CARVANA CO.

Previous wording

Carvana is the leading e-commerce platform for buying and selling used cars. We are transforming the used car buying and selling experience by giving consumers what they want - a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction. Our differentiated business model combines a comprehensive online sales experience with a vertically integrated supply chain, designed to sell high-quality vehicles to our customers transparently and efficiently at a low price. The automotive retail industry is large – with approximately 37 million used auto retail transactions in the United States (“U.S.”) in 2024 according to Cox Automotive – and highly fragmented – with the top 10 used auto retailers in the U.S. accounting for less than 10% of the market share in 2023 according to Automotive News. These dynamics create an exceptional opportunity for disruption that our custom-built business model can capitalize on to remain well-positioned for long term growth. Over the years we have leveraged our growing logistics network, which spans 316 metropolitan statistical areas, and our in-house distribution network, servicing over 80% of the U.S. population as of March 31, 2025, to sell 2.3 million retail vehicles, generating $68.0 billion in total revenue since inception in 2012 through March 31, 2025.

Current wording

Carvana is the leading e-commerce platform for buying and selling used cars. We are transforming the used car buying and selling experience by giving consumers what they want - a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction. Our differentiated business model combines a comprehensive online sales experience with a vertically integrated supply chain, designed to sell high-quality vehicles to our customers transparently and efficiently at a low price. The automotive retail industry is large – with approximately 37 million used auto retail transactions in the United States (“U.S.”) in 2024 according to Cox Automotive – and highly fragmented – with the top 10 used auto retailers in the U.S. accounting for less than 10% of the market share in 2023 according to Automotive News. These dynamics create an exceptional opportunity for disruption that our custom-built business model can capitalize on to remain well-positioned for long term growth. Over the years we have leveraged our growing logistics network, which spans 316 metropolitan statistical areas, and our in-house distribution network, servicing over 80% of the U.S. population as of June 30, 2025, to sell 2.4 million retail vehicles, generating $72.8 billion in total revenue since inception in 2012 through June 30, 2025.

Previous wording

•Online Search and Shopping Experience. We offer a mobile-optimized website, where prospective retail car buyers can immediately begin browsing, researching, filtering, and identifying their vehicle of choice from an inventory of over 53,000 total website units that we offer for sale as of March 31, 2025. We leverage our patented, automated photo technology to offer an annotated virtual vehicle tour, which includes a 360-degree view of the interior and exterior of the actual vehicle and allows customers to view vehicle imperfections through high-definition photography. Our website also features integrations with various vehicle data providers for vehicle feature and option information to assist customers with purchase decisions.

Current wording

•Online Search and Shopping Experience. We offer a mobile-optimized website, where prospective retail car buyers can immediately begin browsing, researching, filtering, and identifying their vehicle of choice from an inventory of over 56,000 total website units that we offer for sale as of June 30, 2025. We leverage our patented, automated photo technology to offer an annotated virtual vehicle tour, which includes a 360-degree view of the interior and exterior of the actual vehicle and allows customers to view vehicle imperfections through high-definition photography. Our website also features integrations with various vehicle data providers for vehicle feature and option information to assist customers with purchase decisions.

Previous wording

•Post-sale customer support. After purchase, our customer advocates handle post-sale coordination and assistance, including facilitating returns or exchanges under our seven-day return policy. As of March 31, 2025, customers rated us an average of 4.7 out of 5.0 from over 221,000 surveys on our website since inception, fostering repeat business and a strong referral network.

Current wording

•Post-sale customer support. After purchase, our customer advocates handle post-sale coordination and assistance, including facilitating returns or exchanges under our seven-day return policy. As of June 30, 2025, customers rated us an average of 4.7 out of 5.0 from over 228,000 surveys on our website since inception, fostering repeat business and a strong referral network.

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 March 31, 2025, the number of vehicles we sold to retail customers increased by 45.7% to 133,898, compared to 91,878 in the three months ended March 31, 2024.

Current wording

Since launching to customers in Atlanta, Georgia in January 2013, we have experienced rapid growth in sales through our website www.carvana.com. During the three months ended June 30, 2025, the number of vehicles we sold to retail customers increased by 41.2% to 143,280, compared to 101,440 in the three months ended June 30, 2024. During the six months ended June 30, 2025, the number of vehicles we sold to retail customers increased by 43.4% to 277,178, compared to 193,318 in the six months ended June 30, 2024.

Previous 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 absent any material changes in macroeconomic conditions. 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 continue to prioritize efficient growth in retail units sold, absent any material changes in macroeconomic conditions. To prioritize growth, we are pursuing investments in technology and infrastructure, while simultaneously maintaining our focus on efficiency gains and profitability. This includes continued investment in our vehicle acquisition, reconditioning and logistics network, as well as continued investment in partnerships, product development, and engineering to deliver customers a best-in-class experience.

Previous wording

Our largest source of revenue, retail vehicle sales, totaled $3.0 billion and $2.2 billion during the three months ended March 31, 2025 and 2024, respectively. We generally expect retail vehicle sales to trend proportionately with retail units sold, absent any material changes in macroeconomic conditions. We generate a majority of 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. Retail vehicle sales also include shipping and delivery fees and service revenue from retail marketplace transactions, which are retail marketplace partner vehicles sold to customers through Carvana that receive net revenue treatment.

Current wording

Our largest source of revenue, retail vehicle sales, totaled $3.4 billion and $2.4 billion during the three months ended June 30, 2025 and 2024, respectively, and $6.4 billion and $4.6 billion during the six months ended June 30, 2025 and 2024, respectively. We generally expect retail vehicle sales to trend proportionately with retail units sold, absent any material changes in macroeconomic conditions. We generate a majority of 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. Retail vehicle sales also include shipping and delivery fees and service revenue from retail marketplace transactions, which are retail marketplace partner vehicles sold to customers through Carvana that receive net revenue treatment.

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 $863 million and $657 million during the three months ended March 31, 2025 and 2024, respectively. We generally expect wholesale sales to trend proportionately with retail units sold through inventory we acquire via trade-ins and from customers who wish to sell us a car independent of a retail sale as well as with 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 $1.0 billion and $720 million during the three months ended June 30, 2025 and 2024, respectively, and $1.9 billion and $1.4 billion during the six months ended June 30, 2025 and 2024, respectively. We generally expect wholesale sales to trend proportionately with retail units sold through inventory we acquire via trade-ins and from customers who wish to sell us a car independent of a retail sale as well as with 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 complementary products such as VSCs, GAP waiver coverage, and auto insurance totaled $389 million and $229 million during the three months ended March 31, 2025 and 2024, 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 complementary 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 complementary products such as VSCs, GAP waiver coverage, and auto insurance totaled $411 million and $279 million during the three months ended June 30, 2025 and 2024, respectively, and $800 million and $508 million during the six months ended June 30, 2025 and 2024, 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 complementary 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

Our highest priority continues to be providing exceptional customer experiences while improving efficiency and utilizing our infrastructure to support efficient growth in retail units sold to help us move along the path to achieve sustained profitability. Strategies to support efficient growth initiatives, which we may undertake from time to time, include the following:

Current wording

Our highest priority continues to be providing exceptional customer experiences while making effective use of our infrastructure to support efficient growth in retail units sold. Strategies to support efficient growth initiatives, which we may undertake from time to time, include the following:

Previous wording

For the past several years 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 absent any material changes in macroeconomic conditions, we also anticipate that our operating expenses will increase as we grow retail units sold, wholesale units sold, and wholesale marketplace units transacted. There is no guarantee that we will be able to realize the desired return on our investments.

Current wording

We maintain a primary focus on expanding the scale and reach of our business, while simultaneously driving operational efficiency, flexibility, and scalability through process and technology improvements that underpin sustainable, profitable growth. While we intend to become increasingly efficient over time absent any material changes in macroeconomic conditions, we also anticipate that our operating expenses will increase as we grow retail units sold, wholesale units sold, and wholesale marketplace units transacted. There is no guarantee that we will be able to realize the desired return on our investments.

Previous wording

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our progress and make strategic decisions. Our key operating metrics reflect the key drivers of our growth, including increasing brand awareness, enhancing the selection of vehicles we make available to our customers, and serving more of the U.S.

Current wording

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our progress and make strategic decisions. Our key operating metrics reflect the key drivers of our growth, including increasing brand awareness, enhancing the selection of vehicles we make available to our customers, and serving more of the U.S. population. Our key operating metrics also demonstrate our ability to translate these drivers into retail sales and to monetize these retail sales through a variety of product offerings.

Previous wording

The number of retail vehicles we sell depends on the volume of traffic to our website, 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, including those that could arise from the global trade environment. 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 several months of 2024, and, to a lesser extent, during the remainder 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. In the three months ended March 31, 2025, inflation and high interest rates did not have a material impact on our business.

Current wording

The number of retail vehicles we sell depends on the volume of traffic to our website, 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, including those that could arise from the global trade environment. 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 several months of 2024, and, to a lesser extent, during the remainder 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. While inflationary pressures persist in 2025, in the three and six months ended June 30, 2025, inflation and high interest rates did not have a material impact on our business.

Previous wording

Other 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 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 $8 and $7, respectively, of wholesale sales and revenues from related parties.

Current wording

(1) Includes $9, $7, $17 and $14, respectively, of wholesale sales and revenues from related parties.

Previous wording

(2) Includes $72 and $42, respectively, of other sales and revenues from related parties.

Current wording

(2) Includes $83, $47, $155 and $89, respectively, of other sales and revenues from related parties.

Previous wording

(5) Includes $16 and $25, respectively, of depreciation and amortization expense.

Current wording

(5) Includes $13, $22, $29 and $47, respectively, of depreciation and amortization expense.

Previous wording

Retail vehicle sales increased by $805 million to $3.0 billion during the three months ended March 31, 2025, compared to $2.2 billion during the three months ended March 31, 2024. The increase in revenue was primarily due to an increase in the number of retail vehicles sold to 133,898 from 91,878 during the three months ended March 31, 2025 and 2024, respectively, partially offset by a decrease in retail revenue per retail unit sold to $22,256 in the three months ended March 31, 2025 from $23,673 in the prior year, due primarily to higher retail marketplace units sold as a share of total retail units sold, partially offset by faster turn times, compared to the three months ended March 31, 2024.

Current wording

Six months ended June 30, 2025 versus 2024. Retail vehicle sales increased by $1.8 billion to $6.4 billion during the six months ended June 30, 2025, compared to $4.6 billion during the six months ended June 30, 2024. The increase in revenue was primarily due to an increase in the number of retail vehicles sold to 277,178 from 193,318 during the six months ended June 30, 2025 and 2024, respectively, partially offset by a decrease in retail revenue per retail unit sold to $23,036 in the six months ended June 30, 2025 from $23,723 in the prior year, due primarily to higher retail marketplace units sold as a share of total retail units sold, and a decrease in turn times.

Previous wording

Other sales and revenues increased by $160 million to $389 million during the three months ended March 31, 2025, compared to $229 million during the three months ended March 31, 2024. The increase was primarily due to an increase in gain on loan sales as a result of increased retail units sold, more loan sales, and higher loan sale spreads during the three months ended March 31, 2025.

Current wording

Three months ended June 30, 2025 Versus 2024. Other sales and revenues increased by $132 million to $411 million during the three months ended June 30, 2025, compared to $279 million during the three months ended June 30, 2024. The increase was primarily due to an increase in gain on loan sales as a result of increased retail units sold, more loan sales, and higher loan sale spreads during the three months ended June 30, 2025.

Previous wording

Retail vehicle gross profit increased by $146 million to $429 million during the three months ended March 31, 2025, compared to $283 million during the three months ended March 31, 2024. This increase was driven primarily by an increase in the number of retail vehicles sold to 133,898 from 91,878 during the three months ended March 31, 2025 and 2024, respectively. Additionally, retail vehicle gross profit per unit increased to $3,204 for the three months ended March 31, 2025, compared to $3,080 for the three months ended March 31, 2024. The per unit increase was primarily driven by lower reconditioning and inbound transport costs and lower depreciation rates, partially offset by lower spreads between retail market and wholesale market prices during the three months ended March 31, 2025.

Current wording

Six months ended June 30, 2025 versus 2024. Retail vehicle gross profit increased by $320 million to $950 million during the six months ended June 30, 2025, compared to $630 million during the six months ended June 30, 2024. This increase was driven primarily by an increase in the number of retail vehicles sold to 277,178 from 193,318 during the six months ended June 30, 2025 and 2024, respectively. Additionally, retail vehicle gross profit per unit increased to $3,427 for the six months ended June 30, 2025, compared to $3,259 for the six months ended June 30, 2024. The per unit increase was primarily driven by lower reconditioning and inbound transport costs and lower depreciation rates, partially offset by lower spreads between retail market and wholesale market prices during the six months ended June 30, 2025.

Previous wording

Wholesale gross profit increased by $32 million to $111 million during the three months ended March 31, 2025, compared to $79 million during the three months ended March 31, 2024. This increase was primarily driven by an increase in wholesale units sold to 63,454 from 44,155 for the three months ended March 31, 2025 and 2024, respectively. The increase in wholesale units sold was primarily a result of an increase in overall vehicle acquisitions during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Additionally, the increase was driven by an increase in wholesale marketplace gross profit by $14 million to $47 million during the three months ended March 31, 2025, compared to $33 million for the three months ended March 31, 2024, due to an increase in the number of wholesale marketplace units transacted to 248,624 from 242,647 during the three months ended March 31, 2025 and 2024, respectively.

Current wording

Three months ended June 30, 2025 versus 2024. Wholesale gross profit increased by $43 million to $132 million during the three months ended June 30, 2025, compared to $89 million during the three months ended June 30, 2024. This increase was primarily driven by an increase in wholesale units sold to 72,770 from 50,368 for the three months ended June 30, 2025 and 2024, respectively, along with an increase in wholesale vehicle gross profit per wholesale unit to $1,086 from $953, 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, 2025 compared to the three months ended June 30, 2024. 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, 2025. Additionally, the increase was driven by an increase in wholesale marketplace gross profit by $12 million to $53 million during the three months ended June 30, 2025, compared to $41 million for the three months ended June 30, 2024, due to an increase in the number of wholesale marketplace units transacted to 258,756 from 247,135 during the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Selling, general and administrative expenses increased by $79 million to $535 million during the three months ended March 31, 2025, compared to $456 million during the three months ended March 31, 2024, primarily due to higher employee headcount and other SG&A expenses, primarily associated with higher retail units sold.

Current wording

Selling, general and administrative expenses increased by $96 million to $551 million during the three months ended June 30, 2025, compared to $455 million during the three months ended June 30, 2024, primarily due to higher employee headcount, advertising, and other SG&A expenses, primarily associated with higher retail units sold. Selling, general and administrative expenses increased by $175 million to $1.1 billion during the six months ended June 30, 2025, compared to $911 million during the six months ended June 30, 2024, primarily due to higher employee headcount, other SG&A expenses, and advertising, primarily associated with higher retail units sold.

Previous wording

Other operating expense, net was zero and $1 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Other operating expense, net was $2 million and $1 million for the three months ended June 30, 2025 and 2024, respectively, and $2 million for each of the six months ended June 30, 2025 and 2024.

Previous wording

Interest expense, net decreased by $34 million to $139 million during the three months ended March 31, 2025 compared to $173 million during the three months ended March 31, 2024, primarily due to lower interest on the Senior Secured Notes as a result of repurchases and our election to pay cash interest on the 2028 and 2030 Senior Secured Notes (each as defined in Note 9 — Debt Instruments), higher interest income, and lower Finance Receivable Facilities and Floor Plan Facility interest expense as a result of lower average balances during the three months ended March 31, 2025.

Current wording

Interest expense, net decreased by $30 million to $143 million during the three months ended June 30, 2025 compared to $173 million during the three months ended June 30, 2024, and decreased by $64 million to $282 million during the six months ended June 30, 2025, compared to $346 million during the six months ended June 30, 2024, primarily due to higher interest income, lower interest on the Senior Secured Notes as a result of repurchases and our election to pay cash interest on the 2028 and 2030 Senior Secured Notes (each as defined in Note 9 — Debt Instruments), and lower Finance Receivable Facilities and Floor Plan Facility interest expense as a result of lower average balances during the three and six months ended June 30, 2025.

Previous wording

Loss on debt extinguishment was $2 million during the three months ended March 31, 2025 due to the repurchase of $52 million of principal amount of 2028 Senior Secured Notes in the open market for $55 million, which included less than $1 million of accrued interest and pro-rata write-offs of unamortized debt issuance costs and unamortized premium.

Current wording

Loss on debt extinguishment was zero and $2 million during the three and six months ended June 30, 2025, respectively, due to the repurchase of $52 million of principal amount of 2028 Senior Secured Notes in the open market for $55 million during the three months ended March 31, 2025, which included less than $1 million of accrued interest and pro-rata write-offs of unamortized debt issuance costs and unamortized premium. 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 during the three months ended June 30, 2024, which included $7 million of accrued interest and $1 million in pro-rata write-offs of unamortized debt issuance costs and unamortized premium.

Previous wording

Other income, net was $122 million during the three months ended March 31, 2025 and was primarily due to a $158 million increase in the fair value of Root Warrants, partially offset by a $40 million TRA expense, compared to $87 million during the three months ended March 31, 2024 which was primarily due to a $75 million increase in the fair value Root Warrants and a $9 million increase in the fair value of our beneficial interests in securitizations.

Current wording

Other expense (income), net changed by $25 million to expense of $60 million during the three months ended June 30, 2025, compared to expense of $35 million during the three months ended June 30, 2024. The change was primarily due to a $35 million decrease in the fair value of Root Warrants, a $25 million TRA expense, and a $4 million lower increase in the fair value of our beneficial interests in securitizations. Other expense (income), net changed by $10 million to income of $62 million during the six months ended June 30, 2025, compared to an income of $52 million during the six months ended June 30, 2024. The change was primarily due to a $123 million increase in the fair value of our Root Warrants, partially offset by a $65 million TRA expense and a $10 million lower increase in the fair value of our beneficial interests in securitizations.

Previous wording

Income tax provision (benefit) changed by $3 million to a provision of $2 million during the three months ended March 31, 2025, compared to a benefit of $1 million during the three months ended March 31, 2024.

Current wording

Income tax provision changed by $1 million to a provision of zero during the three months ended June 30, 2025, compared to a provision of $1 million during the three months ended June 30, 2024. Income tax provision changed by $2 million to a provision of $2 million during the six months ended June 30, 2025, compared to a provision of zero during the six months ended June 30, 2024.

Previous wording

Adjusted EBITDA is defined as net income plus (minus) income tax provision (benefit), interest expense, net, other operating expense, 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, and loss on debt extinguishment, minus other income, net and revenue related to our Root Warrants. Adjusted EBITDA margin is Adjusted EBITDA as a percentage of total revenues.

Current wording

Adjusted EBITDA is defined as net income plus (minus) income tax provision, interest expense, net, other operating expense, 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 other expense (income), net, minus revenue related to our Root Warrants. Adjusted EBITDA margin is Adjusted EBITDA as a percentage of total revenues.

Previous wording

In response to the macroeconomic environment, our focus in past years was on driving profitability through initiatives to better conform our expense structure to unit volume levels and create a strong operational foundation, allowing us to shift focus beginning in 2024 to the long-term phase of driving profitable growth. We expect to continue our focus on profitability initiatives as we continue to grow, assuming stability in the macroeconomic environment. We expect our primary sources of cash to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months.

Current wording

In past years, we maintained a focus on driving profitability, which allowed us to create a strong operational foundation for Company expansion. Beginning in 2024, we began to shift focus to the long-term phase of driving profitable growth. We expect to continue our focus on profitability initiatives as we continue to grow, assuming stability in the macroeconomic environment. We expect our primary sources of cash to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months.

Previous wording

On July 19, 2023, the Company entered into an agreement (the "Distribution Agreement") to establish an ATM Program, and on July 31, 2024, the Company refreshed the ATM Program by entering into an Amended and Restated Distribution Agreement with Barclays Capital Inc., Citigroup Global Markets Inc., Moelis & Company LLC, and Virtu Americas LLC. 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 as of March 31, 2025, 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. There was no activity pursuant to the ATM Program during the three months ended March 31, 2025.

Current wording

On July 19, 2023, the Company entered into an agreement (the "Distribution Agreement") to establish an ATM Program, and on July 31, 2024, the Company refreshed the ATM Program by entering into an Amended and Restated Distribution Agreement with Barclays Capital Inc., Citigroup Global Markets Inc., Moelis & Company LLC, and Virtu Americas LLC. 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 as of June 30, 2025, 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. There was no activity pursuant to the ATM Program during the three and six months ended June 30, 2025.

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 shares 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. In addition, subject to the restrictions in the indentures governing the Senior Secured Notes and the terms of such notes and our Senior Unsecured Notes, we may redeem all or portions of such notes. During the three months ended March 31, 2025, we repurchased and cancelled $52 million of principal amount of 2028 Senior Secured Notes. Any additional repurchase or redemption 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 or redemption will take place.

Current wording

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 shares 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. In addition, subject to the restrictions in the indentures governing the Senior Secured Notes and the terms of such notes and our Senior Unsecured Notes, we may redeem all or portions of such notes. During the three and six months ended June 30, 2025, we repurchased and cancelled zero and $52 million, respectively, of principal amount of 2028 Senior Secured Notes. Any additional repurchase or redemption 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 or redemption will take place.

Previous wording

As of March 31, 2025 and December 31, 2024, the short-term revolving facilities had a total commitment of $4.2 billion each period, an outstanding balance of $64 million and $67 million, respectively, and unused capacity of $4.1 billion each period.

Current wording

As of June 30, 2025 and December 31, 2024, the short-term revolving facilities had a total commitment of $4.2 billion each period, an outstanding balance of $72 million and $67 million, respectively, and unused capacity of $4.1 billion each period.

Previous wording

As of March 31, 2025 and December 31, 2024, our outstanding principal amount of indebtedness was $5.5 billion each period and is summarized in the table below. See Note 9 — Debt Instruments included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q for further information on our debt.

Current wording

As of June 30, 2025 and December 31, 2024, our outstanding principal amount of indebtedness was $5.6 billion and $5.5 billion, respectively, and is summarized in the table below. See Note 9 — Debt Instruments included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q for further information on our debt.

Previous wording

(1) Includes $38 million and $105 million of accrued paid-in-kind ("PIK") interest as of March 31, 2025 and December 31, 2024, respectively. Accrued PIK interest increases the principal amount of Senior Secured Notes on each semi-annual interest payment date.

Current wording

(1) Includes $112 million and $105 million of accrued paid-in-kind ("PIK") interest as of June 30, 2025 and December 31, 2024, 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 three months ended March 31, 2025 and 2024:

Current 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, 2025 and 2024:

Previous wording

Our primary sources of operating cash flows result from the sales of retail vehicles, wholesale vehicles, loans we originate, and VSCs, GAP waiver coverage, and other complementary products. Our primary uses of cash from operating activities are purchases of inventory, personnel-related expenses, and cash used to acquire customers. Cash provided by operating activities was $232 million and $101 million during the three months ended March 31, 2025 and 2024, respectively, an increase in cash provided by operating activities of $131 million, primarily due to an improvement in operating results, partially offset by an increase in interest paid due to our election to pay cash interest on the 2028 and 2030 Senior Secured Notes during the three months ended March 31, 2025.

Current wording

Our primary sources of operating cash flows result from the sales of retail vehicles, wholesale vehicles, loans we originate, and VSCs, GAP waiver coverage, and other complementary products. Our primary uses of cash from operating activities are purchases of inventory, personnel-related expenses, and cash used to acquire customers. Cash provided by operating activities was $261 million and $455 million during the six months ended June 30, 2025 and 2024, respectively, a decrease in cash provided by operating activities of $194 million, primarily due to increased vehicle inventory acquisitions during the six months ended June 30, 2025, together with an increase in interest paid due to our election to pay cash interest on the 2028 and 2030 Senior Secured Notes, partially offset by an improvement in operating results.

Previous wording

Our primary use of cash for investing activities is purchases of property and equipment. Cash used in investing activities was $35 million and cash provided by investing activities was $7 million during the three months ended March 31, 2025 and 2024, respectively, a decrease in cash provided by investing activities of $42 million, primarily due to the $24 million acquisition of a franchise dealership along with increased purchases of property and equipment during the three months ended March 31, 2025.

Current wording

Our primary use of cash for investing activities is purchases of property and equipment. Cash used in investing activities was $54 million and cash provided by investing activities was $9 million during the six months ended June 30, 2025 and 2024, respectively, an increase in cash used in investing activities of $63 million, primarily due to the $24 million acquisition of a franchise dealership along with increased purchases of property and equipment during the six months ended June 30, 2025.

Previous wording

Cash flows from financing activities primarily relate to our short and long-term debt activity, including proceeds from and payments on our short-term revolving facilities. Cash used in financing activities was $53 million and $375 million during the three months ended March 31, 2025 and 2024, respectively, a decrease in cash used in financing activities of $322 million, primarily driven by lower payments on short-term revolving facilities relative to borrowings, partially offset by higher payments on long-term debt due to our repurchases of $52 million of principal amount of the 2028 Senior Secured Notes in the open market for $55 million during the three months ended March 31, 2025.

Current wording

Cash flows from financing activities primarily relate to our short and long-term debt activity, including proceeds from and payments on our short-term revolving facilities. Cash used in financing activities was $37 million and $451 million during the six months ended June 30, 2025 and 2024, respectively, a decrease in cash used in financing activities of $414 million, primarily due to lower payments on short-term revolving facilities relative to borrowings and lower repurchases of 2028 Senior Secured Notes in the open market during the six months ended June 30, 2025, partially offset by net proceeds of $347 million from the sale of approximately 3 million shares of Class A common stock pursuant to our "at-the-market offering" program during the six months ended June 30, 2024.

Previous wording

We report money market securities, certain receivables, warrants to acquire Root's Class A common stock and beneficial interests in securitizations at fair value. See Note 17 — Fair Value of Financial Instruments, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

Current wording

We report money market securities, certain receivables, warrants to acquire common stock and beneficial interests in securitizations at fair value. See Note 17 — Fair Value of Financial Instruments, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

Previous wording

•the impact and outcome of litigation, government inquiries, and investigations; and

Current wording

•the impact and outcome of litigation, governmental inquiries, and investigations;

Previous wording

•potential sales of our Class A common stock, including through use of the at-the-market program;

Current wording

•potential sales of our Class A common stock, including through use of the at-the-market program; and