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 makes money is essential for investors and anyone interested in the business of automotive retail and digital 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 an online platform for buying and selling used vehicles, offering a fully digital car buying experience including financing, trade-ins, and nationwide delivery. Revenue comes primarily from retail vehicle sales, with additional streams from wholesale vehicle sales (selling cars at auction) and other services such as financing, extended warranties, and ancillary products. The business is structured around three main segments: Net Retail Vehicle Sales, Wholesale Sales and Revenue, and Other Sales and Revenue.

Revenue Breakdown

• Total Revenue (Q3 2025): $5.65B (+54.5% YoY)
  • Net Retail Vehicle Sales: $4.00B (70.8% of total)
  • Wholesale Sales and Revenue: $1.18B (20.8% of total)
  • Other Sales and Revenue: $0.47B (8.4% of total)
• Growth is powered by surging retail unit sales, increased average selling prices, and expansion of ancillary services.

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, efficient inventory management, and growing contribution from high-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 corporate overhead, customer support, advertising, and technology investments
  • 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 its operational scale and improving cost structure.

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 model.
• Unit growth and pricing: Strong YoY growth in retail units sold and higher average selling prices drive top-line expansion.
• Ancillary products: Financing, warranties, and other add-ons are strategic investments, boosting gross profit per unit.
• Wholesale and other services: These segments provide incremental revenue and help optimize inventory, though not as profitable as retail sales.
• 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 costs and investments, 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, asset-light business model
• Heavy investment in technology and customer experience, balanced by efficiency in operating costs
• Ongoing growth is driven by unit sales, pricing, and expansion of ancillary services

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 retail vehicle sales. Additional revenue comes from wholesale vehicle sales 21% and other services 8% such as financing and warranties.

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, improved gross profit per unit, and cost discipline.

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 SG&A ($595M in Q3 2025, 10.5% of revenue), as the company prioritizes technology, customer support, and marketing.

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

Wholesale Sales and Revenue, despite generating $1.18B in revenue, posted lower margins in Q3 2025. This is because CVNA aggressively invests in inventory optimization and market expansion, believing these will drive long-term growth—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 typical corporate rates. This low rate is primarily due to tax benefits from share-based compensation and international structuring.