Carvana shares declined 2.6% following Q1 earnings as investors appeared cautious on forward margin outlook and unit profitability, despite headline record sales. While management highlighted operational improvements and record metrics, commentary pointed to expected year-over-year declines in per-unit gross profit due to fading tariff benefits and narrower industry spreads.

• Retail units sold reached an all-time high of 187,393 in Q1, up 40% year-over-year, with revenue growing 52% to $6.43 billion.
• Non-GAAP retail gross profit per unit (GPU) fell by $58; management guided to further year-over-year declines in Q2, citing reduced tariff-related benefits and tighter wholesale-to-retail spreads.
• Wholesale and other GPU also declined, down $83 and $88 respectively, primarily on mix, margin compression, and lower shipping fees.
• Operational improvements in reconditioning ("recon") and SG&A leverage contributed to a $170 reduction in non-GAAP SG&A expense per retail unit sold, but higher advertising expense per unit partly offset these efficiency gains.
• Management expressed confidence in long-term scaling and margin expansion, but near-term margin pressures and guidance for lower per-unit profits weighed on sentiment.