Executive Summary
CarMax Inc reported QQ3 2025 revenue of USD 6.223B, up 1.22% year-over-year but down 11.27% quarter-over-quarter. Gross profit reached USD 677.646M for a gross margin of 10.89%, while operating income was a negative USD 58.561M, yielding an operating margin of -0.94%. The company posted net income of USD 125.441M and basic/diluted EPS of USD 0.80/0.81, aided by a sizable non-operating income line (total other income/expenses net) of USD 225.033M that offset operating weakness. EBITDA stood at USD 460.458M (EBITDA margin ~7.40%), but true operating profitability remains challenged by elevated selling, general, and administrative costs and reconditioning/flow through costs typical of a large used-vehicle retail platform.
From a cash-flow perspective, operating cash flow was negative USD 23.352M and free cash flow was notably negative at USD -150.551M, with capex of USD -127.199M, highlighting ongoing capital discipline needs and working capital dynamics. Net debt remains sizable at roughly USD 17.35B (long-term debt USD 17.041B; cash and cash equivalents USD 271.9M; total debt to capitalization ~75.8%). The balance sheet shows robust current liquidity (current ratio ~2.30) but structural leverage remains a key overhang for near-term profitability and financial flexibility.
In the context of peers and industry benchmarks, CarMax appears to be operating with comparatively thinner margins and higher leverage than several European and U.S. peers in the consumer cyclicals space, raising questions about leverage risk and longer runway to deleverage. The absence of a stated forward guidance in the provided data necessitates a cautious stance until management outlines explicit levers for margin expansion and deleveraging.
Key Performance Indicators
QoQ: -10.89% | YoY:10.57%
QoQ: -139.07% | YoY:39.23%
Key Insights
Revenue: USD 6,223.371M; YoY +1.22%, QoQ -11.27%. Gross Profit: USD 677.646M; Gross Margin 10.89% (YoY +10.57%, QoQ -10.89%). Operating Income: USD -58.561M; Operating Margin -0.94%. EBITDA: USD 460.458M; EBITDARatio ~7.40%. Net Income: USD 125.441M; Net Margin 2.02%. EPS: USD 0.80 (basic), USD 0.81 (diluted).
Cash Flow and capitalization: Net cash provided by operating activities USD -23.352M; Free cash flow USD -150.551M; Net change in cash USD -277.458M; Cash end of period USD 975.836M; Cash...
Financial Highlights
Revenue: USD 6,223.371M; YoY +1.22%, QoQ -11.27%. Gross Profit: USD 677.646M; Gross Margin 10.89% (YoY +10.57%, QoQ -10.89%). Operating Income: USD -58.561M; Operating Margin -0.94%. EBITDA: USD 460.458M; EBITDARatio ~7.40%. Net Income: USD 125.441M; Net Margin 2.02%. EPS: USD 0.80 (basic), USD 0.81 (diluted).
Cash Flow and capitalization: Net cash provided by operating activities USD -23.352M; Free cash flow USD -150.551M; Net change in cash USD -277.458M; Cash end of period USD 975.836M; Cash beginning of period USD 1,253.294M. Capital expenditure USD -127.199M; Investments in property, plant and equipment negative; Net cash used in investing activities USD -132.462M; Net cash used provided by financing activities USD -121.644M. Net debt USD 17,354.249M; Total debt USD 17,626.159M; Long-term debt USD 17,041.115M; Cash and equivalents USD 271.91M.
Balance sheet and liquidity: Total assets USD 27,297.126M; Total liabilities USD 21,085.916M; Total stockholders’ equity USD 6,211.210M. Current assets USD 4,818.636M; Current liabilities USD 2,097.292M; Cash and equivalents USD 271.91M; Inventory USD 3,665.163M; Goodwill USD 141.258M; Total debt-to-capitalization ~0.758; Debt ratio ~0.711; ROE ~2.02%; ROA ~0.46%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
6.22B |
1.22% |
-11.27% |
| Gross Profit |
677.65M |
10.57% |
-10.89% |
| Operating Income |
-58.56M |
39.23% |
-139.07% |
| Net Income |
125.44M |
52.97% |
-5.55% |
| EPS |
0.80 |
53.85% |
-5.88% |
Key Financial Ratios
operatingProfitMargin
-0.57%
operatingCashFlowPerShare
$-0.15
freeCashFlowPerShare
$-0.97
Management Commentary
Note: The provided data set includes an earnings transcript field that is empty (earningsTranscript: []). Consequently, no management quotes or highlights can be pulled from the transcript. If a transcript becomes available, we would extract quotes by themes (strategy, operations, market conditions) and annotate their significance. In a typical CarMax QQ3 scenario, expected themes would include pricing strategy for used vehicles, financing mix through CarMax Auto Finance, inventory optimization, cost containment, store footprint strategy, and responses to financing costs/credit availability.
Forward Guidance
No explicit forward guidance is provided in the data. Given the current quarterly profile, management commentary (when available) would be crucial to evaluate expectations for: (i) used-vehicle demand and pricing dynamics, (ii) gross margin stabilization across reconditioning and procurement costs, (iii) strategy for deleveraging given a high total debt load, and (iv) the evolution of financing margins via CarMax Auto Finance. Investors should monitor debt maturities, liquidity runway, and any cost-control initiatives that could translate into improved operating leverage or cash flow generation in upcoming quarters.