CarMax reported QQ4 2025 revenue of $6.00 billion, up 6.69% year-over-year, reflecting a resilient demand backdrop for used vehicles. Gross profit was $668 million with a gross margin near 10% (ratiosInfo suggests 9.97%), while operating income remained negative at around -$99.6 million, signaling ongoing margin pressure despite top-line strength. Net income totaled $89.9 million, aided by a substantial contribution from total other income and expenses of about $218 million, resulting in an after-tax margin of roughly 1.5% and an EPS of $0.58. EBITDA stood at $220.0 million, underscoring that earnings quality is driven by non-operating items and lease of financing activities rather than core operating profitability.
Cash generation remained positive from operations at $146.4 million, with free cash flow around $18.8 million for the quarter. The balance sheet shows substantial leverage: total debt of $19.22 billion against cash and cash equivalents of about $247 million, yielding a net debt position near $18.98 billion and a debt-to-capitalization of roughly 75.7%. Liquidity metrics remained adequate (current ratio ~2.31), but the heavy debt burden elevates sensitivity to interest rates and financing costs.
Looking ahead, the QQ4 results imply a dichotomy: the revenue engine remains solid in a stable or improving used-vehicle demand environment, yet profitability and free cash flow generation are constrained by elevated interest costs and working-capital demands linked to inventory. Management commentary (where available in transcripts) typically focuses on inventory optimization, cost discipline, and auto-financing opportunities; in the absence of a formal forward guidance in the provided data, investors should monitor used-vehicle price trends, financing spreads, inventory levels, and the trajectory of wholesale channel dynamics as the principal drivers of earnings quality in 2026.