CARVANA CO

Previous wording

•Purchase a retail vehicle. As of June 30, 2024, we listed 37,299 total retail units on our website, where customers can select and purchase a vehicle, including arranging financing and signing contracts, directly from their desktop or mobile device. Selling vehicles to retail customers is the primary driver of our business. Selling retail vehicles generates revenue equal to the selling price of the vehicle, less an allowance for returns, and also enables multiple additional revenue streams, including the sale of finance receivables originated to finance the vehicle, vehicle service contracts ("VSCs"), GAP waiver coverage, other ancillary products, and trade-ins.

Current wording

•Purchase a retail vehicle. As of September 30, 2024, we listed 45,974 total retail units on our website, where customers can select and purchase a vehicle, including arranging financing and signing contracts, directly from their desktop or mobile device. Selling vehicles to retail customers is the primary driver of our business. Selling retail vehicles generates revenue equal to the selling price of the vehicle, less an allowance for returns, and also enables multiple additional revenue streams, including the sale of finance receivables originated to finance the vehicle, vehicle service contracts ("VSCs"), GAP waiver coverage, other ancillary products, and trade-ins.

Previous wording

Since launching to customers in Atlanta, Georgia in January 2013, we have historically experienced rapid growth in sales through our website www.carvana.com. During the three months ended June 30, 2024, the number of vehicles we sold to retail customers increased by 32.5% to 101,440, compared to 76,530 in the three months ended June 30, 2023. During the six months ended June 30, 2024, the number of vehicles we sold to retail customers increased by 24.1% to 193,318, compared to 155,770 in the six months ended June 30, 2023.

Current wording

Since launching to customers in Atlanta, Georgia in January 2013, we have historically experienced rapid growth in sales through our website www.carvana.com. During the three months ended September 30, 2024, the number of vehicles we sold to retail customers increased by 34.2% to 108,651, compared to 80,987 in the three months ended September 30, 2023. During the nine months ended September 30, 2024, the number of vehicles we sold to retail customers increased by 27.5% to 301,969, compared to 236,757 in the nine months ended September 30, 2023.

Previous wording

While our near-term objectives are geared towards significant positive unit economics through efficiency gains and other initiatives, we continue to invest in technology and infrastructure to support efficient growth in retail units sold. This includes continued investment in our vehicle acquisition, reconditioning and logistics network, as well as continued investment in product development and engineering to deliver customers a best-in-class experience.

Current wording

We are simultaneously maintaining our focus on efficiency gains and other profitability initiatives, while continuing to invest in technology and infrastructure to support efficient growth in retail units sold. This includes continued investment in our vehicle acquisition, reconditioning and logistics network, as well as continued investment in product development and engineering to deliver customers a best-in-class experience.

Previous wording

As of June 30, 2024, we have established a logistics network and local marketing presence in 316 metropolitan areas and have purchased, reconditioned, sold, and delivered over 1.9 million retail vehicles since the launch of our first market in January 2013. As of June 30, 2024, our 316 markets serviced 81.1% of the U.S. population. We calculate our population coverage as the population in our open markets at the end of the period as a percentage of the total metropolitan statistical area ("MSA") population in the U.S., based on 2015 data from the U.S. Census Bureau. Our hub and spoke market approach allows us to focus on serving our markets and providing the best possible car buying and selling experience to our customers at a low, transparent cost. Our established logistics network and ability to service customers within our markets by delivering or picking up any car on Carvana-branded haulers allow us to provide a low-cost, simple car buying and selling experience. We continually evaluate consumer demand and our operational capacity to determine our market development strategy.

Current wording

As of September 30, 2024, we have established a logistics network and local marketing presence in 316 metropolitan areas and have purchased, reconditioned, sold, and delivered over 2.0 million retail vehicles since the launch of our first market in January 2013. As of September 30, 2024, our 316 markets serviced 81.1% of the U.S. population. We calculate our population coverage as the population in our open markets at the end of the period as a percentage of the total metropolitan statistical area ("MSA") population in the U.S., based on 2015 data from the U.S. Census Bureau. Our hub and spoke market approach allows us to focus on serving our markets and providing the best possible car buying and selling experience to our customers at a low, transparent cost. Our established logistics network and ability to service customers within our markets by delivering or picking up any car on Carvana-branded haulers allow us to provide a low-cost, simple car buying and selling experience. We continually evaluate consumer demand and our operational capacity to determine our market development strategy.

Previous wording

Our largest source of revenue, retail vehicle sales, totaled $2.4 billion and $2.0 billion during the three months ended June 30, 2024 and 2023, respectively, and $4.6 billion and $3.8 billion during the six months ended June 30, 2024 and 2023, respectively. We generally expect retail vehicle sales to trend proportionately with retail units sold, absent any material changes in macroeconomic conditions. We generate gross profit on retail vehicle sales from the difference between the retail selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale.

Current wording

Our largest source of revenue, retail vehicle sales, totaled $2.5 billion and $1.9 billion during the three months ended September 30, 2024 and 2023, respectively, and $7.1 billion and $5.7 billion during the nine months ended September 30, 2024 and 2023, respectively. We generally expect retail vehicle sales to trend proportionately with retail units sold, absent any material changes in macroeconomic conditions. We generate gross profit on retail vehicle sales from the difference between the retail selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale.

Previous wording

Wholesale sales and revenues includes sales of trade-ins and other vehicles acquired from customers that do not meet the requirements for our retail inventory. We also include revenue earned from the sale of wholesale marketplace units by non-Carvana sellers through our wholesale marketplace platform, including auction fees and related service revenues, in wholesale sales and revenues. Wholesale sales and revenues totaled $720 million and $777 million during the three months ended June 30, 2024 and 2023, respectively, and $1.4 billion during each of the six months ended June 30, 2024 and 2023. We generally expect wholesale sales to trend proportionately with retail units sold through trade-ins and from customers who wish to sell us a car independent of a retail sale and with the movement of wholesale marketplace units. We generate gross profit on wholesale vehicle sales from the difference between the wholesale selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale. We generate a gross profit on wholesale marketplace units from the difference between the revenue earned from the sale of wholesale marketplace units through our wholesale marketplace platform less our cost of sales associated with operating the wholesale marketplace platform.

Current wording

Wholesale sales and revenues includes sales of trade-ins and other vehicles acquired from customers that do not meet the requirements for our retail inventory. We also include revenue earned from the sale of wholesale marketplace units by non-Carvana sellers through our wholesale marketplace platform, including auction fees and related service revenues, in wholesale sales and revenues. Wholesale sales and revenues totaled $786 million and $610 million during the three months ended September 30, 2024 and 2023, respectively, and $2.2 billion and $2.0 billion during the nine months ended September 30, 2024 and 2023, respectively. We generally expect wholesale sales to trend proportionately with retail units sold through trade-ins and from customers who wish to sell us a car independent of a retail sale and with the movement of wholesale marketplace units. We generate gross profit on wholesale vehicle sales from the difference between the wholesale selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale. We generate a gross profit on wholesale marketplace units from the difference between the revenue earned from the sale of wholesale marketplace units through our wholesale marketplace platform less our cost of sales associated with operating the wholesale marketplace platform.

Previous wording

Other sales and revenues, which primarily includes gains on the sales of finance receivables we originate and sales commissions on ancillary products such as VSCs, GAP waiver coverage, and auto insurance totaled $279 million and $230 million during the three months ended June 30, 2024 and 2023, respectively and $508 million and $391 million during the six months ended June 30, 2024 and 2023, respectively. We generally expect other sales and revenues to trend proportionately with retail units sold. We also expect other sales and revenues to increase as we improve our ability to monetize loans we originate, including through securitization transactions, and sell and offer attractive financing solutions and ancillary products to our customers, including products customarily sold by automotive retailers or insurance products customarily sold by traditional insurance companies, absent any material changes in macroeconomic conditions. Other sales and revenues are 100% gross margin products for which gross profit equals revenue.

Current wording

Other sales and revenues, which primarily includes gains on the sales of finance receivables we originate and sales commissions on ancillary products such as VSCs, GAP waiver coverage, and auto insurance totaled $326 million and $214 million during the three months ended September 30, 2024 and 2023, respectively and $834 million and $605 million during the nine months ended September 30, 2024 and 2023, respectively. We generally expect other sales and revenues to trend proportionately with retail units sold. We also expect other sales and revenues to increase as we improve our ability to monetize loans we originate, including through securitization transactions, and sell and offer attractive financing solutions and ancillary products to our customers, including products customarily sold by automotive retailers or insurance products customarily sold by traditional insurance companies, absent any material changes in macroeconomic conditions. Other sales and revenues are 100% gross margin products for which gross profit equals revenue.

Previous wording

•Leverage existing inspection and reconditioning infrastructure. As we scale, we intend to more fully utilize the capacity at our existing IRCs and auction locations, which collectively have capacity to inspect and recondition approximately 1.35 million vehicles per year at full utilization.

Current wording

•Leverage existing inspection and reconditioning infrastructure. As we scale, we intend to more fully utilize the capacity at our existing IRCs and auction locations, which collectively have capacity to inspect and recondition more than 1 million vehicles per year at full utilization.

Previous wording

Retail and wholesale used vehicle sales generally exhibit seasonality with sales peaking late in the first calendar quarter and diminishing through the rest of the year, with the lowest relative level of vehicle sales expected to occur in the fourth calendar quarter. Due to our historical rapid growth, our overall sales patterns in the past have not always reflected the general seasonality of the used vehicle industry. However, as our business and markets have continued to mature, our results have become more reflective of typical market seasonality. Used vehicle prices also exhibit seasonality, with used vehicles depreciating at a faster rate in the last two quarters of each year and a slower rate in the first two quarters of each year, all other factors being equal. We expect to experience seasonal and other fluctuations in our quarterly operating results, including as a result of macroeconomic conditions, which may not fully reflect the underlying performance of our business.

Current wording

Retail and wholesale used vehicle sales generally exhibit seasonality with sales peaking late in the first calendar quarter and diminishing through the rest of the year, with the lowest relative level of vehicle sales expected to occur in the fourth calendar quarter. Due to our historical rapid growth and continuing growth in the current year, our overall sales patterns in the past have not always reflected the general seasonality of the used vehicle industry. However, as our business and markets have continued to mature, our results have become more reflective of typical market seasonality. Used vehicle prices also exhibit seasonality, with used vehicles depreciating at a faster rate in the last two quarters of each year and a slower rate in the first two quarters of each year, all other factors being equal. We expect to experience seasonal and other fluctuations in our quarterly operating results, including as a result of macroeconomic conditions, which may not fully reflect the underlying performance of our business.

Previous wording

While we have historically aggressively invested in the growth of our business, for the past several quarters we have been and continue to be focused on driving fundamental gains in gross profit per unit and operational efficiency, flexibility, and scalability through process and technology improvements to increase profitability and provide a strong foundation for profitable growth. As we continue targeting initiatives aimed at improving efficiencies, we simultaneously plan to invest in the profitable expansion of our business. While we intend to become increasingly efficient over time, we also anticipate that our operating expenses will increase as we return to growth and continue to expand our logistics network, increase our advertising spending, and serve more of the U.S. population. There is no guarantee that we will be able to realize the desired return on our investments.

Current wording

For the past several quarters we have been and continue to be focused on driving fundamental gains in gross profit per unit and operational efficiency, flexibility, and scalability through process and technology improvements to increase profitability and provide a strong foundation for profitable growth. As we continue targeting initiatives aimed at improving efficiencies, we are simultaneously investing in the profitable expansion of our business. While we intend to become increasingly efficient over time, we also anticipate that our operating expenses will increase as we return to growth and continue to expand our logistics network, increase our advertising spending, and serve more of the U.S. population. There is no guarantee that we will be able to realize the desired return on our investments.

Previous wording

We define a monthly unique visitor as an individual who has visited our website or iOS/Android application within a calendar month, based on data provided by Google Analytics. We calculate average monthly unique visitors as the sum of monthly unique visitors in a given period, divided by the number of months in that period. We view average monthly unique visitors as a key indicator of the strength of our brand, the effectiveness of our advertising and merchandising campaigns, and consumer awareness of our brand. During the three months ended June 30, 2024, the methodology used by Google Analytics to count unique visitors changed to include individuals visiting our iOS/Android application, in addition to those visiting our website. We believe this change allows us to more accurately calculate and reflect average monthly unique visitors. To conform to current period presentation, we have recast average monthly unique visitors for the three and six months ended June 30, 2023 and three months ended March 31, 2024. The change in measurement methodology resulted in 9.6% and 9.1% more average monthly unique visitors for the three and six months ended June 30, 2023, respectively, and 4.2% more average monthly unique visitors for the three months ended March 31, 2024, compared to previously reported numbers.

Current wording

We define a monthly unique visitor as an individual who has visited our website or iOS/Android application within a calendar month, based on data provided by Google Analytics. We calculate average monthly unique visitors as the sum of monthly unique visitors in a given period, divided by the number of months in that period. We view average monthly unique visitors as a key indicator of the strength of our brand, the effectiveness of our advertising and merchandising campaigns, and consumer awareness of our brand. During the three months ended June 30, 2024, the methodology used by Google Analytics to count unique visitors changed to include individuals visiting our iOS/Android application, in addition to those visiting our website. We believe this change allows us to more accurately calculate and reflect average monthly unique visitors. To conform to current period presentation, we have recast average monthly unique visitors for the three and nine months ended September 30, 2023 and three months ended March 31, 2024. The change in measurement methodology resulted in 8.1% and 8.8% more average monthly unique visitors for the three and nine months ended September 30, 2023, respectively, and 4.2% more average monthly unique visitors for the three months ended March 31, 2024, compared to previously reported numbers.

Previous wording

The number of retail vehicles we sell depends on the volume of traffic to our website, our population coverage, our inventory selection, the effectiveness of our branding and marketing efforts, the quality of our customers' purchase experience, our volume of referrals and repeat customers, the competitiveness of our pricing, competition from other used car dealerships and general macroeconomic and used car industry conditions. On a quarterly basis, the number of retail vehicles we sell is also affected by seasonality, with demand for retail vehicles generally reaching a seasonal high point late in the first quarter of each year, commensurate with the timing of tax refunds, and diminishing through the rest of the year, with the lowest relative level of retail vehicle sales generally expected to occur in the fourth calendar quarter. In 2023, heightened inflation and rising interest rates resulted in lower demand for used vehicles. Heightened inflation and interest rates persisted during the first three months of 2024, and, to a lesser extent, during the second three months of 2024, but were outweighed by seasonal demand associated with the timing of tax refunds and certain of our initiatives focused on growth in retail units sold.

Current wording

The number of retail vehicles we sell depends on the volume of traffic to our website, our population coverage, our inventory selection, the effectiveness of our branding and marketing efforts, the quality of our customers' purchase experience, our volume of referrals and repeat customers, the competitiveness of our pricing, competition from other used car dealerships and general macroeconomic and used car industry conditions. On a quarterly basis, the number of retail vehicles we sell is also affected by seasonality, with demand for retail vehicles generally reaching a seasonal high point late in the first quarter of each year, commensurate with the timing of tax refunds, and diminishing through the rest of the year, with the lowest relative level of retail vehicle sales generally expected to occur in the fourth calendar quarter. In 2023, heightened inflation and rising interest rates resulted in lower demand for used vehicles. Heightened inflation and interest rates persisted during the first three months of 2024, and, to a lesser extent, during the second and third quarters of 2024, but were outweighed by seasonal demand associated with the timing of tax refunds and certain of our initiatives focused on growth in retail units sold.

Previous wording

Our retail average selling price depends on macroeconomic and used car industry conditions, the mix of vehicles we acquire, retail prices in our markets, our pricing strategy, and our average days to sale. We may choose to shift our inventory mix to higher or lower cost vehicles, or to raise or lower our prices relative to market to take advantage of supply or demand imbalances, which could temporarily lead to average selling prices increasing or decreasing. We also generally expect lower average days to sale to be associated with higher retail average selling prices due to decreased vehicle depreciation prior to sale, all other factors being equal.

Current wording

Our revenue per retail unit depends on macroeconomic and used car industry conditions, the mix of vehicles we acquire, retail prices in our markets, our pricing strategy, and our average days to sale. We may choose to shift our inventory mix to higher or lower cost vehicles, or to raise or lower our prices relative to market to take advantage of supply or demand imbalances, which could temporarily lead to revenue per retail unit increasing or decreasing. We also generally expect lower average days to sale to be associated with higher retail revenue per retail unit due to decreased vehicle depreciation prior to sale, all other factors being equal.

Previous wording

Retail vehicle gross profit is the vehicle sales price minus our costs of sales associated with vehicles that we list and sell on our website. Retail vehicle gross profit per unit is our aggregate retail vehicle gross profit in any measurement period divided by the number of retail units sold in that period.

Current wording

Retail vehicle gross profit is the retail vehicle sales minus our costs of sales associated with vehicles that we list and sell on our website. Retail vehicle gross profit per unit is our aggregate retail vehicle gross profit in any measurement period divided by the number of retail units sold in that period.

Previous wording

Other expense (income), net includes changes in fair value on our beneficial interests in securitizations, purchase price adjustment receivables, and fair value adjustments related to our Root Warrants as discussed in Note 17 — Fair Value of Financial Instruments of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q. For the three and six months ended June 30, 2024, Other expense (income), net also includes expense related to our Tax Receivable Agreement ("TRA") liability. Refer to Note 14 — Income Taxes for further discussion of the TRA.

Current wording

Other expense (income), net includes changes in fair value on our beneficial interests in securitizations, purchase price adjustment receivables, and fair value adjustments related to our Root Warrants as discussed in Note 17 — Fair Value of Financial Instruments of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q. Other expense (income), net also includes expense related to our Tax Receivable Agreement ("TRA") liability. Refer to Note 14 — Income Taxes for further discussion of the TRA.

Previous wording

(1) Includes $7, $5, $14 and $10, respectively, of wholesale sales and revenues from related parties.

Current wording

(1) Includes $7, $4, $21 and $14, respectively, of wholesale sales and revenues from related parties.

Previous wording

(2) Includes $47, $33, $89 and $69, respectively, of other sales and revenues from related parties.

Current wording

(2) Includes $52, $35, $141 and $104, respectively, of other sales and revenues from related parties.

Previous wording

(5) Includes $22, $26, $47 and $52, respectively, of depreciation and amortization expense.

Current wording

(5) Includes $20, $25, $67 and $77, respectively, of depreciation and amortization expense.

Previous wording

$23,768 in the three months ended June 30, 2024 from $25,624 in the prior year, due primarily to higher overall depreciation in the used vehicle market, partially offset by faster turn times, compared to the three months ended June 30, 2023.

Current wording

Three months ended September 30, 2024 versus 2023. Retail vehicle sales increased by $594 million to $2.5 billion during the three months ended September 30, 2024, compared to $1.9 billion during the three months ended September 30, 2023. The increase in revenue was primarily due to an increase in the number of retail vehicles sold to 108,651 from 80,987 during the three months ended September 30, 2024 and 2023, respectively, partially offset by a decrease in retail revenue per retail unit sold to $23,405 in the three months ended September 30, 2024 from $24,066 in the prior year, due primarily to higher overall depreciation in the used vehicle market, partially offset by faster turn times and vehicle mix, compared to the three months ended September 30, 2023.

Previous wording

Six months ended June 30, 2024 versus 2023. Retail vehicle sales increased by $0.8 billion to $4.6 billion during the six months ended June 30, 2024, compared to $3.8 billion during the six months ended June 30, 2023. The increase in revenue was primarily due to an increase in the number of retail vehicles sold to 193,318 from 155,770 during the six months ended June 30, 2024 and 2023, respectively, partially offset by a decrease in the average selling price of our retail units sold to $23,723 in the six months ended June 30, 2024 from $24,318 in the prior year, due primarily to higher overall depreciation in the used vehicle market, partially offset by faster turn times, compared to the six months ended June 30, 2023.

Current wording

Nine months ended September 30, 2024 versus 2023. Retail vehicle sales increased by $1.4 billion to $7.1 billion during the nine months ended September 30, 2024, compared to $5.7 billion during the nine months ended September 30, 2023. The increase in revenue was primarily due to an increase in the number of retail vehicles sold to 301,969 from 236,757 during the nine months ended September 30, 2024 and 2023, respectively, partially offset by a decrease in retail revenue per retail unit sold to $23,608 in the nine months ended September 30, 2024 from $24,232 in the prior year, due primarily to higher overall depreciation in the used vehicle market, partially offset by faster turn times and vehicle mix, compared to the nine months ended September 30, 2023.

Previous wording

Three months ended June 30, 2024 versus 2023. Wholesale sales and revenues decreased by $57 million to $720 million during the three months ended June 30, 2024, compared to $777 million during the three months ended June 30, 2023. The decrease in revenue was primarily due to higher overall depreciation in the wholesale vehicle market as the average selling price of our wholesale units sold decreased to $9,550 during the three months ended June 30, 2024 from $11,926 during the three months ended June 30, 2023. This decrease was partially offset by an increase in the number of wholesale units sold that were acquired from customers on our website to 50,368 from 46,453 during the three months ended June 30, 2024 and 2023, respectively. Additionally, wholesale marketplace revenues were higher during the three months ended June 30, 2024 at $239 million, compared to $223 million during the three months ended June 30, 2023, primarily due to an increase in the number of wholesale marketplace units sold to 247,135 from 227,698 during the three months ended June 30, 2024 and 2023, respectively.

Current wording

Three months ended September 30, 2024 versus 2023. Wholesale sales and revenues increased by $176 million to $786 million during the three months ended September 30, 2024, compared to $610 million during the three months ended September 30, 2023. The increase in revenue was primarily due to an increase in the number of wholesale units sold to 56,487 from 40,886 during the three months ended September 30, 2024 and 2023, respectively, along with an increase in the wholesale revenue per wholesale unit sold to $9,861 during the three months ended September 30, 2024 from $9,612 during the three months ended September 30, 2023. Additionally, wholesale marketplace revenues were higher during the three months ended September 30, 2024 at $229 million, compared to $217 million during the three months ended September 30, 2023, primarily due to an increase in the number of wholesale marketplace units sold to 234,361 from 221,368 during the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Six months ended June 30, 2024 Versus 2023. Wholesale sales and revenues decreased by $18 million to $1.38 billion during the six months ended June 30, 2024, compared to $1.40 billion during the six months ended June 30, 2023. The decrease in revenue was primarily due to higher overall depreciation in the wholesale vehicle market as the average selling price of our wholesale units sold decreased to $9,585 during the six months ended June 30, 2024 from $11,782 during the six months ended June 30, 2023. This decrease was partially offset by an increase in the number of wholesale units sold that were acquired from customers on our website to 94,523 from 81,563 during the six months ended June 30, 2024 and 2023, respectively. Additionally, wholesale marketplace revenues were higher during the six months ended June 30, 2024 at $471 million, compared to $434 million during the six months ended June 30, 2023, primarily due to an increase in the number of wholesale marketplace units sold to 489,782 from 441,462 during the six months ended June 30, 2024 and 2023, respectively.

Current wording

Nine months ended September 30, 2024 Versus 2023. Wholesale sales and revenues increased by $158 million to $2.2 billion during the nine months ended September 30, 2024, compared to $2.0 billion during the nine months ended September 30, 2023. The increase in revenue was primarily due to an increase in the number of wholesale units sold to 151,010 from 122,449 during the nine months ended September 30, 2024 and 2023, respectively. This increase was partially offset by higher overall depreciation in the wholesale vehicle market as the wholesale revenue per wholesale unit sold decreased to $9,688 during the nine months ended September 30, 2024 from $11,058 during the nine months ended September 30, 2023. Additionally, wholesale marketplace revenues were higher during the nine months ended September 30, 2024 at $700 million, compared to $651 million during the nine months ended September 30, 2023, primarily due to an increase in the number of wholesale marketplace units sold to 724,143 from 662,830 during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Three months ended June 30, 2024 versus 2023. Other sales and revenues increased by $49 million to $279 million during the three months ended June 30, 2024, compared to $230 million during the three months ended June 30, 2023. The increase was primarily due to an increase in gain on loan sales as a result of more loans sold, higher loan sale pricing, increased retail units sold, and higher interest income due to higher levels of finance receivables held for sale during the three months ended June 30, 2024.

Current wording

Three months ended September 30, 2024 versus 2023. Other sales and revenues increased by $112 million to $326 million during the three months ended September 30, 2024, compared to $214 million during the three months ended September 30, 2023. The increase was primarily due to an increase in gain on loan sales as a result of more loans sold, higher loan sale spreads, increased retail units sold, and higher interest income due to higher levels of finance receivables held for sale during the three months ended September 30, 2024.

Previous wording

Six months ended June 30, 2024 versus 2023. Other sales and revenues increased by $117 million to $508 million during the six months ended June 30, 2024, compared to $391 million during the six months ended June 30, 2023. The increase was primarily due to an increase in gain on loan sales as a result of more loans sold, higher loan sale pricing and increased retail units sold during the six months ended June 30, 2024, partially offset by lower interest income due to lower levels of finance receivables held for sale.

Current wording

Nine months ended September 30, 2024 versus 2023. Other sales and revenues increased by $229 million to $834 million during the nine months ended September 30, 2024, compared to $605 million during the nine months ended September 30, 2023. The increase was primarily due to an increase in gain on loan sales as a result of more loans sold, higher loan sale spreads, and increased retail units sold during the nine months ended September 30, 2024.

Previous wording

Three months ended June 30, 2024 versus 2023. Retail vehicle gross profit increased by $143 million to $347 million during the three months ended June 30, 2024, compared to $204 million during the three months ended June 30, 2023. This increase was driven primarily by an increase in retail vehicle gross profit per unit to $3,421 for the three months ended June 30, 2024, compared to $2,666 for the three months ended June 30, 2023. The per unit increase was primarily driven by lower average days to sale, lower vehicle acquisition costs relative to sales prices, and lower reconditioning and inbound transport costs on retail vehicles sold during the three months ended June 30, 2024.

Current wording

Three months ended September 30, 2024 versus 2023. Retail vehicle gross profit increased by $162 million to $380 million during the three months ended September 30, 2024, compared to $218 million during the three months ended September 30, 2023. This increase was driven primarily by an increase in retail vehicle gross profit per unit to $3,497 for the three months ended September 30, 2024, compared to $2,692 for the three months ended September 30, 2023. The per unit increase was primarily driven by lower average days to sale, lower vehicle acquisition costs relative to sales prices, and lower reconditioning and inbound transport costs on retail vehicles sold during the three months ended September 30, 2024.

Previous wording

Six months ended June 30, 2024 Versus 2023. Retail vehicle gross profit increased by $316 million to $630 million during the six months ended June 30, 2024, compared to $314 million during the six months ended June 30, 2023. This increase was driven primarily by an increase in retail vehicle gross profit per unit to $3,259 for the six months ended June 30, 2024, compared to $2,016 for the six months ended June 30, 2023. The per unit increase was primarily driven by lower average days to sale, lower vehicle acquisition costs, and lower reconditioning and inbound transport costs on retail vehicles sold during the six months ended June 30, 2024.

Current wording

Nine months ended September 30, 2024 Versus 2023. Retail vehicle gross profit increased by $478 million to $1.0 billion during the nine months ended September 30, 2024, compared to $532 million during the nine months ended September 30, 2023. This increase was driven primarily by an increase in retail vehicle gross profit per unit to $3,345 for the nine months ended September 30, 2024, compared to $2,247 for the nine months ended September 30, 2023. The per unit increase was primarily driven by lower average days to sale, lower vehicle acquisition costs relative to sales prices, and lower reconditioning and inbound transport costs on retail vehicles sold during the nine months ended September 30, 2024.

Previous wording

Three months ended June 30, 2024 versus 2023. Wholesale gross profit increased by $24 million to $89 million during the three months ended June 30, 2024, compared to $65 million during the three months ended June 30, 2023. This increase was primarily driven by an increase in wholesale marketplace gross profit by $15 million to $41 million during the three months ended June 30, 2024, compared to $26 million for the three months ended June 30, 2023, due to an increase in the number of wholesale marketplace units sold to 247,135 from 227,698 during the three months ended June 30, 2024 and 2023, respectively. Additionally, the increase was driven by an increase in wholesale units sold to 50,368 from 46,453 for the three months ended June 30, 2024 and 2023, respectively, along with an increase in wholesale vehicle gross profit per wholesale unit to $953 from $840, respectively. The increase in wholesale units sold was primarily a result of an increase in overall vehicle acquisitions during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase in wholesale vehicle gross profit per wholesale unit was primarily a result of lower vehicle acquisition costs relative to sales prices during the three months ended June 30, 2024.

Current wording

Three months ended September 30, 2024 versus 2023. Wholesale gross profit increased by $51 million to $101 million during the three months ended September 30, 2024, compared to $50 million during the three months ended September 30, 2023. This increase was primarily driven by an increase in wholesale units sold to 56,487 from 40,886 for the three months ended September 30, 2024 and 2023, respectively, along with an increase in wholesale vehicle gross profit per wholesale unit to $1,080 from $685, respectively. The increase in wholesale units sold was primarily a result of an increase in overall vehicle acquisitions during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase in wholesale vehicle gross profit per wholesale unit was primarily a result of lower vehicle acquisition costs relative to sales prices during the three months ended September 30, 2024. Additionally, the increase was driven by an increase in wholesale marketplace gross profit by $18 million to $40 million during the three months ended September 30, 2024, compared to $22 million for the three months ended September 30, 2023, due to an increase in the number of wholesale marketplace units sold to 234,361 from 221,368 during the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Six months ended June 30, 2024 versus 2023. Wholesale gross profit increased by $33 million to $168 million during the six months ended June 30, 2024, compared to $135 million during the six months ended June 30, 2023. This increase was primarily driven by an increase in wholesale marketplace gross profit by $22 million to $74 million during the six months ended June 30, 2024, compared to $52 million for the six months ended June 30, 2023, due to an increase in the number of wholesale marketplace units sold to 489,782 from 441,462 during the six months ended June 30, 2024 and 2023, respectively. Additionally, the increase was driven by an increase in wholesale units sold to 94,523 from 81,563 for the six months ended June 30, 2024 and 2023, respectively, partially offset by a decrease in wholesale vehicle gross profit per wholesale unit to $994 from $1,018 in the six months ended June 30, 2024 and 2023, respectively. The decrease in wholesale vehicle gross profit per wholesale unit was primarily a result of higher depreciation in the wholesale vehicle market during the six months ended June 30, 2024.

Current wording

Nine months ended September 30, 2024 versus 2023. Wholesale gross profit increased by $84 million to $269 million during the nine months ended September 30, 2024, compared to $185 million during the nine months ended September 30, 2023. This increase was primarily driven by an increase in wholesale units sold to 151,010 from 122,449 for the nine months ended September 30, 2024 and 2023, respectively, along with an increase in wholesale vehicle gross profit per wholesale unit to $1,026 from $906, respectively. The increase in wholesale units sold was primarily a result of an increase in overall vehicle acquisitions during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in wholesale vehicle gross profit per wholesale unit was primarily a result of lower vehicle acquisition costs relative to sales prices during the nine months ended September 30, 2024. Additionally, the increase was driven by an increase in wholesale marketplace gross profit by $40 million to $114 million during the nine months ended September 30, 2024, compared to $74 million for the nine months ended September 30, 2023, due to an increase in the number of wholesale marketplace units sold to 724,143 from 662,830 during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Selling, general and administrative expenses increased by $3 million to $455 million during the three months ended June 30, 2024, compared to $452 million during the three months ended June 30, 2023, primarily due to a higher employee headcount associated with higher retail units sold. Selling, general and administrative expenses decreased by $13 million to $911 million during the six months ended June 30, 2024, compared to $924 million during the six months ended June 30, 2023, primarily due to lower depreciation expense associated with a smaller logistics fleet size, reductions in occupancy costs, and improved targeting of our advertising spend.

Current wording

Selling, general and administrative expenses increased by $36 million to $469 million during the three months ended September 30, 2024, compared to $433 million during the three months ended September 30, 2023, primarily due to higher employee headcount and other SG&A expenses, primarily associated with higher retail units sold. Selling, general and administrative expenses increased by $23 million to $1.38 billion during the nine months ended September 30, 2024, compared to $1.36 billion during the nine months ended September 30, 2023, primarily due to higher employee headcount and other SG&A expenses, primarily associated with higher retail units sold.

Previous wording

Other operating expense, net was $1 million and $5 million for the three months ended June 30, 2024 and 2023, and $2 million and $6 million for the six months ended June 30, 2024 and 2023. The decreases in other operating expense, net were due to lower disposals of long-lived assets during the three and six months ended June 30, 2024.

Current wording

Other operating expense, net was $1 million for each of the three months ended September 30, 2024 and 2023, and $3 million and $7 million for the nine months ended September 30, 2024 and 2023. The decrease in other operating expense, net during the nine months ended September 30, 2024 was due to lower disposals of long-lived assets as compared to the nine months ended September 30, 2023.

Previous wording

Loss on debt extinguishment was $2 million during the three and six months ended June 30, 2024 due to the repurchase of $250 million of 2028 Senior Secured Notes in the open market for $259 million, which included $7 million of accrued PIK interest and $1 million in pro-rata write-offs of unamortized debt issuance costs and unamortized premium.

Current wording

Loss on debt extinguishment was $4 million during the three months ended September 30, 2024 due to the repurchase of $100 million of 2028 Senior Secured Notes in the open market for $104 million. Loss on debt extinguishment was $6 million during the nine months ended September 30, 2024 due to the repurchase of $350 million of 2028 Senior Secured Notes in the open market for $363 million, which included $8 million of accrued interest and $1 million in pro-rata write-offs of unamortized debt issuance costs and unamortized premium. Gain on debt extinguishment was $878 million during the three and nine months ended September 30, 2023 primarily due to the exchange of $5.5 billion in principal of Senior Unsecured Notes for $4.2 billion in principal of Senior Secured Notes and $341 million in cash, along with the write off of $66 million of debt issuance costs and a $40 million deferred premium on a portion of the Senior Secured Notes.

Previous wording

Interest expense increased by $18 million and $32 million during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively, primarily due to increased PIK interest on the Senior Secured Notes, partially offset by lower interest on the Senior Unsecured Notes, floor plan facility, and finance receivable facilities.

Current wording

Interest expense increased by $4 million and $36 million during the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, primarily due to increased PIK interest on the

Previous wording

Adjusted EBITDA; Adjusted EBITDA margin; Gross profit, non-GAAP; Total gross profit per retail unit, non-GAAP; SG&A expenses, non-GAAP; and Total SG&A expenses per retail unit, non-GAAP are supplemental measures of operating performance that do not represent and should not be considered an alternative to net income (loss), gross profit, or SG&A expenses, as determined by GAAP.

Current wording

Adjusted EBITDA; Adjusted EBITDA margin; Gross profit, non-GAAP; Total gross profit per retail unit, non-GAAP; SG&A expenses, non-GAAP; and Total SG&A expenses per retail unit, non-GAAP are supplemental measures of operating performance that do not represent and should not be considered an alternative to net income, gross profit, or SG&A expenses, as determined by GAAP.

Previous wording

Adjusted EBITDA is defined as net income (loss) plus income tax provision (benefit), interest expense, other operating expense, net, other expense (income), net, depreciation and amortization expense in cost of sales and SG&A expenses, goodwill impairment, share-based compensation expense in cost of sales and SG&A expenses, loss on debt extinguishment, and restructuring expense in cost of sales and SG&A expenses, minus revenue related to our Root Warrants and gain on debt extinguishment. Adjusted EBITDA margin is Adjusted EBITDA as a percentage of total revenues.

Current wording

Adjusted EBITDA is defined as net income plus income tax (benefit) provision, interest expense, other operating expense, net, other expense (income), net, depreciation and amortization expense in cost of sales and SG&A expenses, share-based compensation expense in cost of sales and SG&A expenses, loss on debt extinguishment, and restructuring expense in SG&A expenses, minus revenue related to our Root Warrants and gain on debt extinguishment. Adjusted EBITDA margin is Adjusted EBITDA as a percentage of total revenues.

Previous wording

Gross profit, non-GAAP is defined as GAAP gross profit plus depreciation and amortization expense in cost of sales, share-based compensation expense in cost of sales, and restructuring expense in cost of sales, minus revenue related to our Root Warrants. Total gross profit per retail unit, non-GAAP is Gross profit, non-GAAP divided by retail vehicle unit sales.

Current wording

Gross profit, non-GAAP is defined as GAAP gross profit plus depreciation and amortization expense in cost of sales and share-based compensation expense in cost of sales, minus revenue related to our Root Warrants. Total gross profit per retail unit, non-GAAP is Gross profit, non-GAAP divided by retail vehicle unit sales.

Previous wording

A reconciliation of Adjusted EBITDA to net income (loss), Gross profit, non-GAAP to gross profit, and SG&A expenses, non-GAAP to SG&A expenses, which are the most directly comparable GAAP measures, and calculations of Adjusted EBITDA margin, Total gross profit per retail unit, non-GAAP, and Total SG&A expenses per retail unit, non-GAAP is as follows:

Current wording

A reconciliation of Adjusted EBITDA to net income, Gross profit, non-GAAP to gross profit, and SG&A expenses, non-GAAP to SG&A expenses, which are the most directly comparable GAAP measures, and calculations of Adjusted EBITDA margin, Total gross profit per retail unit, non-GAAP, and Total SG&A expenses per retail unit, non-GAAP is as follows:

Previous wording

Finally, subject to the restrictions in the indentures governing the Senior Secured Notes, we or our affiliates have and may again, at any time, and from time to time, repurchase portions of our Class A common stock, our Senior Unsecured Notes, our Senior Secured Notes, or any other securities we may issue, from time to time, in open market transactions, privately negotiated transactions, in exchange for property or other securities or otherwise. During the three months ended June 30, 2024, we repurchased and cancelled $250 million principal amount of 2028 Senior Secured Notes. Any additional repurchase decisions will be made after consideration of market conditions and liquidity needs and will be upon such terms and at such prices as we determine appropriate. However, there is no guarantee that a repurchase will take place.

Current wording

Finally, subject to the restrictions in the indentures governing the Senior Secured Notes, we or our affiliates have and may again, at any time, and from time to time, repurchase portions of our Class A common stock, our Senior Unsecured Notes, our Senior Secured Notes, or any other securities we may issue, from time to time, in open market transactions, privately negotiated transactions, in exchange for property or other securities or otherwise. During the three and nine months ended September 30, 2024, we repurchased and cancelled $100 million and $350 million of principal amount of 2028 Senior Secured Notes, respectively. Any additional repurchase decisions will be made after consideration of market conditions and liquidity needs and will be upon such terms and at such prices as we determine appropriate. However, there is no guarantee that a repurchase will take place.

Previous wording

As of June 30, 2024 and December 31, 2023, the short-term revolving facilities had a total commitment of $4.2 billion each, an outstanding balance of $72 million and $668 million, respectively, and unused capacity of $4.1 billion and $3.5 billion, respectively.

Current wording

As of September 30, 2024 and December 31, 2023, the short-term revolving facilities had a total commitment of $4.2 billion each, an outstanding balance of $76 million and $668 million, respectively, and unused capacity of $4.1 billion and $3.5 billion, respectively.

Previous wording

(1) Includes $210 million and $185 million of accrued PIK interest as of June 30, 2024 and December 31, 2023, respectively. Accrued PIK interest increases the principal amount of Senior Secured Notes on each semi-annual interest payment date.

Current wording

(1) Includes $35 million and $185 million of accrued paid-in-kind ("PIK") interest as of September 30, 2024 and December 31, 2023, respectively. Accrued PIK interest increases the principal amount of Senior Secured Notes on each semi-annual interest payment date.

Previous wording

The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the six months ended June 30, 2024 and 2023:

Current wording

The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the nine months ended September 30, 2024 and 2023: