How CVNA (Carvana Co.) Makes Money in 2025: A Deep-Dive With Income Statement

Welcome to the Value Sense Blog, your resource for insights on the stock market! At Value Sense, we focus on intrinsic value tools and offer stock ideas with undervalued companies. Dive into our research products and learn more about our unique approach at valuesense.io

Explore diverse stock ideas covering technology, healthcare, and commodities sectors. Our insights are crafted to help investors spot opportunities in undervalued growth stocks, enhancing potential returns. Visit us to see evaluations and in-depth market research.

Understanding how a used car e-commerce platform like CVNA (formerly Carvana Co.) makes money is essential for investors and anyone interested in the business of automotive retail and online vehicle marketplaces. In this post, we break down CVNA's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick CVNA Overview

CVNA operates a vertically integrated online platform for buying and selling used vehicles in the United States. Its business model centers on digital retailing, offering customers the ability to browse, finance, purchase, and arrange delivery of vehicles entirely online. Revenue comes primarily from retail vehicle sales, with additional contributions from wholesale vehicle sales (selling vehicles acquired but not retailed) and other sales and revenue (including financing, extended warranties, and ancillary products). The company’s business segments reflect these core activities, with retail sales as the dominant driver.

Revenue Breakdown

• Total Revenue (Q3 2025): $5.65B (+54.5% YoY)
  • Net Retail Vehicle Sales: $3.996B (70.8% of total)
  • Wholesale Sales and Revenue: $1.177B (20.8% of total)
  • Other Sales and Revenue: $474M (8.4% of total)
  • Growth is powered by surging retail unit sales, improved vehicle sourcing, and expansion of ancillary product offerings.

Gross Profit and Margins

• Gross Profit: $1.15B (20.3% gross margin)
  • Cost of Revenue: $4.50B (+58.0% YoY)
  • CVNA maintains robust margins due to its scalable digital business model, operational efficiencies in logistics, and higher-margin ancillary products.
• Most costs come from vehicle acquisition, reconditioning, logistics, and fulfillment operations.

Operating Income and Expenses

• Operating Income: $552M (+63.8% YoY, 9.8% margin)
• Operating Expenses: $596M (+27.1% YoY)
  • R&D: Not separately disclosed for Q3 2025
  • SG&A: $595M (+26.9% YoY, 10.5% of revenue) — includes expenses for technology, customer support, marketing, and corporate operations
  • CVNA continues to invest in growth and technology while maintaining efficiency in operating costs.

Net Income

• Pre-Tax Income: $259M (+76.2% YoY, 4.6% margin)
• Income Tax: $4.0M (1.5% effective tax rate)
• Net Income: $151M (+77.6% YoY, 2.7% net margin)
• CVNA converts a moderate portion of sales into profit due to scalability and improving operational leverage.

What Drives CVNA's Money Machine?

• Retail Vehicle Sales: Over 70% of revenue comes from direct-to-consumer used car sales, the core of CVNA’s business.
• Unit Growth: Retail units sold increased sharply, driving both top-line and gross profit expansion.
• Ancillary Products: Financing, warranties, and other add-ons provide high-margin incremental revenue.
• Future Growth Areas: Expansion into new markets and digital services, though not yet a major profit contributor.

Visualizing CVNA's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant investments in technology and logistics, 2.7% of revenue drops to the bottom line.

Key Takeaways

• CVNA's money comes overwhelmingly from retail vehicle sales
• High gross and improving net margins illustrate the power of CVNA's digital-first, vertically integrated business model
• Heavy investment in technology and logistics, balanced by efficiency in operating costs
• Ongoing growth is driven by retail unit expansion, improved sourcing, and ancillary product penetration

Explore More Investment Opportunities

For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:

📌 50 Undervalued Stocks (Best) overall value plays for 2025
📌 50 Undervalued Dividend Stocks (For income-focused investors)
📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)

🔍 Check out these stocks on the Value Sense platform for free!

FAQ About CVNA's Income Statement

1. What is the main source of CVNA's revenue in 2025?

CVNA generates over 70% of its revenue from Net Retail Vehicle Sales. Other significant sources include wholesale vehicle sales 20.8% and ancillary products/services 8.4%.

2. How profitable is CVNA in Q3 2025?

CVNA reported net income of $151M in Q3 2025, with a net margin of approximately 2.7%, reflecting moderate profitability driven by scale and operational improvements.

3. What are the largest expense categories for CVNA?

The biggest expenses on CVNA's income statement are cost of revenue (vehicle acquisition, reconditioning, logistics) and operating expenses, particularly Sales, General & Administrative (SG&A) costs, which reached $595M in Q3 2025 as CVNA prioritizes technology, customer support, and marketing.

4. Why does Wholesale Sales operate at a lower margin?

Wholesale Sales, despite generating $1.18B in revenue, posted lower margins in Q3 2025. This is because CVNA aggressively liquidates vehicles not sold at retail, focusing on inventory turnover and cash flow, even if the division is less profitable today.

5. How does CVNA's effective tax rate compare to previous years?

CVNA's effective tax rate in Q3 2025 was 1.5%, lower than previous years. This low rate is primarily due to tax benefits from net operating loss carryforwards and share-based compensation.