CVNACarvana
Carvana Co. is a holding company that was formed as a Delaware corporation in 2016 in order to operate the business of Carvana Group, LLC and its subsidiaries (collectively, "Carvana Group"). 10-K, Item 1
- Employees
- 23,100
- Headquarters
- Tempe, AZ
- CEO
- Ernest C. Garcia III
- Next results
- around Feb 17, 2027
9 paragraphs in Risk Factors of the 10-K filed Feb 18, 2026 with nothing like them in the 10-K filed Feb 19, 2025. Quoted exactly. Paragraphs that were only edited are under 10-K change.
Compared with the Risk Factors in the latest 10-K of the other 46 Consumer discretionary companies: a paragraph with at least half its words the same at another company is called similar, and the companies are listed under it. A paragraph most of them have is marked boilerplate. No line means no other company has one like it. This counts text; it does not say how serious a risk is.
aspect of our brand, including information spread through social media or traditional media channels, it could have a material adverse effect on our business, sales, and results of operations.
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Our use of artificial intelligence may not perform as expected and could expose us to technological, operational, legal, and reputational risks that could adversely affect our business, financial condition, and results of operations
Similar paragraph at 6 of 46 other Consumer discretionary companies: ABNB, BKNG, DASH, DECK, NCLH, TSCOWe increasingly develop and deploy AI technology through third party generative AI platforms and internal software, in connection with our proprietary systems and customer experiences, including automated, self-service workflows, AI-enabled customer support tools, internal work efficiencies, and enhancement of our recruiting and hiring processes. These initiatives are complex, rapidly evolving, and inherently uncertain. There is no assurance that our AI capabilities will function as intended, deliver anticipated benefits, or scale cost-effectively. The performance, quality, and impact of AI models depend on numerous factors, including the availability and integrity of training data, model design, computational resources, integration with our operations and technology stack, and ongoing monitoring and governance. If our AI systems or those third party platforms we utilize underperform, produce inaccurate, incomplete, or biased outputs, hallucinate or fail under edge cases, degrade customer experiences, inadvertently disclose or misuse intellectual property, or otherwise fail to meet expectations, we could experience decreased conversion, operational disruptions, increased costs, reduced margins, customer dissatisfaction, negative publicity, or harm to our brand and competitive position. Increased use of AI may additionally result in cybersecurity, data privacy, and labor and employment risks.
The laws, rules, standards, and guidance relating to AI are developing rapidly and vary across jurisdictions. We may be subject to evolving requirements regarding transparency, fairness, explainability, safety, data usage and provenance, content integrity, consumer protection, and algorithmic accountability. If we use AI in ways that regulators view as unfair, deceptive, discriminatory, or otherwise noncompliant, we could face heightened scrutiny, investigations, enforcement actions, private litigation, or requirements to modify, suspend, or cease certain AI-enabled practices. To the extent AI touches areas implicating privacy, information security, intellectual property, credit and financing, or other regulated activities, we may incur additional compliance obligations and associated costs.
The development and deployment of AI requires ongoing investments in talent, infrastructure, data quality, tooling, and governance frameworks. These investments may be significant and may not result in improvements to growth, margins, or customer experience. We may need to devote additional resources to testing, monitoring, documentation, and controls to address emerging standards and mitigate model risks, including bias, fairness, and safety. If we are unable to develop, procure, integrate, or govern AI technologies effectively; if third-party AI providers or inputs are unavailable, unreliable, or more costly; if regulatory requirements materially constrain AI use; or if our AI initiatives otherwise fail to meet expectations, our business, financial condition, and results of operations could be adversely affected.
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We also rely on third‑party service providers and vendors that process information on our behalf. We have limited ability to control their security and privacy practices, and contractual protections and due diligence may not prevent all incidents. A security incident at a third party could have similar adverse effects on us as an incident on our own systems. The use of AI tools and programs by new or existing vendors may also introduce unique vulnerabilities whose existence or exploitation could have a material adverse effect on our business or operations.
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safe use of AI tools may not effectively protect proprietary information and any incidents of inadvertent disclosure could undermine our intellectual property rights.
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•entry into certain new lines of business may subject us to new laws and regulations or additional operational costs;
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In June 2025, we received a subpoena from the SEC requesting information that we believe primarily relates to allegations raised by a report published by a now-defunct short-selling firm. We currently cannot predict the outcome of this matter. For more information, see Item 3. Legal Proceedings.
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New in the latest 10-Q
17 paragraphs in the 10-Q filed Oct 28, 2026 with nothing like them in the 10-Q filed Jul 29, 2026 (at least half the words must differ; new numbers alone do not count). Quoted exactly, grouped by the item heading above them. This is text that changed, not a judgement of how serious it is.
Financial statements and notes
Historically, the Company's capital and liquidity needs have been primarily satisfied through its debt and equity financings, operating cash flows, and short-term revolving facilities. During the three months ended September 30, 2026, the Company (i) entered into a $ 1.66 billion Term Loan B facility, and used the proceeds therefrom, together with cash on hand, to redeem in full its 2030 Senior Secured Notes; (ii) further amended the Ally MPSA to increase the commitment by Ally (each as defined in Note 7 - Finance Receivable Sale Agreements) to purchase up to $ 8 billion of principal balance of finance receivables through July 2027; (iii) extended and upsized by $ 500 million one of its definitive loan purchase agreements through January 2028, with a further automatic extension to July 2028 if the full commitment has not yet been purchased by January 2028; and (iv) extended one of its short-term revolving credit facilities through August 2027.
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On August 14, 2026, the Company entered into a credit agreement providing for a senior secured term loan B facility in an aggregate principal amount of $ 1.66 billion (the "Term Loan B"), which was fully drawn at closing at an issue price of 99.75 % of the aggregate principal amount thereof. In connection with the transaction, the Company incurred original issue discount of $ 4 million and debt issuance costs of $ 17 million, which are presented as a direct deduction from the carrying amount of the Term Loan B and are being amortized to interest expense, net over the term of the facility using the effective interest method, resulting in an effective interest rate of approximately 6.1 %.
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The Term Loan B matures on August 14, 2033 and amortizes in equal quarterly installments of $ 4 million, representing 1.00 % per annum of the original principal amount, commencing with the fiscal quarter ending March 31, 2027, with the remaining balance due at maturity. Borrowings bear interest, at the Company's option, at Term SOFR plus 2.25 % per annum, subject to a 0.00 % floor, or at a base rate plus 1.25 % per annum, subject to a 1.00 % floor. The Term Loan B is guaranteed on a joint and several basis by certain of the Company's wholly owned domestic restricted subsidiaries, subject to customary exceptions, and is primarily secured by a first-priority lien on substantially all assets of the Company and the guarantors, ranking pari passu with the Company's outstanding Senior Secured Notes.
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The credit agreement does not contain any financial maintenance covenants. It contains covenants that, among other things, restrict, subject to certain exceptions, the Company's ability and the ability of its restricted subsidiaries to, incur additional indebtedness; create liens on assets; pay dividends and other distributions including debt payments and investments; change its line of business; sell certain assets; enter into certain types of transactions and effect mergers, consolidations, dissolutions or liquidations; and transact with affiliates.
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Prepayments made on or prior to February 14, 2027 in connection with certain repricing transactions are subject to a 1.00 % premium; the Term Loan B is otherwise prepayable at any time at par without premium or penalty.
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As of September 30, 2026, the Company was in compliance with all debt covenants.
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The following table summarizes the changes in AOCI, net of tax, which is reported as a component of stockholders' equity, during the three months ended September 30, 2026. As discussed in Note 17 - Fair Value of Financial Instruments, the interest rate swap was entered into during the three months ended September 30, 2026. As such, there was no activity in prior periods.
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Three Months Ended September 30, (in millions) Opening balance $ — Other comprehensive income before reclassifications 12 ────────────────────────────────────────────────────────────────────────────────────────────────────────────────── 2026 Amounts reclassified from accumulated other comprehensive income 1 Ending balance $ 13
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The Company evaluated the 2026 Warrant Exchange under Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606") and concluded that it represents a modification of the Company's existing contract with Root rather than a termination of that contract. Accordingly, the 2026 Warrant Exchange was accounted for prospectively and the Company's unamortized deferred revenue associated with the Long-Term Warrants immediately prior to the modification was combined with the fair value of the New Root Warrants on the modification date, and the resulting balance is being recognized as revenue on a straight-line basis over the New Root Warrant's remaining two-year term. Separately, the cancellation of the Original Long-Term Warrants and issuance of the New Root Warrants were accounted for as a derecognition of the Original Long-Term Warrants derivative asset at its fair value immediately prior to cancellation and a recognition of a new derivative asset for the New Root Warrants at its fair value on the issuance date, with a resulting loss of $ 11 million recognized in other expense, net during the three months ended September 30, 2026.
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The Company is exposed to variability in its interest payments on its Term Loan B facility, which bears interest at a floating rate based on one-month Term SOFR. To manage this exposure, the Company entered into an interest rate swap, under which the Company pays a fixed rate of 4.055 % and receives one-month Term SOFR, economically converting a portion of its floating-rate interest payments to a fixed rate. The Company has designated the swap as a cash flow hedge of the variability in cash flows attributable to changes in one-month Term SOFR on the forecasted interest payments on the Term Loan B. The swap has an initial notional amount of $ 1.660 billion, which amortizes by $ 4 million each quarter beginning March 31, 2027 to a final notional amount of $ 1.635 billion, and terminates on July 31, 2028. Because the swap terminates prior to the maturity of the Term Loan B, the hedging relationship is a partial-term hedge, and the Company has designated as hedged only those interest payments occurring through July 31, 2028. The Company's obligations under the agreement are secured by the same collateral and guaranteed by the same guarantors that secure and guarantee the Term Loan B.
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The Company determines the fair value of the interest rate swap using a discounted cash flow model with observable market inputs, including the forward one-month Term SOFR curve and discount factors derived from the SOFR curve, adjusted for non-performance risk. Because the significant inputs are observable, the measurement is classified as Level 2. Amounts recorded in AOCI are reclassified into interest expense, net in the same periods in which the hedged interest payments affect earnings, and the Company estimates that approximately $ 7 million of gains currently recorded in AOCI will be reclassified into interest expense over the next twelve months. The Company transacted the swap with a single counterparty, a major financial institution, and is therefore exposed to a concentration of credit risk with respect to that counterparty. The Company monitors the counterparty's credit standing and does not currently anticipate non-performance.
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The notional and fair value of the interest rate swap as of September 30, 2026 was as follows:
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• our substantial indebtedness, the associated interest expense and the effectiveness of our interest rate swap;
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Market risk
As of September 30, 2026, we are exposed to potential losses arising from adverse changes in interest rates related to the Term Loan B, which bears interest at a floating rate based on one-month Term SOFR. To manage a portion of this exposure, we entered into an interest rate swap under which we pay a fixed rate of 4.055% and receive one-month Term SOFR. The interest
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rate swap instrument is designated as a cash flow hedge, with the objective of managing the exposure to interest rate risk by converting a portion of the Term Loan B's floating interest rate payments to a fixed interest rate.
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As of September 30, 2026, the Term Loan B had an outstanding principal amount of $1.660 billion and bore interest at Term SOFR plus 2.25%. A one percentage point increase or decrease in the one month Term SOFR would result in an approximately $17 million increase or decrease, respectively, in annual interest expense before giving effect to the interest rate swap. After giving effect to the interest rate swap, which had a notional amount of $1.660 billion as of September 30, 2026, a one percentage point increase or decrease in Term SOFR would not have a material impact on annual interest expense during the term of the swap.
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The Company transacted the swap with a single counterparty, a major financial institution, and is therefore exposed to a concentration of credit risk with respect to that counterparty. The Company monitors the counterparty’s credit standing.
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The 10-Q's risk factors against the 10-K
Item 1A of the 10-Q filed Oct 28, 2026 against Item 1A of the 10-K filed Feb 18, 2026.
A 10-Q repeats only the risks that changed, so a 10-K paragraph that is missing from it is not counted as removed.
Added is a paragraph with nothing like it in the 10-K, Reworded a sentence that is in both with several words changed,
Quiet changes a sentence in both where one to four words changed and one is a hedge or a modal
(cut words struck through, new words highlighted and underlined).
Text on the page, not a score; each links to the filing at sec.gov.
What the 10-Q itself says about its risk factors:
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Information regarding our risk factors is disclosed under the heading "Risk Factors" in our most recent Annual Report on Form 10-K, filed on February 18, 2026.
1 paragraph in the 10-Q's Item 1A, and none of them adds, rewords or quietly edits a paragraph of the 10-K's.
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