0001690820-20-000139.txt : 20200506 0001690820-20-000139.hdr.sgml : 20200506 20200506162126 ACCESSION NUMBER: 0001690820-20-000139 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 109 CONFORMED PERIOD OF REPORT: 20200331 FILED AS OF DATE: 20200506 DATE AS OF CHANGE: 20200506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARVANA CO. CENTRAL INDEX KEY: 0001690820 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500] IRS NUMBER: 814549921 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38073 FILM NUMBER: 20852911 BUSINESS ADDRESS: STREET 1: 1930 W. RIO SALADO PARKWAY CITY: TEMPE STATE: AZ ZIP: 85281 BUSINESS PHONE: (480) 719-8809 MAIL ADDRESS: STREET 1: 1930 W. RIO SALADO PARKWAY CITY: TEMPE STATE: AZ ZIP: 85281 10-Q 1 cvna-20200331.htm 10-Q cvna-20200331
false2020Q10001690820--12-31P1YP1YP12MP5YP5YP5YP10YP5YP5DP15DP1DP15DP2DP2YP5Y0.80.80.80.80.80.00.0P4YP2YP4YP4YP5Y0.800.80P2YP7YP1YP20YP2YP5YP4Y00016908202020-01-012020-03-31xbrli:shares0001690820us-gaap:CommonClassAMember2020-05-010001690820us-gaap:CommonClassBMember2020-05-01iso4217:USD00016908202020-03-3100016908202019-12-310001690820srt:AffiliatedEntityMember2020-03-310001690820srt:AffiliatedEntityMember2019-12-31iso4217:USDxbrli:shares0001690820us-gaap:CommonClassAMember2019-12-310001690820us-gaap:CommonClassAMember2020-03-310001690820us-gaap:CommonClassBMember2019-12-310001690820us-gaap:CommonClassBMember2020-03-310001690820cvna:UsedVehicleSalesMember2020-01-012020-03-310001690820cvna:UsedVehicleSalesMember2019-01-012019-03-310001690820cvna:WholesaleVehicleSalesMember2020-01-012020-03-310001690820cvna:WholesaleVehicleSalesMember2019-01-012019-03-310001690820srt:AffiliatedEntityMember2020-01-012020-03-310001690820srt:AffiliatedEntityMember2019-01-012019-03-310001690820us-gaap:ProductAndServiceOtherMember2020-01-012020-03-310001690820us-gaap:ProductAndServiceOtherMember2019-01-012019-03-3100016908202019-01-012019-03-310001690820us-gaap:CommonClassAMember2020-01-012020-03-310001690820us-gaap:CommonClassAMember2019-01-012019-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassAMember2018-12-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassBMember2018-12-310001690820us-gaap:AdditionalPaidInCapitalMember2018-12-310001690820us-gaap:RetainedEarningsMember2018-12-310001690820us-gaap:NoncontrollingInterestMember2018-12-3100016908202018-12-310001690820us-gaap:RetainedEarningsMember2019-01-012019-03-310001690820us-gaap:NoncontrollingInterestMember2019-01-012019-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-01-012019-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-01-012019-03-310001690820us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001690820cvna:CarvanaGroupMemberus-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001690820cvna:CarvanaGroupMember2019-01-012019-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMember2019-01-012019-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-03-310001690820us-gaap:AdditionalPaidInCapitalMember2019-03-310001690820us-gaap:RetainedEarningsMember2019-03-310001690820us-gaap:NoncontrollingInterestMember2019-03-3100016908202019-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-12-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-12-310001690820us-gaap:AdditionalPaidInCapitalMember2019-12-310001690820us-gaap:RetainedEarningsMember2019-12-310001690820us-gaap:NoncontrollingInterestMember2019-12-310001690820us-gaap:RetainedEarningsMember2020-01-012020-03-310001690820us-gaap:NoncontrollingInterestMember2020-01-012020-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-01-012020-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-01-012020-03-310001690820us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001690820cvna:CarvanaGroupMemberus-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001690820cvna:CarvanaGroupMember2020-01-012020-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMember2020-01-012020-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-03-310001690820us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-03-310001690820us-gaap:AdditionalPaidInCapitalMember2020-03-310001690820us-gaap:RetainedEarningsMember2020-03-310001690820us-gaap:NoncontrollingInterestMember2020-03-31cvna:classxbrli:pure0001690820cvna:CarvanaGroupMember2020-03-31cvna:facility0001690820us-gaap:LineOfCreditMembercvna:FloorPlanFacilityMember2020-03-310001690820us-gaap:ConsumerLoanMembercvna:PurchaseAndSaleAgreementMember2020-03-310001690820cvna:FinanceReceivableFacilitiesMemberus-gaap:RevolvingCreditFacilityMember2020-03-310001690820us-gaap:RevolvingCreditFacilityMembercvna:SPVANAFacilitiesMember2020-02-290001690820us-gaap:CommonClassAMembercvna:RegisteredDirectOfferingMemberus-gaap:SubsequentEventMember2020-04-012020-04-010001690820us-gaap:CommonClassAMembercvna:RegisteredDirectOfferingMemberus-gaap:SubsequentEventMember2020-04-010001690820us-gaap:LandAndLandImprovementsMember2020-03-310001690820us-gaap:LandAndLandImprovementsMember2019-12-310001690820us-gaap:BuildingAndBuildingImprovementsMember2020-03-310001690820us-gaap:BuildingAndBuildingImprovementsMember2019-12-310001690820us-gaap:TransportationEquipmentMember2020-03-310001690820us-gaap:TransportationEquipmentMember2019-12-310001690820us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-03-310001690820us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2019-12-310001690820us-gaap:FurnitureAndFixturesMember2020-03-310001690820us-gaap:FurnitureAndFixturesMember2019-12-310001690820cvna:PropertyandEquipmentExcludingConstructionInProgressMember2020-03-310001690820cvna:PropertyandEquipmentExcludingConstructionInProgressMember2019-12-310001690820us-gaap:ConstructionInProgressMember2020-03-310001690820us-gaap:ConstructionInProgressMember2019-12-310001690820us-gaap:PropertyPlantAndEquipmentMember2020-01-012020-03-310001690820us-gaap:PropertyPlantAndEquipmentMember2019-01-012019-03-310001690820cvna:Car360Member2018-04-122018-04-120001690820cvna:ClassACommonUnitsMembercvna:Car360Member2018-04-122018-04-120001690820cvna:Car360Member2018-04-120001690820cvna:Car360Membersrt:MinimumMember2020-01-012020-03-310001690820cvna:Car360Membersrt:MaximumMember2020-01-012020-03-310001690820cvna:Car360Member2020-01-012020-03-310001690820cvna:Car360Member2019-01-012019-03-310001690820us-gaap:DevelopedTechnologyRightsMembercvna:Car360Member2020-01-012020-03-310001690820us-gaap:DevelopedTechnologyRightsMembercvna:Car360Member2020-03-310001690820us-gaap:DevelopedTechnologyRightsMembercvna:Car360Member2019-12-310001690820us-gaap:CustomerRelationshipsMembercvna:Car360Member2020-01-012020-03-310001690820us-gaap:CustomerRelationshipsMembercvna:Car360Member2020-03-310001690820us-gaap:CustomerRelationshipsMembercvna:Car360Member2019-12-310001690820cvna:Car360Memberus-gaap:NoncompeteAgreementsMember2020-01-012020-03-310001690820cvna:Car360Memberus-gaap:NoncompeteAgreementsMember2020-03-310001690820cvna:Car360Memberus-gaap:NoncompeteAgreementsMember2019-12-310001690820cvna:Car360Member2020-03-310001690820cvna:Car360Member2019-12-310001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:RelatedPartyLeaseAgreementsMemberus-gaap:BuildingMembersrt:AffiliatedEntityMember2014-11-012014-11-30cvna:renewal_option0001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:RelatedPartyLeaseAgreementsMemberus-gaap:BuildingMembersrt:AffiliatedEntityMember2014-11-30cvna:location0001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:RelatedPartyLeaseAgreementsMemberus-gaap:BuildingMembersrt:AffiliatedEntityMember2017-03-012017-03-310001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:RelatedPartyLeaseAgreementsMemberus-gaap:BuildingMembersrt:AffiliatedEntityMember2017-03-310001690820cvna:VerdeInvestmentsIncMembercvna:LeaseAgreementRelatedtoVehicleInspectionandReconditioningCenterMembercvna:TollesonArizonaMemberus-gaap:BuildingMembersrt:AffiliatedEntityMember2016-12-31cvna:vote0001690820cvna:VerdeInvestmentsIncMembercvna:LeaseAgreementRelatedtoVehicleInspectionandReconditioningCenterMembercvna:TollesonArizonaMemberus-gaap:BuildingMembersrt:AffiliatedEntityMember2016-12-012016-12-310001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:WinderGeorgiaMemberus-gaap:BuildingMembercvna:LeaseAgreementForFullyOperationalInspectionAndReconditioningCenterMembersrt:AffiliatedEntityMember2017-02-280001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:WinderGeorgiaMemberus-gaap:BuildingMembercvna:LeaseAgreementForFullyOperationalInspectionAndReconditioningCenterMembersrt:AffiliatedEntityMember2017-02-012017-02-280001690820cvna:DriveTimeAutomotiveGroupInc.Memberus-gaap:BuildingMembercvna:LeaseAgreementForFullyOperationalInspectionAndReconditioningCenterMembersrt:AffiliatedEntityMembercvna:ClevelandOhioMember2018-11-300001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:RelatedPartyLeaseAgreementsMemberus-gaap:BuildingMembersrt:AffiliatedEntityMembercvna:ClevelandOhioMember2018-11-012018-11-300001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:RelatedPartyLeaseAgreementsMemberus-gaap:BuildingMembersrt:AffiliatedEntityMembercvna:ClevelandOhioMember2018-11-300001690820cvna:RelatedPartyLeaseAgreementsMembercvna:VerdeInvestmentsIncAndDriveTimeAutomotiveGroupIncMembersrt:AffiliatedEntityMember2020-01-012020-03-310001690820cvna:RelatedPartyLeaseAgreementsMembercvna:VerdeInvestmentsIncAndDriveTimeAutomotiveGroupIncMemberus-gaap:CostOfSalesMembersrt:AffiliatedEntityMember2020-01-012020-03-310001690820us-gaap:SellingGeneralAndAdministrativeExpensesMembercvna:RelatedPartyLeaseAgreementsMembercvna:VerdeInvestmentsIncAndDriveTimeAutomotiveGroupIncMembersrt:AffiliatedEntityMember2020-01-012020-03-310001690820cvna:RelatedPartyLeaseAgreementsMembercvna:VerdeInvestmentsIncAndDriveTimeAutomotiveGroupIncMembersrt:AffiliatedEntityMember2019-01-012019-03-310001690820cvna:RelatedPartyLeaseAgreementsMembercvna:VerdeInvestmentsIncAndDriveTimeAutomotiveGroupIncMemberus-gaap:CostOfSalesMembersrt:AffiliatedEntityMember2019-01-012019-03-310001690820us-gaap:SellingGeneralAndAdministrativeExpensesMembercvna:RelatedPartyLeaseAgreementsMembercvna:VerdeInvestmentsIncAndDriveTimeAutomotiveGroupIncMembersrt:AffiliatedEntityMember2019-01-012019-03-310001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:LeaseAgreementForInspectionAndReconditioningCenterMembercvna:LeaseholdImprovementsAndEquipmentMembersrt:AffiliatedEntityMembercvna:NashvilleTNMember2019-02-280001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:LeaseAgreementForInspectionAndReconditioningCenterMembercvna:LeaseholdImprovementsAndEquipmentMembersrt:AffiliatedEntityMembercvna:NashvilleTNMember2019-02-012019-02-280001690820srt:AffiliatedEntityMember2019-01-012019-03-310001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:CorporateHeadquartersOfficeLeaseMembersrt:AffiliatedEntityMember2016-09-300001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:CorporateHeadquartersOfficeLeaseAndSubleasedOfficeSpaceFirstFloorMembersrt:AffiliatedEntityMember2016-09-300001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:CorporateHeadquartersOfficeLeaseAndSubleasedOfficeSpaceFirstFloorMembersrt:AffiliatedEntityMember2016-09-012016-09-300001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:SubleasedOfficeSpaceFirstFloorMembersrt:AffiliatedEntityMember2020-01-012020-03-310001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:SubleasedOfficeSpaceFirstFloorMembersrt:AffiliatedEntityMember2019-01-012019-03-310001690820cvna:TempeArizonaMembercvna:OfficeBuildingLeaseMembercvna:VerdeInvestmentsInc.Membersrt:AffiliatedEntityMember2019-12-310001690820cvna:TempeArizonaMembercvna:OfficeBuildingLeaseMembercvna:VerdeInvestmentsInc.Membersrt:AffiliatedEntityMember2019-12-012019-12-310001690820cvna:TempeArizonaMembercvna:OfficeBuildingLeaseMembercvna:VerdeInvestmentsInc.Membersrt:AffiliatedEntityMember2020-01-012020-03-310001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:MasterDealerAgreementMembersrt:AffiliatedEntityMember2020-01-012020-03-310001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:MasterDealerAgreementMembersrt:AffiliatedEntityMember2019-01-012019-03-310001690820cvna:AffiliateDriveTimeAutomotiveGroupIncMembersrt:AffiliatedEntityMember2020-01-012020-03-310001690820cvna:AffiliateDriveTimeAutomotiveGroupIncMembersrt:AffiliatedEntityMember2019-01-012019-03-310001690820cvna:AffiliateDriveTimeAutomotiveGroupIncMembersrt:AffiliatedEntityMember2020-03-310001690820cvna:AffiliateDriveTimeAutomotiveGroupIncMembersrt:AffiliatedEntityMember2019-12-310001690820cvna:DriveTimeAutomotiveGroupInc.Membersrt:AffiliatedEntityMembercvna:ServicingandAdministrativeFeesMember2020-01-012020-03-310001690820cvna:DriveTimeAutomotiveGroupInc.Membersrt:AffiliatedEntityMembercvna:ServicingandAdministrativeFeesMember2019-01-012019-03-31cvna:aircraft0001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:VerdeInvestmentsInc.Memberus-gaap:AirTransportationEquipmentMembercvna:AircraftTimeSharingAgreementMembersrt:AffiliatedEntityMember2015-10-220001690820cvna:DriveTimeAutomotiveGroupInc.Membercvna:VerdeInvestmentsInc.Memberus-gaap:AirTransportationEquipmentMembercvna:AircraftTimeSharingAgreementMembersrt:AffiliatedEntityMember2017-12-310001690820cvna:DriveTimeAutomotiveGroupInc.Memberus-gaap:AirTransportationEquipmentMembercvna:AircraftTimeSharingAgreementMembersrt:AffiliatedEntityMember2015-10-222015-10-220001690820cvna:DriveTimeAutomotiveGroupInc.Memberus-gaap:AirTransportationEquipmentMembercvna:AircraftTimeSharingAgreementMembersrt:AffiliatedEntityMember2019-01-012019-03-310001690820cvna:DriveTimeAutomotiveGroupInc.Memberus-gaap:AirTransportationEquipmentMembercvna:AircraftTimeSharingAgreementMembersrt:AffiliatedEntityMember2020-01-012020-03-310001690820us-gaap:SeniorNotesMembercvna:VerdeInvestmentsInc.Membersrt:AffiliatedEntityMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2019-12-310001690820us-gaap:SeniorNotesMembercvna:VerdeInvestmentsInc.Membersrt:AffiliatedEntityMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2020-03-310001690820srt:AffiliatedEntityMember2020-03-310001690820srt:AffiliatedEntityMember2019-12-310001690820srt:ChiefExecutiveOfficerMembercvna:ContributionAgreementMemberus-gaap:RestrictedStockUnitsRSUMember2018-09-102018-09-10cvna:agreementType0001690820us-gaap:ConsumerLoanMembercvna:PurchaseAndSaleAgreementMember2019-03-310001690820us-gaap:ConsumerLoanMembercvna:MasterTransferAgreementMember2019-03-310001690820us-gaap:ConsumerLoanMembercvna:MasterTransferAgreementMember2019-01-012019-03-310001690820us-gaap:ConsumerLoanMember2019-05-072019-05-070001690820us-gaap:ConsumerLoanMember2019-05-070001690820cvna:SecuritizationTransactionMember2020-03-310001690820cvna:SecuritizationTransactionMember2019-03-310001690820us-gaap:ConsumerLoanMembercvna:MasterPurchaseAndSaleAgreementAnd2017MasterTransferAgreementMember2020-01-012020-03-310001690820us-gaap:ConsumerLoanMembercvna:MasterPurchaseAndSaleAgreementAnd2017MasterTransferAgreementMember2019-01-012019-03-310001690820cvna:RatedNotesMemberus-gaap:VariableInterestEntityNotPrimaryBeneficiaryAggregatedDisclosureMember2020-03-310001690820cvna:RatedNotesMemberus-gaap:VariableInterestEntityNotPrimaryBeneficiaryAggregatedDisclosureMember2019-12-310001690820cvna:CertificatesAndOtherAssetsMemberus-gaap:VariableInterestEntityNotPrimaryBeneficiaryAggregatedDisclosureMember2020-03-310001690820cvna:CertificatesAndOtherAssetsMemberus-gaap:VariableInterestEntityNotPrimaryBeneficiaryAggregatedDisclosureMember2019-12-310001690820us-gaap:VariableInterestEntityNotPrimaryBeneficiaryAggregatedDisclosureMember2020-03-310001690820us-gaap:VariableInterestEntityNotPrimaryBeneficiaryAggregatedDisclosureMember2019-12-310001690820us-gaap:LineOfCreditMembercvna:FloorPlanFacilityMember2019-11-300001690820us-gaap:LineOfCreditMembercvna:FloorPlanFacilityMember2019-10-310001690820us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LineOfCreditMembercvna:FloorPlanFacilityMember2019-11-012019-11-300001690820us-gaap:LineOfCreditMembercvna:FloorPlanFacilityMember2019-11-012019-11-300001690820us-gaap:LineOfCreditMembercvna:PurchaseAndSaleAgreementOrLoanAndSecurityAgreementMembercvna:FloorPlanFacilityMember2019-11-012019-11-300001690820us-gaap:LineOfCreditMembercvna:FloorPlanFacilityMember2019-12-310001690820us-gaap:RevolvingCreditFacilityMembercvna:SPVANAICreditFacilityMember2020-03-310001690820us-gaap:RevolvingCreditFacilityMembercvna:SPVANAICreditFacilityMember2020-01-310001690820us-gaap:RevolvingCreditFacilityMembercvna:SPVANAIICreditFacilityMember2020-02-290001690820us-gaap:RevolvingCreditFacilityMembercvna:SPVANAFacilitiesMember2020-03-310001690820cvna:DARTICreditFacilityMemberus-gaap:RevolvingCreditFacilityMembercvna:FinancingPartnerMembercvna:LoanAndSecurityAgreementMember2019-04-300001690820cvna:DARTICreditFacilityMemberus-gaap:RevolvingCreditFacilityMembercvna:FinancingPartnerMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMembercvna:LoanAndSecurityAgreementMember2019-04-012019-04-300001690820cvna:DARTICreditFacilityMemberus-gaap:RevolvingCreditFacilityMembercvna:FinancingPartnerMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMembercvna:LoanAndSecurityAgreementMember2019-04-012019-04-300001690820us-gaap:RevolvingCreditFacilityMembercvna:FinancingPartnerMembercvna:AmendedAndRestatedLoanAndSecurityAgreementMembercvna:SART20171CreditFacilityMember2019-05-310001690820us-gaap:RevolvingCreditFacilityMembercvna:FinancingPartnerMemberus-gaap:LondonInterbankOfferedRateLIBORMembercvna:AmendedAndRestatedLoanAndSecurityAgreementMembercvna:SART20171CreditFacilityMember2019-05-012019-05-310001690820cvna:DARTICreditFacilityMemberus-gaap:RevolvingCreditFacilityMembercvna:FinancingPartnerMembercvna:LoanAndSecurityAgreementMember2019-05-310001690820us-gaap:SeniorNotesMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2018-09-210001690820us-gaap:SeniorNotesMembercvna:SeniorUnsecuredNotesEffectiveMay2019Member2019-05-240001690820us-gaap:SeniorNotesMember2019-05-240001690820us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodOneMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2018-09-212018-09-210001690820us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2018-09-212018-09-210001690820us-gaap:SeniorNotesMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2020-03-310001690820us-gaap:SeniorNotesMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2019-12-310001690820us-gaap:NotesPayableOtherPayablesMembercvna:PromissoryNoteMembersrt:MinimumMember2020-01-012020-03-310001690820us-gaap:NotesPayableOtherPayablesMembercvna:PromissoryNoteMembersrt:MaximumMember2020-01-012020-03-310001690820us-gaap:NotesPayableOtherPayablesMembercvna:PromissoryNoteMember2020-03-310001690820srt:MinimumMember2020-01-012020-03-310001690820srt:MaximumMember2020-01-012020-03-310001690820cvna:LeasedPropertiesAndConstructionImprovementsMember2020-03-310001690820cvna:LeasedPropertiesAndConstructionImprovementsMember2019-12-31cvna:property0001690820cvna:MasterSaleLeasebackAgreementMember2017-11-012017-11-300001690820cvna:MasterSaleLeasebackAgreementMember2017-11-300001690820cvna:MasterSaleLeasebackAgreementMember2019-12-310001690820cvna:MasterSaleLeasebackAgreementMember2020-03-310001690820us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2020-03-310001690820us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2019-12-3100016908202017-05-030001690820us-gaap:CommonClassAMember2017-05-030001690820us-gaap:CommonClassBMember2017-05-030001690820us-gaap:ConvertiblePreferredStockMember2017-12-050001690820us-gaap:CommonClassAMember2017-05-032017-05-030001690820cvna:GarciaPartiesMemberus-gaap:CommonClassBMember2017-05-032017-05-030001690820cvna:GarciaPartiesMember2017-05-022017-05-020001690820us-gaap:CommonClassBMember2017-05-032017-05-030001690820cvna:CarvanaGroupMember2020-01-012020-03-310001690820cvna:CarvanaSubMember2017-05-022017-05-020001690820cvna:ClassACommonUnitsMembercvna:CarvanaGroupMember2020-03-310001690820cvna:CarvanaGroupMembercvna:ClassBCommonUnitsMember2020-03-310001690820cvna:ClassACommonUnitsMembercvna:ExchangeAgreementMember2020-01-012020-03-310001690820cvna:ExchangeAgreementMemberus-gaap:CommonClassBMember2020-01-012020-03-310001690820us-gaap:CommonClassAMembercvna:ExchangeAgreementMember2020-01-012020-03-310001690820cvna:ClassANonConvertiblePreferredUnitsMembercvna:CarvanaGroupMember2018-10-022018-10-020001690820us-gaap:SeniorNotesMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2018-10-022018-10-020001690820cvna:ClassANonConvertiblePreferredUnitsMembercvna:CarvanaGroupMember2018-10-020001690820srt:ChiefExecutiveOfficerMemberus-gaap:CommonClassAMembercvna:ContributionAgreementMember2019-01-012019-03-310001690820us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-03-310001690820us-gaap:CommonClassAMembercvna:ExchangeAgreementMember2017-05-032017-05-030001690820us-gaap:ConvertiblePreferredStockMember2017-12-052017-12-050001690820us-gaap:AdditionalPaidInCapitalMembercvna:PublicEquityOfferingMember2020-01-012020-03-310001690820us-gaap:NoncontrollingInterestMembercvna:PublicEquityOfferingMember2020-01-012020-03-310001690820cvna:ClassBCommonUnitsMember2020-01-012020-03-310001690820cvna:ClassBCommonUnitsMember2019-01-012019-03-310001690820cvna:RestrictedStockUnitsAndRestrictedStockExcludingMilestoneGiftMember2020-01-012020-03-310001690820cvna:RestrictedStockUnitsAndRestrictedStockExcludingMilestoneGiftMember2019-01-012019-03-310001690820cvna:RestrictedStockUnitsMilestoneGiftMember2020-01-012020-03-310001690820cvna:RestrictedStockUnitsMilestoneGiftMember2019-01-012019-03-310001690820us-gaap:EmployeeStockOptionMember2020-01-012020-03-310001690820us-gaap:EmployeeStockOptionMember2019-01-012019-03-310001690820cvna:ClassAUnitsMember2020-01-012020-03-310001690820cvna:ClassAUnitsMember2019-01-012019-03-310001690820us-gaap:PropertyPlantAndEquipmentMember2020-01-012020-03-310001690820us-gaap:PropertyPlantAndEquipmentMember2019-01-012019-03-310001690820us-gaap:InventoriesMember2020-01-012020-03-310001690820us-gaap:InventoriesMember2019-01-012019-03-310001690820cvna:TwoThousandSeventeenOmnibusIncentivePlanMember2020-03-310001690820cvna:TwoThousandSeventeenOmnibusIncentivePlanMember2020-01-012020-03-310001690820us-gaap:CommonClassAMembercvna:TwoThousandSeventeenOmnibusIncentivePlanMember2020-03-310001690820cvna:ClassACommonUnitsMembersrt:MinimumMember2018-01-012018-12-310001690820cvna:ClassACommonUnitsMembersrt:MaximumMember2018-01-012018-12-310001690820cvna:ClassACommonUnitsMember2018-01-012018-12-310001690820srt:MinimumMembercvna:ClassBCommonUnitsMember2015-01-012015-12-310001690820srt:MaximumMembercvna:ClassBCommonUnitsMember2015-01-012015-12-310001690820cvna:ClassBCommonUnitsMember2020-01-012020-03-310001690820cvna:ClassBCommonUnitsMember2019-01-012019-03-310001690820srt:MinimumMembercvna:ClassBCommonUnitsMember2020-01-012020-03-310001690820srt:MaximumMembercvna:ClassBCommonUnitsMember2020-01-012020-03-310001690820cvna:ClassACommonUnitsMember2020-01-012020-03-310001690820us-gaap:RestrictedStockMember2020-01-012020-03-310001690820us-gaap:RestrictedStockMember2019-01-012019-03-310001690820us-gaap:CommonClassBMember2020-01-012020-03-310001690820us-gaap:CommonClassBMember2019-01-012019-03-310001690820cvna:ClassBCommonUnitsMember2020-01-012020-03-310001690820cvna:ClassBCommonUnitsMember2019-01-012019-03-310001690820cvna:RestrictedAwardsAndRestrictedStockUnitsMember2020-01-012020-03-310001690820cvna:RestrictedAwardsAndRestrictedStockUnitsMember2019-01-012019-03-310001690820us-gaap:EmployeeStockOptionMember2019-01-012019-03-310001690820us-gaap:EmployeeStockOptionMember2020-01-012020-03-310001690820cvna:ExchangeAgreementMember2020-01-012020-03-310001690820cvna:Car360Membersrt:MinimumMember2018-04-122018-04-120001690820cvna:Car360Membersrt:MaximumMember2018-04-122018-04-120001690820srt:MinimumMember2020-03-310001690820srt:MaximumMember2020-03-310001690820cvna:ConsolidatedEntityExcludingAffiliatedEntityMember2020-01-012020-03-310001690820cvna:ConsolidatedEntityExcludingAffiliatedEntityMember2019-01-012019-03-310001690820cvna:ExcludingAffiliatedEntityTwoMember2020-03-31utr:mi0001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2020-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2020-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2020-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2020-03-310001690820us-gaap:FairValueMeasurementsRecurringMember2020-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMember2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMember2019-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberus-gaap:FairValueInputsLevel3Member2019-12-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberus-gaap:FairValueInputsLevel3Member2020-01-012020-03-310001690820us-gaap:FairValueMeasurementsRecurringMemberus-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberus-gaap:FairValueInputsLevel3Member2020-03-310001690820us-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2020-03-310001690820us-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2019-12-310001690820us-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2020-03-310001690820us-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMembercvna:SeniorUnsecuredNotesEffectiveSeptember2018Member2019-12-310001690820us-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-03-310001690820us-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310001690820us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-03-310001690820us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310001690820cvna:ErnestGarciaIIIMemberus-gaap:CommonClassAMembercvna:RegisteredDirectOfferingMemberus-gaap:SubsequentEventMember2020-04-012020-04-010001690820cvna:ErnestGarciaIIMemberus-gaap:CommonClassAMembercvna:RegisteredDirectOfferingMemberus-gaap:SubsequentEventMember2020-04-012020-04-010001690820cvna:CarvanaGroupMemberus-gaap:SubsequentEventMember2020-04-01



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to ______


Commission File Number: 001-38073

CARVANA CO.
(Exact name of registrant as specified in its charter)


Delaware81-4549921
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1930 W. Rio Salado ParkwayTempeArizona85281
(Address of principal executive offices)(Zip Code)
(480) 719-8809
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer

  Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting company
  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☒No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

As of May 1, 2020, the registrant had 64,063,049 shares of Class A common stock outstanding and 101,200,276 shares of Class B common stock outstanding.

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, Par Value $0.001 Per ShareCVNANew York Stock Exchange








INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Page
PART I.
FINANCIAL INFORMATION
Item 1.
Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019
Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2020 and 2019
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019
Notes to Unaudited Condensed Consolidated Financial Statements
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
PART II.
OTHER INFORMATION
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits


PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CARVANA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$72,435  $76,016  
Restricted cash72,600  42,443  
Accounts receivable, net26,591  39,864  
Finance receivables held for sale, net199,045  286,969  
Vehicle inventory844,681  762,696  
Beneficial interests in securitizations118,923  98,780  
Other current assets59,309  52,654  
Total current assets1,393,584  1,359,422  
Property and equipment, net645,485  543,471  
Operating lease right-of-use assets, including $43,677 and $44,583, respectively, from leases with related parties
169,741  123,420  
Intangible assets, net6,685  7,232  
Goodwill9,353  9,353  
Other assets, including $8,372 and $6,138, respectively, due from related parties
14,370  14,850  
Total assets$2,239,218  $2,057,748  
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities, including $10,173 and $9,549, respectively, due to related parties
$246,783  $234,443  
Short-term revolving facilities812,214  568,840  
Current portion of long-term debt53,286  48,731  
Other current liabilities, including $4,436 and $4,518, respectively, from leases with related parties
16,141  12,856  
Total current liabilities1,128,424  864,870  
Long-term debt, excluding current portion, including $15,000 held by a related party
936,121  883,060  
Operating lease liabilities, excluding current portion, including $40,732 and $41,829, respectively, from leases with related parties
159,751  116,071  
Other liabilities1,696  1,808  
Total liabilities2,225,992  1,865,809  
Commitments and contingencies (Note 16)
Stockholders' equity:
Preferred stock, $0.01 par value - 50,000 shares authorized; none issued and outstanding as of March 31, 2020 and December 31, 2019
    
Class A common stock, $0.001 par value - 500,000 shares authorized; 50,660 and 50,507 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
51  51  
Class B common stock, $0.001 par value - 125,000 shares authorized; 101,200 and 101,219 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
101  101  
Additional paid-in capital285,874  280,994  
Accumulated deficit(242,921) (183,034) 
Total stockholders' equity attributable to Carvana Co.43,105  98,112  
Non-controlling interests(29,879) 93,827  
Total stockholders' equity13,226  191,939  
Total liabilities & stockholders' equity$2,239,218  $2,057,748  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1



CARVANA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)

Three Months Ended March 31,
20202019
Sales and operating revenues:
Used vehicle sales, net$964,279  $683,829  
Wholesale vehicle sales79,606  33,030  
Other sales and revenues, including $20,562 and $10,573, respectively, from related parties
54,331  38,375  
Net sales and operating revenues1,098,216  755,234  
Cost of sales, including $842 and $1,273, respectively, to related parties
959,794  666,702  
Gross profit138,422  88,532  
Selling, general and administrative expenses, including $4,426 and $2,735, respectively, to related parties
275,711  155,241  
Interest expense, including $333 to related parties
28,862  15,648  
Other expense, net17,406  239  
Net loss before income taxes(183,557) (82,596) 
Income tax provision    
Net loss(183,557) (82,596) 
Net loss attributable to non-controlling interests (123,670) (59,481) 
Net loss attributable to Carvana Co. $(59,887) $(23,115) 
Net loss per share of Class A common stock, basic and diluted
$(1.19) $(0.56) 
Weighted-average shares of Class A common stock, basic and diluted(1)
50,399  41,352  
(1) Weighted-average shares of Class A common stock outstanding have been adjusted for unvested restricted stock awards.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2



CARVANA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)

Class A Common StockClass B Common Stock
SharesAmountSharesAmountAdditional Paid-in CapitalAccumulated DeficitNon-controlling InterestsTotal Stockholders' Equity
Balance, December 31, 201841,208  $41  104,336  $104  $147,916  $(68,375) $147,742  $227,428  
Net loss—  —  —  —  —  (23,115) (59,481) (82,596) 
Exchanges of LLC Units2,020  2  (1,984) (2) 1,899  —  (1,899) —  
Establishment of deferred tax assets related to increases in tax basis in Carvana Group—  —  —  —  25,582  —  —  25,582  
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group—  —  —  —  (25,582) —  —  (25,582) 
Contribution of Class A common stock from related party(72) —  —  —  —  —  —  —  
Issuance of Class A common stock to settle vested restricted stock units74  —  —  —  —  —  —  —  
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes(14) —  —  —  (433) —  —  (433) 
Options exercised27  —  —  —  426  —  —  426  
Equity-based compensation—  —  —  —  8,022  —  —  8,022  
Balance, March 31, 201943,243  $43  102,352  $102  $157,830  $(91,490) $86,362  $152,847  




3



CARVANA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - (Continued)
(Unaudited)
(In thousands)

Class A Common StockClass B Common Stock
SharesAmountSharesAmountAdditional Paid-in CapitalAccumulated DeficitNon-controlling InterestsTotal Stockholders' Equity
Balance, December 31, 201950,507  $51  101,219  $101  $280,994  $(183,034) $93,827  $191,939  
Net loss—  —  —  —  —  (59,887) (123,670) (183,557) 
Exchanges of LLC Units116    (19)   36  —  (36) —  
Establishment of deferred tax assets related to increases in tax basis in Carvana Group—  —  —  —  1,949  —  —  1,949  
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group—  —  —  —  (1,949) —  —  (1,949) 
Issuance of Class A common stock to settle vested restricted stock units38  —  —  —  —  —  —  —  
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes(8) —  —  —  (2,356) —  —  (2,356) 
Options exercised7  —  —  —  145  —  —  145  
Equity-based compensation—  —  —  —  7,055  —  —  7,055  
Balance, March 31, 202050,660  $51  101,200  $101  $285,874  $(242,921) $(29,879) $13,226  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4



CARVANA CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended March 31,
20202019
Cash Flows from Operating Activities:
Net loss$(183,557) $(82,596) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense15,811  7,943  
Loss on disposal of property and equipment145  49  
Provision for bad debt and valuation allowance5,213  1,385  
Gain on loan sales(12,976) (19,200) 
Equity-based compensation expense5,940  7,711  
Amortization and write-off of debt issuance costs and bond premium1,932  979  
Originations of finance receivables(782,240) (532,066) 
Proceeds from sale of finance receivables, net812,868  601,557  
Purchase of finance receivables  (127,710) 
Principal payments received on finance receivables held for sale25,653  11,227  
Unrealized loss on beneficial interests in securitization11,405    
Changes in assets and liabilities:
Accounts receivable12,995  (5,435) 
Vehicle inventory(80,014) (112,536) 
Other assets(3,985) (12,873) 
Accounts payable and accrued liabilities1,820  48,632  
Operating lease right-of-use assets(46,321) (1,262) 
Operating lease liabilities46,965  68  
Other liabilities(112) (382) 
Net cash used in operating activities(168,458) (214,509) 
Cash Flows from Investing Activities:
Purchases of property and equipment, including $0 and $4,257, respectively, from related parties
(89,433) (43,199) 
Principal payments received on beneficial interests in securitizations725    
Net cash used in investing activities(88,708) (43,199) 
Cash Flows from Financing Activities:
Proceeds from short-term revolving facilities1,964,496  807,890  
Payments on short-term revolving facilities(1,721,122) (570,076) 
Proceeds from issuance of long-term debt51,963  41,817  
Payments on long-term debt(5,912) (3,003) 
Payments of debt issuance costs(3,472) (567) 
Proceeds from exercise of stock options145  426  
Tax withholdings related to restricted stock awards(2,356) (433) 
Net cash provided by financing activities283,742  276,054  
Net increase in cash, cash equivalents and restricted cash26,576  18,346  
Cash, cash equivalents and restricted cash at beginning of period118,459  88,709  
Cash, cash equivalents and restricted cash at end of period$145,035  $107,055  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


CARVANA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 — BUSINESS ORGANIZATION

Description of Business

Carvana Co. and its wholly-owned subsidiary Carvana Co. Sub (collectively, "Carvana Co."), together with its consolidated subsidiaries (the “Company”), is a leading e-commerce platform for buying and selling used cars. The Company is transforming the used car sales experience by giving consumers what they want — a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction. Using the website, customers can complete all phases of a used vehicle purchase transaction, including financing their purchase, trading in their current vehicle, and purchasing complementary products such as vehicle service contracts ("VSC") and GAP waiver coverage. Each element of the Company's business, from inventory procurement to fulfillment and overall ease of the online transaction, has been built for this singular purpose.

Organization

Carvana Co. is a holding company that was formed as a Delaware corporation on November 29, 2016 for the purpose of completing its initial public offering ("IPO") and related transactions in order to operate the business of Carvana Group, LLC and its subsidiaries (collectively, "Carvana Group"). Substantially all of the Company’s assets and liabilities represent the assets and liabilities of Carvana Group, except the Senior Notes (as defined in Note 9 — Debt Instruments) which were issued by Carvana Co. and guaranteed by its and Carvana Group's existing domestic restricted subsidiaries. 

In accordance with Carvana Group LLC's amended and restated limited liability company agreement (the "LLC Agreement"), Carvana Co. is the sole manager of Carvana Group and conducts, directs and exercises full control over the activities of Carvana Group. There are two classes of common ownership interests in Carvana Group, Class A common units (the "Class A Units") and Class B common units (the "Class B Units"). As further discussed in Note 10 — Stockholders' Equity, the Class A Units and Class B Units (collectively, the "LLC Units") do not hold voting rights, which results in Carvana Group being considered a variable interest entity ("VIE"). Due to Carvana Co.'s power to control and its significant economic interest in Carvana Group, it is considered the primary beneficiary of the VIE and the Company consolidates the financial results of Carvana Group. As of March 31, 2020, Carvana Co. owned approximately 32.5% of Carvana Group and the LLC Unitholders (as defined in Note 10 — Stockholders' Equity) owned the remaining 67.5%.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. All intercompany balances and transactions have been eliminated. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to prevent the information presented from being misleading. However, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included within the Company's most recent Annual Report on Form 10-K.
 
The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring items) necessary to present fairly the Company’s financial position as of March 31, 2020, results of operations and changes in stockholder's equity for the three months ended March 31, 2020 and 2019. Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations.

As discussed in Note 1 — Business Organization, Carvana Group is considered a VIE and Carvana Co. consolidates its financial results due to the determination that it is the primary beneficiary.

Liquidity

The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has incurred losses from inception through March 31, 2020, and expects to incur additional losses in the future. As the Company continues to grow
6


CARVANA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
into new markets, build vending machines and inspection and reconditioning centers ("IRCs"), and enhance technology and software development efforts, it may need access to additional capital. Historically, the Company has raised additional capital through equity issuances or debt instruments to fund its expansion (refer to Note 10 — Stockholders' Equity and Note 9 — Debt Instruments). The Company has also funded some of its capital expenditures through long-term financing with lenders and other investors, as described further in Note 9 — Debt Instruments. At March 31, 2020, the Company had $87.1 million of committed funds for future construction costs at four IRCs currently under construction. The Company funds vehicle inventory purchases through its Floor Plan Facility, as described further in Note 9 — Debt Instruments. As of March 31, 2020, the Company had approximately $211.8 million available under its $950.0 million Floor Plan Facility and may draw upon this facility through October 2020 to fund future vehicle inventory purchases, as described further in Note 9 — Debt Instruments. Further, the Company plans to increase the amount and maturity date of financing available to purchase vehicle inventory within the next year by amending its existing Floor Plan Facility or by entering into a new agreement. The Company has historically sold the finance receivables it generates through forward flow agreements and fixed pool loan sales, including securitization transactions. In March 2020, the Company amended its Master Purchase and Sale Agreement with Ally to provide for the sale of up to $2.0 billion of principal balance of finance receivables through March 2021. Prior to selling the finance receivables as part of a securitization transaction, the Company funds the finance receivables through Finance Receivable Facilities (as defined and further discussed in Note 9 — Debt Instruments). At March 31, 2020, the Company had $851.0 million available under its Finance Receivable Facilities, which have a current total capacity of $925.0 million. The Company may draw upon these facilities through July 2021 and February 2022 to fund future finance receivable originations. The aggregate capacity of these facilities may be increased to $1.0 billion with the consent of certain lenders. On April 1, 2020, the Company completed a registered direct offering of approximately 13.3 million shares of its Class A common stock at an offering price of $45.00 per share and received net proceeds from the offering of approximately $599.5 million. Due to the impact of COVID-19 on the economy, the Company has temporarily paused certain new market openings and vending machine launches and significantly reduced discretionary growth expenditures on new hiring, travel, facilities, and information technology investments. The Company has also rebalanced its marketing, staffing, and purchasing levels to align with demand, while closely monitoring key metrics to determine when and how quickly to adjust in the future. Management believes that the actions taken in respect of the COVID-19 pandemic, current working capital, results of operations, and expected continued inventory and capital expenditure financing are sufficient to fund operations for at least one year from the financial statement issuance date.

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management’s experience, and other factors, which are believed to be reasonable under the circumstances. The COVID-19 pandemic has adversely impacted the global economy, as well as the Company’s operations, and the extent and duration of the impacts remain unclear. The Company’s future estimates, including, but not limited to, the Company’s allowance for loan losses, inventory valuations, fair value measurements, cancellation reserves, asset impairment charges, and discount rate assumptions, may be impacted and continue to evolve as conditions change as a result of the COVID-19 pandemic. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates, which could have a material impact on the carrying values of the Company’s assets and liabilities and the results of operations.

Adoption of New Accounting Standards

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the guidance on the impairment of financial instruments by requiring measurement and recognition of expected credit losses for financial assets held. The Company adopted ASU 2016-13 on January 1, 2020. Financial assets measured at fair value through net income are excluded from the scope of ASU 2016-13. The Company's beneficial interests in securitizations are carried at fair value and are thus excluded from ASU 2016-13. Finance receivables originated in connection with the Company’s vehicle sales are held for sale and presented at the lower of amortized cost or fair value. The Company intends to sell the finance receivables prior to their contractual maturity, therefore the recovery of the asset is from its sale rather than maturity and the Company is not required to measure the expected lifetime credit losses. The adoption of ASU 2016-13 did not have a material effect on the Company’s consolidated financial statements.

7


CARVANA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13") related to updated requirements over the disclosures of fair value measurements. Under ASU 2018-13, certain disclosure requirements for fair value measurements will be eliminated, modified or added to facilitate better communication around recurring and nonrecurring fair value measurements. ASU 2018-13 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with some amendments applied prospectively, some applied retrospectively and early adoption permitted. The Company adopted ASU 2018-13 for its fiscal year beginning January 1, 2020 and it did not have a material effect on the Company's fair value disclosures within its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). The intent of this pronouncement is to align the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software as defined in ASC 350-40. Under ASU 2018-15, the capitalized implementation costs related to a cloud computing arrangement will be amortized over the term of the arrangement and all capitalized implementation amounts will be required to be presented in the same line items of the financial statements as the related hosting fees. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2018-15 for its fiscal year beginning January 1, 2020 and it did not have a material effect on its consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities ("ASU 2018-17"). ASU 2018-17 requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. Entities are required to apply the amendments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company adopted ASU 2018-15 for its fiscal year beginning January 1, 2020 and it did not have an effect on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides optional guidance for a limited period of time related to contract modifications and hedge accounting to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The standard is effective from March 12, 2020 through December 31, 2022, except for hedging relationships existing as of December 31, 2022 that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company may elect to take advantage of this optional guidance in its transition away from LIBOR within certain debt contracts but does not expect a material impact on its consolidated financial statements. As of March 31, 2020, the Company had not modified any contracts or had any hedge accounting activity that fell under ASU 2020-04.

Accounting Standards Issued But Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company plans to adopt ASU 2019-12 for its fiscal year beginning January 1, 2021 and is currently assessing the impact, if any, the guidance will have on its consolidated financial statements.

8


CARVANA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
NOTE 3 — PROPERTY AND EQUIPMENT, NET

The following table summarizes property and equipment, net as of March 31, 2020 and December 31, 2019 (in thousands):
March 31, 2020December 31, 2019
Land and site improvements$103,536  $98,530  
Buildings and improvements275,707  229,640  
Transportation fleet128,740  110,302  
Software78,707  66,875  
Furniture, fixtures and equipment45,955  38,123  
Total property and equipment excluding construction in progress632,645  543,470  
Less: accumulated depreciation and amortization on property and equipment(105,922) (88,795) 
Property and equipment excluding construction in progress, net526,723  454,675  
Construction in progress118,762  88,796  
Property and equipment, net$645,485  $543,471  

Depreciation and amortization expense on property and equipment was approximately $15.3 million and $7.6 million for the three months ended March 31, 2020 and 2019, respectively. These amounts primarily relate to selling, general and administrative activities and are included as a component of selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

NOTE 4 — GOODWILL AND INTANGIBLE ASSETS, NET

On April 12, 2018, the Company acquired Car360, Inc. ("Car360"), a provider of app-based photo capture technology, for approximately $16.7 million, net of cash acquired of approximately $0.4 million. The purchase price was comprised of approximately $6.7 million cash, net of cash acquired, and approximately 0.5 million Class A Units of Carvana Group, with a fair value of approximately $10.0 million.

The purchase price was allocated to net tangible assets of approximately $0.2 million and intangible assets of approximately $9.9 million based on their fair values on the acquisition date and a related deferred tax liability of approximately $2.5 million. The deferred tax liability will amortize over 2 years to 7 years, and approximately $0.1 million and $0.4 million was amortized during the three months ended March 31, 2020 and 2019, respectively. The excess of the purchase price over the amounts allocated to assets acquired, liabilities assumed and the deferred tax liability was approximately $9.4 million, which has been recorded as goodwill. The historical results of operations for Car360 were not significant to the Company's consolidated results of operations for the periods presented.

The following table summarizes intangible assets and goodwill related to the Car360 acquisition as of March 31, 2020 and December 31, 2019 (in thousands):

Useful LifeMarch 31, 2020December 31, 2019
Intangible assets:
Developed technology7 years$8,642  $8,642  
Customer relationships2 years523  523  
Non-compete agreements5 years774  774  
Intangible assets, acquired cost9,939  9,939  
Less: accumulated amortization(3,254) (2,707) 
Intangible assets, net$6,685  $7,232  
GoodwillN/A$9,353  $9,353  

9


CARVANA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Amortization expense was approximately $0.5 million and $0.4 million during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, the remaining weighted-average amortization period for definite-lived intangible assets was approximately 4.9 years. The anticipated annual amortization expense to be recognized in future years as of March 31, 2020 is as follows (in thousands):

Expected Future Amortization
Remainder of 2020$1,042  
20211,389  
20221,389  
20231,279  
20241,235  
2025351  
Thereafter  
Total$6,685  


NOTE 5 — ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

The following table summarizes accounts payable and other accrued liabilities as of March 31, 2020 and December 31, 2019 (in thousands):
March 31, 2020December 31, 2019
Accounts payable, including $10,173 and $9,549, respectively, due to related parties
$56,008  $63,576  
Sales taxes and vehicle licenses and fees50,364  45,812  
Accrued interest expense31,210  15,650  
Accrued property and equipment27,270  23,433  
Reserve for returns and cancellations20,024  19,721  
Accrued compensation and benefits14,096  21,726  
Accrued advertising costs12,687  11,403  
Customer deposits6,249  6,379  
Other accrued liabilities28,875  26,743  
Total accounts payable and accrued liabilities
$246,783  $234,443  

NOTE 6 — RELATED PARTY TRANSACTIONS

Lease Agreements

In November 2014, the Company and DriveTime Automotive Group ("DriveTime") entered into a lease agreement that governs the Company’s access to and utilization of temporary storage, reconditioning, offices and parking space at various DriveTime facilities (the "DriveTime Lease Agreement"). The DriveTime Lease Agreement was most recently amended in December 2018. Lease duration varies by location, with cancellable terms, provided 60 days' prior written notice is given, expiring between 2021 and 2024. Most of the facilities allow the Company to exercise up to two consecutive one-year renewal options at up to ten of these locations, less the number of locations renewed under the DriveTime Hub Lease Agreement described below.

In March 2017, the Company and DriveTime entered into a lease agreement that governs the Company's access to and utilization of office and parking space at various DriveTime facilities (the "DriveTime Hub Lease Agreement"). The DriveTime Hub Lease Agreement was most recently amended in December 2018. Lease expiration varies by location with most having cancellable terms, provided 60 days' prior written notice is given, expiring in 2021 and the Company having the right to
10


CARVANA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
exercise up to two consecutive one-year renewal options at up to ten of these locations, less the number of locations renewed under the DriveTime Lease Agreement described above.

The DriveTime Lease Agreement and the DriveTime Hub Lease Agreement both have non-cancellable lease terms of less than twelve months with rights to terminate at the Company's election with 60 days' prior written notice and extension options as described above. At non-reconditioning locations, it is not reasonably certain that the Company will exercise its options to extend the leases or abstain from exercising its termination rights within these lease agreements to create a lease term greater than one year and therefore the Company accounts for them as short-term leases. For these locations the Company makes variable monthly lease payments based on its pro rata utilization of space at each facility plus a pro rata share of each facility’s actual insurance costs and real estate taxes. Management has determined that the costs allocated to the Company are based on a reasonable methodology. The DriveTime Lease Agreement includes the Blue Mound and Delanco inspection and reconditioning centers ("IRCs"). At both of these locations, the Company expects to extend the lease terms beyond twelve months, therefore those locations are not considered short-term leases. The Company occupies all of the space at these IRCs and makes monthly lease payments based on DriveTime's actual rent expense. In addition, the Company is responsible for the actual insurance costs and real estate taxes at these IRC locations.

At all locations, the Company is additionally responsible for paying for any tenant improvements it requires to conduct its operations and its share of estimated costs incurred by DriveTime related to preparing these sites for use. Management has determined that the costs allocated to the Company are based on a reasonable methodology.

In December 2016, the Company entered into a lease agreement related to an IRC in Tolleson, Arizona, with Verde Investments, Inc., an affiliate of DriveTime ("Verde"), with an initial term of approximately 15 years. In August 2018, the Company entered into an additional lease agreement with a coterminous initial term with Verde for contiguous space to that IRC. The lease agreements require monthly rental payments and can each be extended for four additional five-year periods.

In February 2017, the Company entered into a lease agreement with DriveTime for sole occupancy of a fully operational IRC in Winder, Georgia, where the Company previously maintained partial occupancy. The lease has an initial term of eight years, subject to the Company's ability to exercise three renewal options of five years each.

In November 2018, the Company entered into a lease agreement with DriveTime for access to and utilization of a fully operational IRC near Cleveland, Ohio. DriveTime vacated the facility in February 2019, at which point the Company became the sole occupant and began leasing the full facility from DriveTime. The lease has an initial term of three years, subject to the Company's ability to exercise three renewal options of five years each. Before DriveTime vacated the facility, the Company paid a monthly rental fee for facility and shared reconditioning costs, calculated based on the Company’s pro rata utilization of space at the IRC in a given month, along with a pro rata share of the facility’s actual insurance costs and real estate taxes. Management has determined that the costs allocated to the Company are based on a reasonable methodology.

Expenses related to these operating lease agreements are allocated based on usage to inventory and selling, general and administrative expenses in the accompanying unaudited condensed consolidated balance sheets and statements of operations. Costs allocated to inventory are recognized as cost of sales when the inventory is sold. During the three months ended March 31, 2020, total costs related to these operating lease agreements, including those noted above, were approximately $1.8 million with approximately $0.8 million and $1.0 million allocated to inventory and selling, general and administrative expenses, respectively. During the three months ended March 31, 2019, total costs related to these lease agreements were approximately $1.0 million with approximately $0.8 million and $1.2 million allocated to inventory and selling, general and administrative expenses, respectively.

In February 2019, the Company entered into an agreement to assume a lease of an IRC near Nashville, Tennessee that DriveTime leased from an unrelated landlord. The Company became the sole occupant in April 2019. The lease expires in four years, subject to the ability to exercise three renewal options of five years each. DriveTime remained an occupant of the facility through April 1, 2019 but is not fully released from the lease obligations by the landlord.

During the three months ended March 31, 2019, in connection with the Company becoming the sole occupant of the IRC near Cleveland, Ohio, the Company purchased certain leasehold improvements and equipment from DriveTime for DriveTime's net book value of approximately $4.3 million.

11


CARVANA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Corporate Office Leases

In September 2016, the Company entered into a lease for the second floor of its corporate headquarters in Tempe, Arizona. DriveTime guaranteed up to $0.5 million of the Company's rent payments under that lease through September 2019. In connection with that lease, the Company entered into a sublease with DriveTime for the use of the first floor of the same building. The lease and sublease each have a term of 83 months, subject to the right to exercise three five-year extension options. Pursuant to the sublease, the Company will pay the rent equal to the amounts due under DriveTime's master lease directly to DriveTime's landlord. The rent expense incurred related to this first floor sublease was approximately $0.2 million during each of the three months ended March 31, 2020 and March 31, 2019, respectively.

In December 2019, Verde purchased an office building in Tempe, Arizona that the Company leased from an unrelated landlord prior to Verde's purchase. In connection with the purchase, Verde assumed that lease. The lease has an initial term of ten years, subject to the right to exercise two five-year extension options. The rent expense incurred under the lease with Verde was approximately $0.2 million during the three months ended March 31, 2020.

Master Dealer Agreement

In December 2016, the Company entered into a master dealer agreement with DriveTime (the "Master Dealer Agreement"), pursuant to which the Company may sell VSCs to customers purchasing a vehicle from the Company. The Company earns a commission on each VSC sold to its customers, and DriveTime is obligated by and subsequently administers the VSCs. The Company collects the retail purchase price of the VSCs from its customers and remits the purchase price net of commission to DriveTime. During the three months ended March 31, 2020 and March 31, 2019, the Company recognized approximately $18.3 million and $10.1 million, respectively, of commissions earned on VSCs sold to its customers and administered by DriveTime, net of a reserve for estimated contract cancellations. The commission earned on the sale of these VSCs is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations. In November 2018, the Company amended the Master Dealer Agreement to allow the Company to receive payments for excess reserves based on the performance of the VSCs versus the reserves held by the VSC administrator, once a required claims period for such VSCs has passed. During the three months ended March 31, 2020 and March 31, 2019, the Company recognized approximately $2.3 million and $0.5 million, respectively, related to payments for excess reserves to which it expects to be entitled, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

Beginning in 2017, DriveTime also administers a portion of the Company's GAP waiver coverage and the limited warranty provided to all customers under the Master Dealer Agreement. The Company pays a per-contract fee to DriveTime to administer a portion of the GAP waiver coverage it sells to its customers and a per-vehicle fee to DriveTime to administer the limited warranty included with every purchase. The Company incurred approximately $1.3 million and $0.8 million during the three months ended March 31, 2020 and March 31, 2019, respectively, related to the administration of GAP waiver coverage and limited warranty. As of March 31, 2020, the majority of the Company's GAP waiver coverage sales were administered by an unrelated party.

GAP Waiver Insurance Policy

During the three months ended March 31, 2020 and 2019, the Company purchased insurance policies from BlueShore Insurance Company ("BlueShore"), an affiliate of DriveTime, for approximately $0.0 million and $1.0 million, respectively, that reimburses the lienholder of finance receivables with GAP waiver coverage for any GAP waiver claims on a defined set of finance receivables that the Company sold in its securitization transactions. This insurance is transferred with the underlying finance receivable. In March 2019, the Company entered into a retrospective profit sharing agreement with BlueShore under which the Company will share in the profits generated from the insurance policies by receiving a portion of the excess of the premium it paid to BlueShore, net of a fee, compared to the amount BlueShore pays out related to the GAP waiver claims. As of March 31, 2020 and December 31, 2019, the Company held a receivable of approximately $0.1 million and $0.2 million, respectively, which is included in other assets on the accompanying unaudited condensed consolidated balance sheets, related to this retrospective profit sharing agreement.
12


CARVANA CO. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

Servicing and Administrative Fees

DriveTime provides servicing and administrative functions associated with the Company's finance receivables. The Company incurred expenses of approximately $1.6 million and $0.5 million during the three months ended March 31, 2020 and 2019, respectively, related to these services.

Aircraft Time Sharing Agreement

The Company entered into an agreement to share usage of