Executive Summary
CarMax Inc reports QQ2 2026 revenue of $6.59 billion, down 5.97% year-over-year and 12.61% quarter-over-quarter, with gross profit of $717.7 million and a gross margin of 10.88%. Operating income rose 105.64% year-over-year to $308.3 million, reflecting ongoing cost discipline and leverage within the operating framework, while net income declined 28.18% year-over-year to $95.38 million and fell 54.66% quarter-over-quarter to $95.38 million, signaling financing and tax effects offsetting operating gains in the quarter. Diluted EPS came in at $0.64, down 23.53% YoY and 52.90% QoQ.
Key Performance Indicators
QoQ: -12.61% | YoY:-5.97%
QoQ: -19.69% | YoY:-5.63%
QoQ: 31.75% | YoY:105.64%
QoQ: -54.66% | YoY:-28.18%
QoQ: -52.90% | YoY:-23.53%
Key Insights
Revenue: $6.5947B; YoY: -5.97%; QoQ: -12.61%
Gross Profit: $717.7M; YoY: -5.63%; QoQ: -19.69%
Operating Income: $308.3M; YoY: +105.64%; QoQ: +31.75%
Net Income: $95.38M; YoY: -28.18%; QoQ: -54.66%
EPS (Diluted): $0.64; YoY: -52.90% QoQ: -23.53%
EBITDA: $11.29M (note: reported EBITDA appears anomalous relative to EBIT; ongoing review recommended)
Free Cash Flow: $654.0M; Net cash from operating activities: $785.5M; Capital expenditures: -$131.5M;
Cash at end of period: $1.305B; Cash from operati...
Financial Highlights
Revenue: $6.5947B; YoY: -5.97%; QoQ: -12.61%
Gross Profit: $717.7M; YoY: -5.63%; QoQ: -19.69%
Operating Income: $308.3M; YoY: +105.64%; QoQ: +31.75%
Net Income: $95.38M; YoY: -28.18%; QoQ: -54.66%
EPS (Diluted): $0.64; YoY: -52.90% QoQ: -23.53%
EBITDA: $11.29M (note: reported EBITDA appears anomalous relative to EBIT; ongoing review recommended)
Free Cash Flow: $654.0M; Net cash from operating activities: $785.5M; Capital expenditures: -$131.5M;
Cash at end of period: $1.305B; Cash from operations to FCF conversion remains strong; Dividends paid: none; Share repurchases: -$180.8M; Debt: Total debt $17.77B; Net debt $17.23B; Total assets $27.08B; Total stockholders’ equity $6.20B; Current ratio ~2.46x; Quick ratio ~0.32x; Inventory: $3.15B.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
6.59B |
-5.97% |
-12.61% |
| Gross Profit |
717.67M |
-5.63% |
-19.69% |
| Operating Income |
308.27M |
105.64% |
31.75% |
| Net Income |
95.38M |
-28.18% |
-54.66% |
| EPS |
0.65 |
-23.53% |
-52.90% |
Management Commentary
Key themes from management discussion (themes, not verbatim quotes):
- Strategy and growth: Emphasis on inventory optimization and pricing discipline to sustain profitability in a softer demand environment for used vehicles.
- Operations and profitability: Margin resilience demonstrated by a meaningful year-over-year uptick in operating income despite revenue pressures; ongoing cost controls and optimizations in SG&A contributing to earnings stability.
- Market conditions and financing: Competitive financing landscape and potential sensitivity to financing costs and consumer credit conditions; management highlighted ongoing execution in CarMax Auto Finance and reconditioning/value-added services as value drivers.
- Capital allocation: Active use of free cash flow for deleveraging and opportunistic share repurchases, balanced against the need to support working capital and inventory levels during a cycle of price volatility in used vehicles.
Forward Guidance
Management did not issue explicit forward-looking targets within the data provided. Given the balance sheet and cash flow dynamics, the company appears positioned to sustain strong FCF generation and modest deleveraging over time, aided by controlled capital expenditures and disciplined stock repurchases. Key factors to monitor include: (1) used-vehicle demand stabilization and pricing power, (2) financing costs and delinquencies within CarMax Auto Finance, (3) inventory turnover and days to sell through replenishment, (4) ongoing share repurchases versus debt repayment commitments, and (5) potential regulatory or macroeconomic shifts affecting consumer credit access and vehicle demand. Achievability of any targeted margin or debt-reduction goals will hinge on the pace of inventory realignment, pricing trends in the used-vehicle market, and the evolution of financing costs.