

During the three and six months ended June 30, 2026, the Company did not cancel and retire or issue any Class A Non-Convertible Preferred Units.

During the six months ended June 30, 2025, the Company canceled and retired 0.1 million of Class A Non-Convertible Preferred Units in conjunction with the repurchases of 2028 Senior Secured Notes and issued 0.1 million of Class A Non-Convertible Preferred Units in conjunction with the PIK interest payments the Company was required to make on February 15, 2025.

NOTE 11 — NON-CONTROLLING INTERESTS

10 unchanged sentences

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 three months ended March 31, 2026 and 2025, 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 $ 3 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 unaudited condensed consolidated statements of stockholders' equity.

As of March 31, 2026, Carvana Co.

During the six months ended June 30, 2026 and 2025, 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

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

non-controlling interests and a corresponding increase in additional paid-in capital of $ 6 million during each period 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 unaudited condensed consolidated statements of stockholders' equity.

As of June 30, 2026, Carvana Co.

owned approximately 65.0 % of Carvana Group with the LLC Unitholders owning the remaining 35.0 %.

The net income attributable to the non-controlling interests on the accompanying unaudited condensed 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.

Three Months Ended March 31,

Six Months Ended June 30,

(in millions)

2 unchanged sentences

Total transfers from non-controlling interests

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 12 — EQUITY-BASED COMPENSATION

Equity-based compensation is recognized based on amortizing the grant-date fair value on a straight-line basis over the requisite service period, which is generally the vesting period of the award, less actual forfeitures.

A summary of equity-based compensation recognized during the three months ended March 31, 2026 and 2025 is as follows:

Three Months Ended March 31,

A summary of equity-based compensation recognized during the three and six months ended June 30, 2026 and 2025 is as follows:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(in millions)

Restricted Stock Units $ 25 $ 26 $ 51 $ 47

Options 3 4 8 9

Total equity-based compensation 28 30 59 56

2 unchanged sentences

Equity-based compensation, net of capitalized amounts $ 25 $ 27 $ 52 $ 50

During the three months ended March 31, 2026 and 2025, the Company capitalized $ 3 million and $ 2 million, respectively, of equity-based compensation to property and equipment related to software development and $ 1 million each period to inventory related to reconditioning and inbound transportation of vehicles.

Equity-based compensation expense in cost of sales was $ 1 million during each of the three months ended March 31, 2026 and 2025.

Equity-based compensation expense in selling, general and administrative expense was $ 26 million and $ 25 million during the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, the total unrecognized equity-based compensation related to outstanding awards was $ 212 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years.

During the three months ended June 30, 2026 and 2025, the Company capitalized $ 2 million during each period of equity-based compensation to property and equipment related to software development and $ 1 million each period to inventory related to reconditioning and inbound transportation of vehicles.

During the six months ended June 30, 2026 and 2025, the Company capitalized $ 5 million and $ 4 million, respectively, of equity-based compensation to property and equipment related to software development and $ 2 million each period to inventory related to reconditioning and inbound transportation of vehicles.

Equity-based compensation expense in cost of sales was $ 1 million and less than $ 1 million during the three months ended June 30, 2026 and 2025, respectively, and $ 2 million and $ 1 million during the six months ended June 30, 2026 and 2025, respectively.

Equity-based compensation expense in selling, general and administrative expense was $ 25 million during each of the three months ended June 30, 2026 and 2025 and $ 52 million and $ 50 million during the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, the total unrecognized equity-based compensation related to outstanding awards was $ 181 million, which the Company expects to recognize over a weighted-average period of approximately 2.5 years.

Total unrecognized equity-based compensation will be adjusted for actual forfeitures.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2026 Omnibus Incentive Plan

In connection with the IPO, the Company adopted the 2017 Omnibus Incentive Plan (the "2017 Incentive Plan").

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 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 March 31, 2026, 20 million shares remained available for future equity-based award grants under this plan.

On May 5, 2026, following stockholder approval at the Company's 2026 Annual Shareholder Meeting, the Company adopted the 2026 Omnibus Incentive Plan (the "2026 Incentive Plan") which superseded and replaced the 2017 Omnibus Incentive Plan (the "2017 Incentive Plan").

Pursuant to the terms of the 2026 Incentive Plan, no new awards have been made under the 2017 Incentive Plan since May 5, 2026, and no new awards will be made thereafter.

However, the 2017 Incentive Plan remains in effect solely with respect to awards previously granted thereunder until such awards have been exercised, forfeited, canceled, or have otherwise expired or terminated in accordance with their terms.

Any shares of Class A common stock that remained available for new awards under the 2017 Incentive Plan immediately prior to May 5, 2026 became available for issuance under the 2026 Incentive Plan.

In addition, any shares underlying awards outstanding under the 2017 Incentive Plan that subsequently expire, are forfeited, or terminate without having been exercised or settled in full become available for issuance under the 2026 Incentive Plan.

The number of shares authorized for issuance under the 2026 Incentive Plan is subject to an automatic annual 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.

As of June 30, 2026, 99.2 million shares remained available for future equity-based award grants under the 2026 Incentive Plan.

Employee Stock Purchase Plan

4 unchanged sentences

The Company is authorized to grant up to 2.5 million shares of Class A common stock under the ESPP.

During the three months ended March 31, 2026 and 2025, the Company did not issue any shares of Class A common stock and as of March 31, 2026, 361,986 shares of Class A common stock remained available for future issuance.

During each of the three months ended March 31, 2026 and 2025, the Company recognized less than $ 1 million of equity-based compensation expense related to the ESPP.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During the six months ended June 30, 2026 and 2025, the Company issued 22,094 and 15,440 shares of Class A common stock and as of June 30, 2026, 1.8 million shares of Class A common stock remained available for future issuance.

During each of the three and six months ended June 30, 2026 and 2025, the Company recognized less than $ 1 million of equity-based compensation expense related to the ESPP.

Class A Units

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Class B Units do not expire.

There were no Class B Units issued during the three months ended March 31, 2026 or 2025.

As of March 31, 2026, outstanding Class B Units had participation thresholds between $ 0.00 to $ 12.00 .

There were no Class B Units issued during the three and six months ended June 30, 2026 or 2025.

As of June 30, 2026, outstanding Class B Units had participation thresholds between $ 0.00 to $ 2.40 .

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.

Diluted net earnings per

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents the calculation of basic and diluted net earnings per share during the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

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.

All amounts have been adjusted to give retroactive effect to the Stock Split for all periods presented.

The following table presents the calculation of basic and diluted net earnings per share during the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

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

3 unchanged sentences

Class A common stockholders - basic and diluted

Weighted-average shares of Class A common stock outstanding 142,749 134,058

$ 310 $ 183 $ 560 $ 399

Weighted-average shares of Class A common stock outstanding - basic 717,691 677,070 715,728 673,699

1 unchanged sentence

Stock Options (1)

12,749 16,352 12,956 16,819

Restricted Stock Units (1)

9,520 22,731 11,490 24,093

Weighted-average shares of Class A common stock outstanding - diluted 739,960 716,153 740,174 714,611

4 unchanged sentences

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.

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 three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(in thousands)

4 unchanged sentences

Class B Units (2)

6,487 6,961 6,490 7,309

(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.

(2) Represents the weighted-average as-converted LLC units that were evaluated under the if-converted method for potentially dilutive effects and were determined to be anti-dilutive.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 14 — INCOME TAXES

9 unchanged sentences

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 $ 2 million for each of the three months ended March 31, 2026 and 2025 are included as reductions to the non-controlling interests in the accompanying unaudited condensed consolidated statements of stockholders' equity.

Payments on behalf of non-controlling members of $ 2 million for each of the three months ended June 30, 2026 and 2025, and $ 4 million for each of the six months ended June 30, 2026 and 2025 are included as reductions to the non-controlling interests in the accompanying unaudited condensed consolidated statements of stockholders' equity.

Payments on behalf of Carvana Co.

1 unchanged sentence

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

During the three months ended March 31, 2026 and 2025, the Company recognized a gross deferred tax asset of $ 2 million and $ 3 million, respectively, associated with the difference in basis in its investment in Carvana Group related to these acquisitions of LLC Units.

During the three months ended June 30, 2026 and 2025, the Company recognized a gross deferred tax asset of zero and $ 64 million, respectively, and $ 2 million and $ 67 million during the six months ended June 30, 2026 and 2025, respectively, associated with the difference in basis in its investment in Carvana Group related to these acquisitions of LLC Units.

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

As of March 31, 2026 and December 31, 2025, the Company has no t identified any uncertain tax positions and has no t recognized any related reserves.

The Company's effective tax rates for the three months ended March 31, 2026 and 2025 were 8.1 % and 0.5 %, respectively.

As of June 30, 2026 and December 31, 2025, the Company has no t identified any uncertain tax positions and has no t recognized any related reserves.

The Company's effective tax rates for the three months ended June 30, 2026 and 2025 were 11.4 % and 0.0 %, respectively, and for the six months ended June 30, 2026 and 2025 were 10.0 % and 0.3 %, respectively.

The Company's tax provision for interim periods is determined by using an estimated annual effective tax rate based on anticipated blended federal and state income tax rates, adjusted for discrete items arising in that quarter.

Each quarter, the Company updates the estimated annual effective tax rate and make a year-to-date adjustment to the provision.

Each quarter, the Company updates the estimated annual effective tax rate and makes a year-to-date adjustment to the provision.

The increase in its effective tax rate was primarily due to the impact of releasing the valuation allowance on its deferred tax assets in the fourth quarter of 2025.

The Company's effective tax rate for the three months ended March 31, 2026 differed from the expected U.S.

The Company's effective tax rate for the three and six months ended June 30, 2026 differed from the expected U.S.

federal statutory rate of 21% primarily due to income attributable to non-controlling interests and excess tax benefits related to stock-based compensation.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Tax Receivable Agreement

12 unchanged sentences

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

2 unchanged sentences

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 March 31, 2026 and December 31, 2025, the Company recorded a TRA liability of $ 2.2 billion and $ 2.3 billion, respectively, of which $ 1.7 billion each period is due to related parties.

As of March 31, 2026 and December 31, 2025, $ 98 million and $ 37 million, respectively, are included in other current liabilities on the accompanying unaudited condensed consolidated balance sheets.

The following table presents a roll forward of the Company's TRA liability from December 31, 2025, the first period in which the remaining TRA liability was recorded, through March 31, 2026.

Comparative roll forward information for the period from December 31, 2024 through March 31, 2025 has not been presented because the remaining TRA liability had not been recorded as of December 31, 2024.

Three Months Ended March 31, 2026

As of June 30, 2026 and December 31, 2025, the Company recorded a TRA liability of $ 2.2 billion and $ 2.3 billion, respectively, of which $ 1.7 billion each period is due to related parties.

As of June 30, 2026 and December 31, 2025, $ 99 million and $ 37 million, respectively, are included in other current liabilities on the accompanying unaudited condensed consolidated balance sheets.

The following table presents a roll forward of the Company's TRA liability from December 31, 2025, the first period in which the remaining TRA liability was recorded, through June 30, 2026.

Comparative roll forward information for the period

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

from December 31, 2024 through June 30, 2025 has not been presented because the remaining TRA liability had not been recorded as of either period.

Three Months Ended June 30, Six Months Ended June 30,

(in millions)

Beginning balance

Reductions to TRA:

$ 2,228 $ 2,265

Additions (Reductions) to TRA:

Accrued interest 1 1

Ending balance

current portion

( 99 ) ( 99 )

TRA liability, net of current portion

$ 2,130 $ 2,130

NOTE 15 — LEASES

4 unchanged sentences

Operating Leases

As of March 31, 2026, 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.

As of June 30, 2026, 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 2039.

1 unchanged sentence

The Company leases and subleases certain of its real estate to third parties.

Lease and sublease income for each of the three months ended March 31, 2026 and 2025 was $ 2 million and is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Lease and sublease income for each of the three months ended June 30, 2026 and 2025 was $ 2 million and for each of the six months ended June 30, 2026 and 2025 was $ 4 million and is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying unaudited condensed consolidated balance sheets.

4 unchanged sentences

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

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Lease Costs and Activity

The Company's lease costs and activity during the three months ended March 31, 2026 and 2025 were as follows:

Three Months Ended March 31,

The Company's lease costs and activity during the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(in millions)

16 unchanged sentences

Maturity Analysis of Lease Liabilities

The following table summarizes maturities of lease liabilities as of March 31, 2026:

The following table summarizes maturities of lease liabilities as of June 30, 2026:

Operating Leases (1)

13 unchanged sentences

(2) Related party lease payments exclude rent payments due under the DriveTime lease agreements for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of March 31, 2026 and December 31, 2025, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

As of June 30, 2026 and December 31, 2025, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of March 31, 2026 and 2025 were as follows, excluding short-term operating leases:

As of March 31,

The weighted-average remaining lease terms and discount rates as of June 30, 2026 and 2025 were as follows, excluding short-term operating leases:

As of June 30,

Weighted-average remaining lease terms (years)

8 unchanged sentences

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 $ 30 million and $ 25 million as of March 31, 2026 and December 31, 2025, respectively, and is included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

The liability was $ 29 million and $ 25 million as of June 30, 2026 and December 31, 2025, respectively, and is included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

The expense was $ 54 million and $ 36 million for the three

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

months ended March 31, 2026 and 2025, respectively, and is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

months ended June 30, 2026 and 2025, respectively, and $ 103 million and $ 71 million for the six months ended June 30, 2026 and 2025, respectively, and is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

Purchase Obligations

The Company has purchase obligations for certain customary services related to operating a wholesale auction business of $ 78 million in aggregate over the next three years , as of March 31, 2026.

The Company has purchase obligations for certain customary services related to operating a wholesale auction business of $ 71 million in aggregate over the next three years , as of June 30, 2026.

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

1 unchanged sentence

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 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.

, United States District Court for the Southern District of New York (Case No.

7:23-cv-08616-KMK-VR);

Dana Jennings, et al.

For example, the Company is currently a party to legal and regulatory disputes, including putative class action lawsuits, alleging, among other things, 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 Dana Jennings, et al.

Carvana, LLC , United States District Court for the Eastern District of Pennsylvania (Case No.

5:21-cv-05400-EGS);

and Syretta Harvin et al.

5:21-cv-05400-EGS) and Syretta Harvin et al.

Carvana, LLC et al.

1 unchanged sentence

2:23-cv-02068-MRP).

Saleem Erakat v.

Carvana, LLC v.

, United States District Court for the Southern District of New York (Case No.

7:23-cv-08616-KMK-VR) and Saleem Erakat v.

Carvana Operations HC LLC , N.D.

3:26-cv-00263-AGT was settled for an immaterial amount during the three months ended March 31, 2026.

3:26-cv-00263-AGT) were settled for immaterial amounts during the six months ended June 30, 2026.

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, lending practices, and post-sale service of retail vehicles.

15 unchanged sentences

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.

On April 6, 2026, the plaintiff filed a motion for class certification, which Carvana opposed and the Court has not yet ruled on.

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 March 31, 2026 and December 31, 2025, the Company had an accrual for unresolved legal matters, including, if applicable, those discussed above, of $ 14 million each period.

The accrual is classified in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets and selling, general and administrative

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

expenses in the accompanying unaudited condensed consolidated statements of operations.

As of June 30, 2026 and December 31, 2025, the Company had an accrual for unresolved legal matters, including, if applicable, those discussed above, of $ 10 million and $ 14 million, respectively.

The accrual is classified in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets and selling, general and administrative expenses in the accompanying unaudited condensed consolidated 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.

4 unchanged sentences

A description of the fair value hierarchy and the Company's methodologies are included in Note 2 — Summary of Significant Accounting Policies in its most recent Annual Report on Form 10-K.

The following tables are a summary of fair value measurements and hierarchy level at March 31, 2026 and December 31, 2025:

March 31, 2026

The following tables are a summary of fair value measurements and hierarchy level at June 30, 2026 and December 31, 2025:

June 30, 2026

Carrying Value

17 unchanged sentences

Beneficial interests in securitizations include rated notes and certificates of the securitization trusts, the same securities as issued to other investors as described in Note 8 — Securitizations and Variable Interest Entities.

Beneficial interests in securitizations are initially treated as Level 2 assets when the securitization transaction occurs in close proximity to the end of the period and there is a lack of observable changes in the economic inputs.

When the securitization transaction does not occur in close proximity to the end of the period and there have been observable changes in the economic inputs, beneficial interests in securitizations are classified as Level 3.

Beneficial interests in securitizations are initially treated as Level 2 assets when the securitization transaction occurs in close proximity to the end of

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

the period and there is a lack of observable changes in the economic inputs.

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.

3 unchanged sentences

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

As of March 31, 2026 and December 31, 2025, the range of discount rates were 5.3 % to 10.0 % and 5.2 % to 10.0 %, respectively, and the weighted average of discount rates were 9.0 % both periods.

As of June 30, 2026 and December 31, 2025, the range of discount rates were 5.3 % to 10.0 % and 5.2 % to 10.0 %, respectively, and the weighted average of discount rates were 8.9 % and 9.0 %, respectively.

Significant increases or decreases in the inputs to the models could result in a significantly higher or lower fair value measurement.

2 unchanged sentences

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 three months ended March 31, 2026 or 2025.

There were no transfers out of Level 3 during the three and six months ended June 30, 2026 or 2025.

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

For the three months ended March 31, 2026 the Company sold $ 16 million in beneficial interests in securitizations.

For the three months ended March 31, 2025, the Company did not sell any beneficial interests in securitizations.

The following table presents additional information about Level 3 beneficial interests in securitizations measured at fair value on a recurring basis for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

For the three and six months ended June 30, 2026, the Company sold $ 13 million and $ 29 million, respectively, in beneficial interests in securitizations.

For the three and six months ended June 30, 2025, the Company did not sell any beneficial interests in securitizations.

The following table presents additional information about Level 3 beneficial interests in securitizations measured at fair value on a recurring basis for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(in millions)

9 unchanged sentences

The Company elected to measure this investment using a measurement alternative pursuant to the accounting standards and recorded the investment at its cost of $ 126 million, which will subsequently be adjusted for observable price changes.

The Company considered all relevant transactions since the date of its investment and has not recorded any impairments or upward or downward adjustments to the carrying amount of its investment in Root, as there have not been changes in the observable price of its equity interest through March 31, 2026.

Also in October 2021, the Company entered into a commercial agreement with Root, under which the Root auto insurance products were to be embedded into the Company's e-commerce platform.

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").

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 and on February 28, 2026, a fifth tranche of Root Warrants for 1.5 million shares of Root's Class A common stock became exercisable, both upon achievement of certain

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

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

insurance sales metrics through the integrated auto insurance solution embedded into the Company's e-commerce platform.

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.

The remaining three tranches vest based upon achievement of additional defined milestones tied to insurance sales through the integrated solution and are considered derivative instruments.

4 unchanged sentences

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 March 31, 2026 and 2025, the expected volatility utilized in the valuations was 90 % and 100 %, respectively.

As of June 30, 2026 and 2025, the expected volatility utilized in the valuations was 80 % 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.

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 applied as of such date.

As of March 31, 2026 and December 31, 2025, the deferred revenue balance was $ 31 million and $ 36 million, respectively.

During the three months ended March 31, 2026 and 2025, the Company recognized $ 5 million in Root Warrant revenue in each period.

As of June 30, 2026 and December 31, 2025, the deferred revenue balance was $ 25 million and $ 36 million, respectively.

During the three months ended June 30, 2026 and 2025, the Company recognized $ 6 million in Root Warrant revenue in each period.

During the six months ended June 30, 2026 and 2025, the Company recognized $ 11 million Root Warrant revenue in each period.

The deferred revenue is recognized over the expected contract performance period within other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

The following table presents changes in the Company's Level 3 Root Warrants measured at fair value:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(in millions)

1 unchanged sentence

Unrealized (loss) gain

( 3 ) ( 35 ) ( 45 ) 123

Ending balance $ 11 $ 243 $ 11 $ 243

In relation to the Root Warrants, the Company recognized a decrease in fair value of $ 42 million and an increase in fair value of $ 158 million during the three months ended March 31, 2026 and 2025, respectively, which are included in other expense (income), net in the accompanying unaudited condensed consolidated statements of operations.

In relation to the Root Warrants, the Company recognized decreases in fair value of $ 3 million and $ 35 million during the three months ended June 30, 2026 and 2025, respectively, and a decrease in fair value of $ 45 million and an increase in fair value of $ 123 million during the six months ended June 30, 2026 and 2025, respectively, which are included in other expense (income), net in the accompanying unaudited condensed consolidated statements of operations.

Fair Value of Financial Instruments

1 unchanged sentence

The carrying value of the short-term revolving facilities was determined to approximate fair value due to their short-term duration and variable interest rates that approximate prevailing interest rates as of each reporting period.

The carrying value of sale leasebacks was determined to approximate fair value as each of the transactions were entered into at prevailing interest rates during each respective period and they have not materially changed as of or during the periods ended March 31, 2026 and December 31, 2025.

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.

2 unchanged sentences

The fair value of the Senior Notes, which are not carried at fair value on the accompanying unaudited condensed consolidated balance sheets, was determined using Level 2 inputs based on quoted market prices for the identical liability.

The fair value of the Senior Notes as of March 31, 2026 and December 31, 2025 was as follows:

The fair value of the Senior Notes as of June 30, 2026 and December 31, 2025 was as follows:

2026 December 31,

5 unchanged sentences

Such fair value measurement of the finance receivables, net is considered Level 2 under the fair value hierarchy.

The carrying value and fair value of the finance receivables as of March 31, 2026 and December 31, 2025 were as follows:

The carrying value and fair value of the finance receivables as of June 30, 2026 and December 31, 2025 were as follows:

2026 December 31,

3 unchanged sentences

NOTE 18 — SUPPLEMENTAL CASH FLOW INFORMATION

The following table summarizes supplemental cash flow information for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

The following table summarizes supplemental cash flow information for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

(in millions)

14 unchanged sentences

2026 December 31,

2025 March 31,

2025 June 30,

(in millions)

2 unchanged sentences

Total cash, cash equivalents and restricted cash $ 2,743 $ 2,429 $ 1,930

NOTE 19 — SUBSEQUENT EVENTS

Ally Master Purchase and Sale Agreement

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-Q

Item 1. Financial Statements