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What changed in CarMax's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CarMax's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+327 added−313 removedSource: 10-K (2025-04-11) vs 10-K (2024-04-15)

Top changes in CarMax's 2025 10-K

327 paragraphs added · 313 removed · 242 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

70 edited+9 added−12 removed43 unchanged
Biggest changeOur CarMax Quality Certified standards were developed internally by CarMax and are not affiliated with any third party or original equipment manufacturer program. We maximize customer choice by offering a large selection of inventory on our lots and by making our nationwide inventory available for viewing on carmax.com as well as our mobile app.
Biggest changeWe maximize customer choice by offering a large selection of inventory on our lots and by making our nationwide inventory available for viewing on our online platforms and mobile app. As of February 28, 2025, we had approximately 73,000 saleable retail vehicles in our inventory. Vehicles in-transit or on customer hold are not reservable by other customers on our website.
Our CarMax Sales Operations segment consists of all aspects of our auto merchandising and service operations, excluding financing provided by CAF. Our CAF segment consists solely of our own finance operation that provides financing to customers buying retail vehicles from CarMax.
Our CarMax Sales Operations segment consists of all aspects of our auto merchandising and service operations, excluding financing provided by CAF. Our CAF segment consists solely of our own finance operation that provides financing to customers buying retail vehicles from CarMax. CarMax Sales Operations.
We recondition every used vehicle we retail to meet our CarMax Quality Certified standards, and each vehicle must pass an inspection before being offered for sale. We stand behind every used vehicle we sell with our Love Your Car Guarantee.
We recondition every used vehicle we retail to meet our CarMax Quality Certified standards, and each vehicle must pass an inspection before being offered for sale. We stand behind every retail used vehicle we sell with our Love Your Car Guarantee.
The typical vehicle sold at our wholesale auctions is approximately 10 years old and has more than 100,000 miles. We provide condition disclosures on each vehicle, including those for vehicles with major mechanical issues, possible frame or flood damage, branded titles, salvage history and unknown true mileage. Professional, licensed auctioneers conduct our auctions.
The typical vehicle sold at our wholesale auctions is more than 10 years old and has more than 100,000 miles. We provide condition disclosures on each vehicle, including those for vehicles with major mechanical issues, possible frame or flood damage, branded titles, salvage history and unknown true mileage. Professional, licensed auctioneers conduct our auctions.
Based on the large number of vehicles remarketed each year, consumer acceptance of our appraisal process, our experience and success in acquiring vehicles from auctions and other sources, and the large size of the U.S. auction market relative to our needs, we believe that sources of used vehicles will continue to be sufficient to meet our current and future needs.
We believe that sources of used vehicles will continue to be sufficient to meet our current and future needs based on the large number of vehicles remarketed each year, consumer acceptance of our appraisal process, our experience and success in acquiring vehicles from dealers, auctions and other sources, and the large size of the U.S. auction market relative to our needs.
However, we have made arrangements to have third-party financing available to our auction customers. 8 Suppliers for Used Vehicles We acquire a significant percentage of our retail used vehicle inventory directly from consumers through our in-store and online appraisal processes, as well as through local, regional and online auctions.
However, we have made arrangements to have third-party financing available to our auction customers. Suppliers for Used Vehicles We acquire a significant percentage of our retail used vehicle inventory directly from consumers through our in-store and online appraisal processes, as well as through local, regional and online auctions.
With this acquisition, CarMax has enhanced its digital capabilities and further strengthened its role and reach across the used auto ecosystem while adding exceptional technology and creative talent. CarMax Business We operate in two reportable segments: CarMax Sales Operations and CarMax Auto Finance (“CAF”).
With this acquisition, CarMax enhanced its digital capabilities and further strengthened its role and reach across the used auto ecosystem while adding exceptional technology and creative talent. CarMax Business We operate in two reportable segments: CarMax Sales Operations and CarMax Auto Finance (“CAF”).
We recognize that our associates are the key to our success, and we are proud to provide an award-winning workplace where we value the diversity and contribution of all associates and foster a culture where associates can achieve their career goals.
We recognize that our associates are the key to our success, and we are proud to provide an award-winning workplace where we value the contribution of all associates and foster a culture where associates can achieve their career goals.
We will appraise a customer’s vehicle in-person free of charge and make a written, guaranteed offer to buy that vehicle regardless of whether the owner is purchasing a vehicle from us. This no-haggle offer is good for seven days. We also provide online instant appraisal offers, which quickly give customers an offer on their vehicle.
We will appraise a customer’s vehicle in-person free of charge and make a written, guaranteed offer to buy that vehicle regardless of whether the owner is purchasing a vehicle from us. We also provide online instant appraisal offers, which quickly give customers an offer on their vehicle. Our no-haggle offer is good for seven days.
The U.S. used car marketplace is highly fragmented, and we face competition from franchised dealers, who sell both new and used vehicles; online and mobile sales platforms; independent used car dealers; and private parties. According to industry sources, as of December 31, 2023, there were over 18,000 franchised dealers in the U.S., who sell the majority of late-model used vehicles.
The U.S. used car marketplace is highly fragmented, and we face competition from franchised dealers, who sell both new and used vehicles; online and mobile sales platforms; independent used car dealers; and private parties. According to industry sources, as of December 31, 2024, there were over 18,000 franchised dealers in the U.S., who sell the majority of late-model used vehicles.
We believe consumers in the used car industry will increasingly prefer to have the ability to shop and transact digitally. In fiscal 2024, we continued building the CarMax brand through new creative campaigns promoting our omni-channel platform as well as brand reassurance messaging, highlighting our money back guarantee and up-front pricing.
We believe consumers in the used car industry will increasingly prefer to have the ability to shop and transact digitally. In fiscal 2025, we continued building the CarMax brand through new creative campaigns promoting our omni-channel platform as well as brand reassurance messaging, highlighting our money back guarantee and up-front pricing.
These products seamlessly provide consumers with the information and capabilities they need to shop for financing that best meets their budget and needs, further differentiating CarMax’s customer-centric financing experience. Over 80% of our customers use our online finance-based shopping tool as they begin the credit process.
These products seamlessly provide consumers with the information and capabilities they need to shop for financing that best meets their budget and needs, further differentiating CarMax’s customer-centric financing experience. Approximately 80% of our customers use our online finance-based shopping tool as they begin the credit process.
We also continued to measure engagement via biannual associate voice surveys, and across the company, teams created focused plans to continually improve engagement based on survey results. Our goal is to achieve world-class associate engagement and responding to associate feedback enables us to focus on the issues that matter to our associates. Diversity and Inclusion.
We also continued to measure engagement via biannual associate voice surveys, and across the company, teams created focused plans to continually improve engagement based on survey results. Our goal is to achieve world-class associate engagement and responding to associate feedback enables us to focus on the issues that matter to our associates.
Leveraging our thirty years of experience buying and selling millions of used vehicles, our system generates recommended initial retail price points, as well as retail price markdowns for specific vehicles based on algorithms that account for factors including sales history, consumer interest and seasonal patterns.
Leveraging our more than thirty years of experience buying and selling millions of used vehicles, our system generates recommended initial retail price points, as well as retail price markdowns for specific vehicles based on algorithms that account for factors including sales history, consumer interest and seasonal patterns.
The following documents are also available free of charge on our website: Corporate Governance Guidelines, Code of Business Conduct, and the charters of the Audit, Nominating and Governance, Compensation and Personnel, and Technology and Innovation Committees. We publish any changes to these documents on our website.
The following documents are also available free of charge on our website: Corporate Governance Guidelines, Code of Business Conduct, Responsibility Reports and the charters of the Audit, Nominating and Governance, Compensation and Personnel, and Technology and Innovation Committees. We publish any changes to these documents on our website.
These strategies are implemented through a broad range of media including, but not limited to, traditional broadcast, digital, search, social, out-of-home, sports sponsorships and newer influencer and activation programs.
These strategies are implemented through a broad range of media including, but not 9 limited to, traditional broadcast, digital, search, social, out-of-home, sports sponsorships and influencer and activation programs.
In fiscal 2024, we purchased approximately 1.1 million vehicles from consumers and dealers. Based on age, mileage or condition, approximately half of the vehicles acquired through our appraisal processes meet our retail standards. Those vehicles that do not meet our retail standards are sold to licensed dealers through our wholesale auctions.
In fiscal 2025, we purchased approximately 1.2 million vehicles from consumers and dealers. Based on age, mileage or condition, approximately half of the vehicles acquired through our appraisal processes meet our retail standards. Those vehicles that do not meet our retail standards are sold to licensed dealers through our wholesale auctions.
Our website and related mobile app received an average of 34 million monthly visits during fiscal 2024 and are a critical part of the customer’s journey, allowing them to learn about CarMax, explore our full inventory in real time, initiate vehicle transfers, apply for financing pre-qualification, receive an appraisal offer and even buy a car fully online.
Our website and related mobile app received an average of 35 million monthly visits during fiscal 2025 and are a critical part of the customer’s journey, allowing them to learn about CarMax, explore our full inventory in real time, initiate vehicle transfers, apply for financing pre-qualification, receive an appraisal offer and even buy a car fully online.
After the effect of 3-day payoffs and vehicle returns, CAF financed 42.9% of our retail used vehicle unit sales in fiscal 2024. CAF also services all auto loans it originates and is responsible for providing billing statements, collecting payments, maintaining contact with delinquent customers, and arranging for the repossession of vehicles securing defaulted loans. Competition CarMax Sales Operations.
After the effect of 3-day payoffs and vehicle returns, CAF financed 42.7% of our retail used vehicle unit sales in fiscal 2025. CAF also services all auto loans it originates and is responsible for providing billing statements, collecting payments, maintaining contact with delinquent customers, and arranging for the repossession of vehicles securing defaulted loans. Competition CarMax Sales Operations.
Claims arising out of actual or alleged violations of law could be asserted against us by individuals or governmental authorities and could expose us to significant damages or other penalties, including revocation or suspension of the licenses necessary to conduct business and fines.
Claims arising out of actual or alleged violations of law could be asserted against us by individuals or governmental authorities and could expose us to significant damages or other penalties, including revocation or suspension of the licenses necessary to conduct business and fines. Environmental Laws and Regulations.
No associate is subject to a collective bargaining agreement. We annually review our pay in each geographic market to ensure we are providing a fair and competitive wage. As of February 29, 2024, all our associates were paid above the applicable minimum wage. We offer a broad range of benefits to our associates, including health benefits for full-time associates.
No associate is subject to a collective bargaining agreement. We annually review our pay in each geographic market to ensure we are providing a fair and competitive wage. As of February 28, 2025, all our associates were paid above the applicable minimum wage. We offer a broad range of benefits to our associates, including health benefits for full-time associates.
Our focus is vehicles that are 0 to 10 years old; over the past three fiscal years, these vehicles generally ranged in price from $14,000 to $49,000. The mix of our used vehicle inventory by make, model and age will vary from time to time, depending on consumer preferences, seasonality and market pricing and availability. Wholesale Auctions.
Over the past three fiscal years, vehicles that are 0 to 10 years old generally ranged in price from $15,000 to $49,000. The mix of our used vehicle inventory by make, model and age will vary from time to time, depending on consumer preferences, seasonality and market pricing and availability. Wholesale Auctions.
For fiscal 2024, our average auction sales rate was approximately 97%. Financing a Vehicle : The availability of financing is a critical component of the vehicle purchase process, and having an array of finance sources increases approvals, expands access to financing for our customers and mitigates risk to CarMax.
For fiscal 2025, our average auction sales rate was approximately 98%. Financing a Vehicle : The availability of financing is a critical component of the vehicle purchase process, and having an array of finance sources increases approvals, expands access to financing for our customers and mitigates risk to CarMax.
On October 1, 2002, the CarMax business was separated from Circuit City through a tax-free transaction, becoming an independent, publicly traded company. As of February 29, 2024, we operated 245 used car stores in 109 U.S. television markets. Our home office is located at 12800 Tuckahoe Creek Parkway, Richmond, Virginia.
On October 1, 2002, the CarMax business was separated from Circuit City through a tax-free transaction, becoming an independent, publicly traded company. As of February 28, 2025, we operated 250 used car stores in 109 U.S. television markets. Our home office is located at 12800 Tuckahoe Creek Parkway, Richmond, Virginia.
Vehicles are financed using retail installment contracts secured by the vehicle. As of February 29, 2024, our network of third-party finance providers included Ally Financial, American Credit Acceptance, Capital One Auto Finance, Chase Auto Finance, Exeter Finance Corp., Santander Consumer USA and Westlake Financial Services.
Vehicles are financed using retail installment contracts secured by the vehicle. As of February 28, 2025, our network of third-party finance providers included Ally Financial, American Credit Acceptance, Capital One Auto Finance, Exeter Finance Corp., Santander Consumer USA and Westlake Financial Services.
As of February 29, 2024, our third-party ESP providers included Assurant, Inc., CNA National Warranty Corporation and Fidelity Warranty Services, Inc. Our third-party GAP provider as of February 29, 2024 was Safe-Guard Products International LLC. Reconditioning and Service.
As of February 28, 2025, our third-party ESP providers included Assurant, Inc., CNA National Warranty Corporation and Fidelity Warranty Services, Inc. Our third-party GAP provider as of February 28, 2025 was Safe-Guard Products International LLC. Reconditioning and Service.
Competition in our industry has evolved with the adoption of online platforms and marketing tools, all of which facilitate increased competition. Based on industry data, there were approximately 37 million used cars sold in the U.S. in calendar 2023, of which approximately 19 million were estimated to be age 0- to 10-year old vehicles.
Competition in our industry has evolved with the adoption of online platforms and marketing tools, all of which facilitate increased competition. Based on industry data, there were approximately 38 million used cars sold in the U.S. in calendar 2024, of which approximately 20 million were estimated to be age 0- to 10-year old vehicles.
Our survey 9 data indicates that during fiscal 2024, approximately 95% of customers who purchased a vehicle from us had first visited us online. In addition, approximately 70% of our customers leveraged some or all of our digital capabilities to complete their transactions in fiscal 2024.
Our survey data indicates that during fiscal 2025, approximately 95% of customers who purchased a vehicle from us had first visited us online. In addition, approximately 80% of our customers leveraged some or all of our digital capabilities to complete their transactions in fiscal 2025.
We believe that the broad scope of our ESPs helps promote customer satisfaction and loyalty, and thus increases the likelihood of repeat and referral business. In fiscal 2024, approximately 58% of the customers who purchased a retail used vehicle also purchased an ESP and approximately 16% purchased GAP. 6 CarMax Auto Finance.
We believe that the broad scope of our ESPs helps promote customer satisfaction and loyalty, and thus increases the likelihood of repeat and referral business. In fiscal 2025, approximately 54% of the customers who purchased a retail used vehicle also purchased an ESP and approximately 18% purchased GAP. 6 CarMax Auto Finance.
This sector is primarily comprised of banks, captive finance divisions of new car manufacturers, credit unions and independent finance companies. According to industry sources, this sector represented more than $1.6 trillion in outstanding receivables as of December 31, 2023. CAF’s primary competitors are banks and credit unions that offer direct financing to customers purchasing used cars.
This sector is primarily comprised of banks, captive finance divisions of new car manufacturers, credit unions and independent finance companies. According to industry sources, this sector represented approximately $1.7 trillion in outstanding receivables as of December 31, 2024. CAF’s primary competitors are banks and credit unions that offer direct financing to customers purchasing used cars.
Our wholesale auctions compete with other automotive in-person and online auctions. These competitors auction vehicles of all ages, while CarMax’s auctions predominantly sell older, higher mileage vehicles. Our wholesale auctions were primarily conducted virtually during fiscal 2024. CarMax Auto Finance. CAF operates and is a significant participant in the auto finance sector of the consumer finance market.
Our wholesale auctions compete with other automotive in-person and online auctions. These competitors auction vehicles of all ages, while CarMax’s auctions predominantly sell older, higher mileage vehicles. Since fiscal 2021, our wholesale auctions have primarily been conducted virtually. CarMax Auto Finance. CAF operates and is a significant participant in the auto finance sector of the consumer finance market.
These awards reflect our ability to provide associates with the tools and environment they need to succeed and grow in their careers. We have an Associate Experience Team and a cross-functional Associate Experience Advisory Group dedicated to ensuring an inclusive and engaging workplace.
This award reflects our ability to provide associates with the tools and environment they need to succeed and grow in their careers. We have an Associate Experience Team and a cross-functional Associate Experience Advisory Group dedicated to ensuring an inclusive and engaging workplace.
According to industry sources, there were approximately 289 million light vehicles in operation in the U.S. as of December 31, 2023.
According to industry sources, there were approximately 292 million light vehicles in operation in the U.S. as of December 31, 2024.
The success of these offerings strengthens our leadership position as the largest used vehicle buyer from consumers in the U.S. Vehicle purchases are also made through MaxOffer, our digital appraisal product for dealers. We leverage the Edmunds sales team to open new markets and sign-up new dealers for MaxOffer.
The success of these offerings strengthens our leadership position as the largest used vehicle buyer from consumers in the U.S. Vehicle purchases are also made through MaxOffer, our digital appraisal product for dealers that gives licensed dealers an instant offer good for seven days. We leverage the Edmunds sales team to open new markets and sign-up new dealers for MaxOffer.
Our high volume of appraisal purchases, which has increased further with the rollout of our instant appraisal offers and MaxOffer, supplies not only a large portion of our retail inventory, but also provides the scale that enables us to conduct our own wholesale auctions to dispose of vehicles that do not meet our retail standards.
Our high volume of appraisal purchases, further supported by our online instant appraisal offers and MaxOffer, supplies not only a large portion of our retail inventory, but also provides the scale that enables us to conduct our own wholesale auctions to dispose of vehicles that do not meet our retail standards.
During calendar year 2023, it is estimated that approximately 15 million new cars and 37 million used cars were sold at retail, many of which were accompanied by trade-ins, and approximately 10 million wholesale vehicles were sold at auctions and through other channels.
During calendar year 2024, it is estimated that approximately 16 million new cars and 38 million used cars were sold at retail, many of which were accompanied by trade-ins, and approximately 12 million wholesale vehicles were sold at auctions and through other channels.
We are also one of the nation’s largest operators of wholesale vehicle auctions, with 546,331 vehicles sold during fiscal 2024, and one of the nation’s largest providers of used vehicle financing, servicing approximately 1.1 million customer accounts in our $17.39 billion portfolio of managed receivables as of February 29, 2024.
We are also one of the nation’s largest operators of wholesale vehicle auctions, with 544,312 vehicles sold during fiscal 2025, and one of the nation’s largest providers of used vehicle financing, servicing approximately 1.1 million customer accounts in our $17.59 billion portfolio of managed receivables as of February 28, 2025.
While we are the largest retailer of used vehicles in the U.S., in calendar 2023, we estimate we sold approximately 3.7% of the age 0- to 10-year old vehicles sold on a nationwide basis, a decrease from 4.0% in calendar 2022.
We are the largest retailer of used vehicles in the U.S. In calendar 2024, we estimate we sold approximately 3.7% of the age 0- to 10-year old vehicles sold on a nationwide basis, consistent with calendar 2023.
Our associates are further guided by the policies and procedures we have in place to ensure everyone is treated with respect and has opportunities to reach their full potential. On February 29, 2024, we had a total of 29,836 full- and part-time associates, of which 970 work in our CAF segment and 473 work for our Edmunds business.
Our associates are further guided by the policies and procedures we have in place to ensure everyone is treated with respect and has opportunities to reach their full potential. On February 28, 2025, we had a total of 30,048 full- and part-time associates, of which 1,011 work in our CAF segment and 492 work for our Edmunds business.
Based on this inspection, we determine the reconditioning necessary to bring the vehicle up to our internal quality standards. Many of our stores depend upon nearby, typically larger, CarMax stores for reconditioning, which increases efficiency and reduces overhead.
Based on this inspection, we determine the reconditioning necessary to bring the vehicle up to our internal quality standards. Many of our stores depend upon nearby, typically larger, CarMax stores for reconditioning, which increases efficiency and reduces overhead. We utilize stand-alone reconditioning centers to balance production capacity across our stores and drive efficiency across our network.
We rely on trademarks, domain names and copyrights to protect core aspects of CarMax’s look and feel. Innovation and technology also play an increasingly vital role in all aspects of the business.
Intellectual Property Our brand image is a critical element of our business strategy. We rely on trademarks, domain names and copyrights to protect core aspects of CarMax’s look and feel. Innovation and technology also play an increasingly vital role in all aspects of the business.
We are the nation’s largest retailer of used cars, and we sold 765,572 used vehicles at retail during the fiscal year ended February 29, 2024.
We are the nation’s largest retailer of used cars, and we sold 789,050 used vehicles at retail during the fiscal year ended February 28, 2025.
We had 25,122 hourly and salaried associates, as well as 3,077 in-store sales associates, 1,525 sales associates in our Customer Experience Centers (“CECs”) and 112 Edmunds sales associates. Our in-store sales associates predominantly work on a commission basis while our CEC sales associates are hourly employees who are incentive eligible. We employ additional associates during peak selling seasons.
We had 24,883 hourly and salaried associates, as well as 3,537 in-store sales associates, 1,510 sales associates in our CECs and 118 Edmunds sales associates. Our in-store and Edmunds sales associates predominantly work on a commission basis while our CEC sales associates are hourly employees who are incentive eligible. We employ additional associates during peak selling seasons.
We also promptly disclose reportable waivers of the Code of Business Conduct on our website. The contents of our website are not, however, part of this report. Printed copies of these documents are also available to any shareholder, without charge, upon written request to our corporate secretary at the address set forth on the cover page of this report.
Printed copies of these documents are also available to any shareholder, without charge, upon written request to our corporate secretary at the address set forth on the cover page of this report. 11
We continue to build our technologies to expand our reach and integrate CarMax into a broader ecosystem of partnerships. Our proprietary centralized inventory management and pricing system tracks each vehicle throughout the sales process and allows us to buy the mix of makes, models, age, mileage and price points tailored to customer buying preferences at each CarMax location.
Our proprietary centralized inventory management and pricing system tracks each vehicle throughout the sales process and allows us to buy the mix of makes, models, age, mileage and price points tailored to customer buying preferences.
We use advanced data science, artificial intelligence and machine learning capabilities to optimize our business and the customer experience. Our business is supported by digital and mobile technologies that provide enhanced customer experience while enabling highly integrated automation of all operating functions, including credit processing and supply chain management.
We use advanced data science, AI and machine learning capabilities to optimize our business and the customer experience. Our business is supported by digital and mobile technologies that provide enhanced customer experience while enabling highly integrated automation of all operating functions, including receiving, appraisals, cataloging, reconditioning, merchandising, shopping, financing, sale and delivery.
In fiscal 2024, approximately 36% of our vehicles sold were transferred at customer request. Selling us a Vehicle : We have separated the practice of trading in a used vehicle in conjunction with the purchase of another vehicle into two distinct and independent transactions.
Selling us a Vehicle : We have separated the practice of trading in a used vehicle in conjunction with the purchase of another vehicle into two distinct and independent transactions.
We are subject to compliance with regulations concerning, among other things, the operation of underground and above-ground gasoline storage tanks, gasoline dispensing equipment, above-ground oil tanks and automotive paint booths. 11 AVAILABILITY OF REPORTS AND OTHER INFORMATION The following items are available free of charge on our website through the “Financials” link on our investor relations home page at investors.carmax.com, shortly after we file them with, or furnish them to, the U.S.
AVAILABILITY OF REPORTS AND OTHER INFORMATION The following items are available free of charge on our website through the “Financials” link on our investor relations home page at investors.carmax.com, shortly after we file them with, or furnish them to, the U.S.
Our activities are subject to oversight by the Federal Trade Commission and other federal and state regulators, and our financing activities are also subject to enforcement by the Consumer Financial Protection Bureau (“CFPB”). The CFPB has supervisory authority over large nonbank auto finance companies, including CAF.
Our activities are subject to oversight by the Federal Trade Commission and other federal and state regulators, and our financing activities are also subject to the supervisory authority of the Consumer Financial Protection Bureau.
As part of this partnership, CarMax is the presenting sponsor of the NWSL Shield, awarded to the club with the best regular season record. Human Capital Resources CarMax’s purpose, to drive integrity by being honest and transparent in every interaction, is brought to life each day by our associates’ commitment to living our core values.
Human Capital Resources CarMax’s purpose, to drive integrity by being honest and transparent in every interaction, is brought to life each day by our associates’ commitment to living our core values.
Our omni-channel platform further empowers our customers to buy a car on their own terms – online, in-store or an integrated combination of both. Our omni-channel platform provides multiple ways for our customers to interact with us, including completely online. A customer may interact with our customer experience consultants via phone, text messages or chat.
Our omni-channel platform provides multiple ways for our customers to interact with us, including completely online. A customer may interact online with Skye (our AI-powered virtual assistant) or with our customer experience consultants via phone, text messages or chat.
Buyers and sales consultants are equipped with mobile and centralized tools that allow them to access real-time information to better serve our customers. Our proprietary digital technology provides our management with real-time information about many aspects of our omni-channel operations, such as inventory management, pricing, vehicle transfers, wholesale auctions and sales consultant productivity.
Our proprietary digital technology provides our management with real-time information about many aspects of our omni-channel operations, such as inventory management, pricing, vehicle transfers, wholesale auctions and sales consultant productivity. Real-time access to a complete view of our customer interactions from omni-channel allows our associates to provide a tailored and differentiated experience to our customers.
As of February 29, 2024, we had approximately 64,000 saleable retail vehicles in our inventory. Vehicles in-transit or on customer hold are not visible on our website. Upon request by a customer, we will transfer virtually any used vehicle in our inventory. This gives CarMax customers access to a much larger selection of vehicles than any traditional auto retailer.
Upon request by a customer, we will transfer virtually any used vehicle in our inventory. This gives CarMax customers access to a much larger selection of vehicles than any traditional auto retailer. In fiscal 2025, approximately 38% of our vehicles sold were transferred at customer request.
This guarantee gives customers the ability to take 24-hour test drives before committing to purchase as well as provides a 30-day/1,500 mile money-back guarantee and a 90-day/4,000-mile limited warranty. In May 2024, we will replace our 30-day 5 money-back guarantee with a 10-day money-back guarantee.
This guarantee gives customers the ability to take 24-hour test drives before committing to purchase as well as provides a 10- 5 day money-back guarantee and a 90-day/4,000-mile limited warranty. Our CarMax Quality Certified standards were developed internally by CarMax and are not affiliated with any third party or original equipment manufacturer program.
We believe that CAF’s principal competitive advantage is its strategic position as the primary finance source for CarMax customers, and that CAF’s primary driver for growth is the growth in CarMax’s retail used unit sales. We periodically test different credit offers and closely monitor acceptance rates and the effect on sales to assess market competitiveness.
We believe that CAF’s principal competitive advantage is its strategic position as the primary finance source for CarMax customers, and that CAF’s primary drivers for growth are the growth in CarMax’s retail used unit sales as well as increased penetration through full credit spectrum lending.
In response, we created a rotational program for college technology hires and implemented a technology and data science reskilling program. All roles working on our innovation efforts are eligible for equity or equity-based grants through our standard compensation plan, which serve as a meaningful engagement and retention tool.
All roles working on our innovation efforts are eligible for equity or equity-based grants through our standard compensation plan, which serve as a meaningful engagement and retention tool. We believe this evolution in our workforce has been and will continue to be critical to the development of our technology platforms and strategic initiatives.
This commitment extends to every facet of our business interactions, from associates within CarMax to job applicants, customers, vendors, shareholders, and business partners, to ensure everyone is treated fairly and impartially. We consider a wide set of different suppliers when conducting business, including small, local businesses.
Our commitment to inclusion is based on a company vision to ensure everyone, everywhere has the opportunity to reach their full potential. 10 This commitment extends to every facet of our business interactions, from associates within CarMax to job applicants, customers, vendors, shareholders, and business partners, to ensure everyone is treated fairly and impartially.
The CarMax culture of diversity and inclusion is built on a foundation of integrity and respect, and we value the diverse backgrounds and perspectives our associates bring to locations across the country. Our commitment to diversity and inclusion is based on a company vision to ensure everyone, everywhere has the opportunity to reach their full potential.
CarMax’s culture of inclusion is built on a foundation of integrity and respect. We value the wide range of experiences and perspectives our associates bring to locations across the country.
Throughout the implementation of our omni-channel car buying experience, the shape of our workforce has evolved and the number of technology, product and data science associates has increased. As of February 29, 2024, we had 1,469 technology, product and data science associates.
Throughout the implementation of our omni-channel car buying experience, the shape of our workforce evolved to include more technology, product and data science associates. As of February 28, 2025, we had 1,481 technology, product and data science associates. In response, we created a rotational program for college technology hires and implemented a technology and data science reskilling program.
Our consolidated financial statements include the financial results related to our Edmunds business, which does not meet the definition of a reportable segment. CarMax Sales Operations. Our CarMax Sales Operations segment sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers, all for competitive, no-haggle prices.
Our CarMax Sales Operations segment sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers, all for competitive, no-haggle prices. We enable our customers to separately evaluate each component of the sales process based on comprehensive information about the terms and associated prices of each component.
Market share performance in calendar 2023 was negatively impacted by sharp vehicle depreciation in the used car industry and our focus on profitable market share. Our market share is generally correlated to the length of time we have operated in a given market.
Our market share is generally correlated to the length of time we have operated in a given market.
We believe this evolution in our workforce has been and will continue to be critical to the development of our technology platforms and strategic initiatives. Our commitment to our associates is reflected in our fair and broad-based compensation packages and benefit programs, our continuous investment in talent acquisition, engagement, and development activities, and our comprehensive safety and security program.
Our commitment to our associates is reflected in our fair and broad-based compensation packages and benefit programs, our continuous investment in talent acquisition, engagement, and development activities, and our comprehensive safety and security program. We review pay equity annually based on objective factors such as position, tenure, and location.
We review pay equity annually based on objective factors such as position, tenure, and location. If we find discrepancies that cannot be explained by these objective factors, we make appropriate adjustments. Our commitment is to provide equal pay for comparable work regardless of gender, age, race or ethnicity.
If we find discrepancies that cannot be explained by these objective factors, we make appropriate adjustments. Our commitment is to provide equal pay for comparable work. We have been recognized for 21 consecutive years as one of Fortune magazine’s 100 Best Companies to Work For®.
Purchasing a Vehicle : The vehicle purchase process at CarMax differs fundamentally from the traditional auto retail experience. Our no-haggle pricing removes a frequent customer frustration with the purchase process and allows customers to shop for vehicles the same way they shop for other consumer products.
Our no-haggle pricing removes a frequent customer frustration with the purchase process and allows customers to shop for vehicles the same way they shop for other consumer products. Our omni-channel platform further empowers our customers to buy a car on their own terms – online, in-store or a seamless combination of both.
We launched a new campaign with the NBA/WNBA alongside the announcement of CarMax as the newest WNBA Changemaker. In addition, we launched our Never Settle campaign, encouraging customers to never settle for less than the CarMax experience when buying or selling a car. We also continued our multi-year partnership with the NWSL.
We extended our Never Settle campaign, encouraging customers to never settle for less than the CarMax experience when buying or selling a car. We have expanded our partnerships with the WNBA and the NWSL, including our front-of-kit sponsorship of the NWSL’s Gotham FC and our founding partnership of the WNBA’s new Golden State Valkyries.
Real-time access to a complete view of our customer interactions from omni-channel allows our associates to provide a tailored and differentiated experience to our customers. In addition, through our systematic integrations with our third-party finance partners, we are able to provide our finance-based shopping experience.
In addition, through our systematic integrations with our third-party finance partners, we are able to provide our finance-based shopping experience. We continue to build our technologies to expand our reach and integrate CarMax into a broader ecosystem of partnerships.
We also monitor 3-day payoffs, as the percentage of customers exercising this option can be an indication of the competitiveness of our offer. 7 Products and Services Retail Merchandising. We offer customers a broad selection of makes and models of used vehicles, including domestic, imported and luxury vehicles, as well as hybrid and electric vehicles (“EV”), at competitive prices.
We periodically test different credit offers and closely monitor acceptance rates and the effect on sales to assess market competitiveness. We also monitor 3-day payoffs, as the percentage of customers exercising this option can be an indication of the competitiveness of our offer. 7 Products and Services Retail Merchandising.
Our omni-channel platform, which gives us the largest addressable market in the used car industry, empowers our retail customers to buy a car on their terms – online, in-store or an integrated combination of both. CarMax was incorporated under the laws of the Commonwealth of Virginia in 1996.
Our omni-channel platform empowers our retail customers to buy a car on their terms - online, in-store or a seamless combination of both. Our associates, stores, technology and digital capabilities seamlessly tied together enable us to provide the most customer centric car buying and selling experience.
We enable our customers to separately evaluate each component of the sales process based on comprehensive information about the terms and associated prices of each component. Customers can accept or decline any individual element of the offer without affecting the price or terms of any other component of the offer.
Customers can accept or decline any individual element of the offer without affecting the price or terms of any other component of the offer. Purchasing a Vehicle : The vehicle purchase process at CarMax differs fundamentally from the traditional auto retail experience.
We believe our omni-channel platform reinforces our competitive advantages as it empowers customers to buy a car on their own terms, whether online, in-store or through an integrated combination of online and in-store experiences.
Our omni-channel platform empowers our retail customers to buy a car on their terms - online, in-store or a seamless combination of both. Our associates, stores, technology and digital capabilities seamlessly tied together enable us to provide the most customer centric car buying and selling experience.
Removed
Our diversified business model, combined with our exceptional associates and unparalleled omni-channel experience, is a unique advantage in the used car industry that firmly positions us to drive profitable market share gains while creating shareholder value over the long-term.
Added
This is a key differentiator that gives us the right to win and access to the largest total addressable market in the used car space. This positions us to deliver strong market share growth and significant year-over-year earnings growth for years to come. CarMax was incorporated under the laws of the Commonwealth of Virginia in 1996.
Removed
We do not offer financing to dealers purchasing vehicles at our wholesale auctions.
Added
External title data indicates that while our year-over-year market share came under pressure during the first half of the year, it recovered as we achieved accelerating gains through the second half of the year, with particular strength in vehicles aged 0 to 4 years, which grew for the entire year.
Removed
We have been recognized for 20 consecutive years as one of Fortune magazine’s 100 Best Companies to Work For® and have also been recognized as one of Training magazine’s “Training APEX Award” recipients for 17 years in a row.
Added
This is a key differentiator that gives us the right to win and access to the largest total addressable market in the used car space. This positions us to deliver strong market share growth and significant year-over-year earnings growth for years to come.
Removed
Our diversity and inclusion governance model includes a council as well as an executive steering committee, of which the CEO is a member. We also have a Corporate Social Responsibility (“CSR”) team, led by our Vice President, CSR.
Added
We offer customers a broad selection of makes and models of used vehicles, including domestic, imported and luxury vehicles, as well as hybrid and electric vehicles (“EV”), at competitive prices. Our focus is vehicles that are 0 to 10 years old, with vehicles that are 0 to 6 years old representing approximately 75% of used vehicle sales in fiscal 2025.
Removed
The CSR team includes, in part, the Community Relations, Diversity and Inclusion and Internal Communications teams. 10 We have a company-wide associate training program on diversity and inclusion. This program includes required trainings for all associates, with a completion rate of over 90% in fiscal 2024.
Added
CAF is building the capability to scale its participation across all credit tiers, which will help to capture finance economics, drive sales, and complement our valued lending partnerships that are a key foundation of CarMax’s best-in-class credit platform. 8 We do not offer financing to dealers purchasing vehicles at our wholesale auctions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe impact of reducing or curtailing CAF’s loan originations could have a material adverse effect on our business, sales and results of operations. 13 Our revolving credit facility, term loans, senior unsecured notes and certain securitization and sale-leaseback agreements contain covenants and event-of-default or other performance triggers.
Biggest changeOur revolving credit facility, term loan, senior unsecured notes and certain securitization and sale-leaseback agreements contain covenants and event-of-default or other performance triggers. Any failure to comply with these covenants or performance triggers could have a material adverse effect on our business, results of operations and financial condition.
CAF Competition. Our CAF segment is subject to competition from various financial institutions, including banks and credit unions, which provide vehicle financing to consumers.
Our CAF segment is subject to competition from various financial institutions, including banks and credit unions, which provide vehicle financing to consumers.
Further, as the Earth’s climate changes, extreme weather events could become more frequent or more intense, which could have a material adverse effect on our sales and results of operations. We have communicated certain environmental goals that are subject to related disclosure requirements.
Further, as the Earth’s climate changes, extreme weather events have become more frequent or more intense, which could have a material adverse effect on our sales and results of operations. We have communicated certain environmental goals that are subject to related disclosure requirements.
Our performance is subject to local economic, competitive and other conditions prevailing in geographic areas where we operate. Since a large portion of our sales is generated in the Southeastern U.S., California, Texas and Washington, D.C./Baltimore, our results of operations depend substantially on general economic conditions and consumer spending habits in these 17 markets.
Our performance is subject to local economic, competitive and other conditions prevailing in geographic areas where we operate. Since a large portion of our sales is generated in the Southeastern U.S., California, Texas and Washington, D.C./Baltimore, our results of operations depend substantially on general economic conditions and consumer spending habits in these markets.
We have identified several accounting policies as being “critical” to the fair presentation of our financial condition and results of operations because they involve major aspects of our business and require us to make judgments about matters that are inherently uncertain. These policies are described in Item 7.
We have identified several accounting policies as being “critical” to the fair presentation of our financial condition and results of operations because they involve major aspects of our business and require us to make judgments about matters that are inherently uncertain. These policies are described in Item 16 7.
If we fail to maintain the high standards on which our reputation is built, or if an event occurs that damages this reputation, it could adversely affect consumer demand and have a material adverse effect on our business, sales and results of operations.
If we fail to maintain the high 13 standards on which our reputation is built, or if an event occurs that damages this reputation, it could adversely affect consumer demand and have a material adverse effect on our business, sales and results of operations.
We are exposed to the risk that our customers who finance their purchases through CAF will be unable or unwilling to repay their loans according to their terms and that the vehicle collateral securing the payment of their loans may not be sufficient to 15 ensure full repayment.
We are exposed to the risk that our customers who finance their purchases through CAF will be unable or unwilling to repay their loans according to their terms and that the vehicle collateral securing the payment of their loans may not be sufficient to ensure full repayment.
Our ability to source vehicles from 14 third-party auctions could be affected by an increase in the number of closed auctions that are open only to new car dealers who have franchise relationships with automotive manufacturers.
Our ability to source vehicles from third-party auctions could be affected by an increase in the number of closed auctions that are open only to new car dealers who have franchise relationships with automotive manufacturers.
If litigation were instituted against us, it could result in substantial costs and a diversion of our attention and resources, which could have a material adverse effect on our business. 19 Item 1B. Unresolved Staff Comments. None.
If litigation were instituted against us, it could result in substantial costs and a diversion of our attention and resources, which could have a material adverse effect on our business. Item 1B. Unresolved Staff Comments. None.
The marketplace for used vehicles may be impacted by the significant, and likely accelerating, changes to the broader automotive industry. Increasing demand for EVs is driving the need to adapt our business to source, recondition and service EVs.
The marketplace for used vehicles may be impacted by the significant, and likely accelerating, changes to the broader automotive industry. Increasing demand for EVs is driving the need to adapt our business to source, recondition 12 and service EVs.
Even the perception of a decrease in the quality of our brand could impact results. The use of social media has increased the speed with which information and opinions can be shared and thus the speed with which reputation can be affected.
Even the perception of a decrease in the quality of our brand could impact results. The use of social media has increased the speed with which information and opinions can be shared and the speed with which reputation can be affected.
Claims arising out of actual or alleged violations of law could be asserted against us by individuals, either individually or through class claims, or by governmental entities in civil or criminal investigations and proceedings.
Claims arising out of actual or alleged violations of the law could be asserted against us by individuals, either individually or through class claims, or by governmental entities in civil or criminal investigations and proceedings.
The occurrence of severe weather events, such as rain, flooding, hail, snow, wind, storms, hurricanes, extended periods of unusually cold weather or natural disasters, could cause store closures or affect the timing of consumer demand, either of which could adversely affect consumer traffic and could have a material adverse effect on our sales and results of operations in a given period.
The occurrence of severe weather events, such as rain, flooding, hail, snow, wind, storms, hurricanes, extended periods of unusually cold weather or natural disasters, including wildfires, could cause store closures or affect the timing of consumer demand, either of which could adversely affect consumer traffic and could have a material adverse effect on our sales and results of operations in a given period.
If we are unable to achieve progress with respect to our environmental goals, accomplish our environmental goals or satisfy evolving shareholder expectations or industry standards, we could suffer reputational harm.
If we are unable to achieve progress with respect to our environmental goals, accomplish our environmental goals or satisfy evolving shareholder expectations or regulatory or industry standards, we could suffer reputational harm.
Failure to develop and execute strategies to remain the nation’s preferred retailer of used vehicles and to adapt to the increasing use of digital and online tools to market, buy, sell and finance used vehicles could adversely affect our business, sales and results of operations. Automotive retailing is a highly competitive and highly fragmented business.
Failure to develop and execute strategies to remain the nation’s largest retailer of used vehicles and to adapt to the increasing use of digital and online tools to market, buy, sell and finance used vehicles could adversely affect our business, sales and results of operations. Automotive retailing is a highly competitive and highly fragmented business.
Our inability to acquire or lease suitable real estate at favorable terms could limit our expansion and could have a material adverse effect on our business and results of operations. Our success depends upon the continued contributions of our associates. Our associates are the driving force behind our success.
The expansion of our business also requires real estate. Our inability to acquire or lease suitable real estate at favorable terms could limit our expansion and could have a material adverse effect on our business and results of operations. Our success depends upon the continued contributions of our associates. Our associates are the driving force behind our success.
This information includes the information customers provide when purchasing a vehicle and applying for vehicle financing. We also collect, process and retain sensitive and confidential associate information in the normal course of business and may share that information with our third-party service providers.
This information includes the information customers provide when purchasing or selling a vehicle and applying for vehicle financing. We also collect, process and retain sensitive and confidential associate information in the normal course of business and may share that information with our third-party service providers.
Furthermore, we may not realize all the anticipated benefits of these investments, or the realized benefits may be significantly delayed.
Furthermore, we may not realize all the anticipated 15 benefits of these investments, or the realized benefits may be significantly delayed.
The failure of these systems to perform as designed, the failure to maintain or update these systems as necessary, or the inability to enhance our data management and information technology capabilities, could disrupt our business operations and have a material adverse effect on our sales and results of operations.
The failure of these systems to perform as designed, the failure to maintain or invest in and update these systems as necessary, or the inability to enhance our data management and information technology capabilities, could disrupt our business operations and have a material adverse effect on our sales and results of operations.
Worsening or stagnating economic conditions can also have a material adverse effect on the supply of late-model used vehicles, as automotive manufacturers produce fewer new vehicles and consumers retain their current vehicles for longer periods of time. This could result in increased costs to acquire used vehicle inventory and decreased margins on units sold.
Economic conditions can also have a material adverse effect on the supply of late-model used vehicles, as automotive manufacturers produce fewer new vehicles and consumers retain their current vehicles for longer periods of time. This could result in increased costs to acquire used vehicle inventory and decreased margins on units sold.
Such an event could include an isolated incident at a single store, particularly if such incident results in adverse publicity, governmental investigations, or litigation and could involve, among other things, our sales process, our provision of financing, our reconditioning process, our treatment of customers or associates, our use of artificial intelligence, cultural brand positioning, or real or perceived vehicle quality and related injury.
Such an event could include an isolated incident at a single store, particularly if such incident results in adverse publicity, governmental investigations, or litigation and could involve, among other things, our sales process, our provision of financing, our reconditioning process, our treatment of customers or associates, our use of AI, cultural brand positioning, or real or perceived vehicle quality and related injury.
In particular, we rely on our information systems to manage sales, inventory, our customer-facing websites and applications (carmax.com, carmaxautofinance.com, the CarMax mobile app, and carmaxauctions.com), consumer financing, customer information and other data.
We rely on our information systems to manage sales, inventory, our customer-facing websites and applications (carmax.com, carmaxautofinance.com, the CarMax mobile app, and carmaxauctions.com), consumer financing, customer information and other data.
The violation of regulations or disclosure requirements related to ESG matters (or the disclosures themselves) could result in civil penalties, significant expenses, or damage to our reputation, which could have a material adverse effect on our business, sales and results of operations. We are subject to various legal proceedings.
The violation of laws or regulations for ESG-related matters (or the disclosures themselves) could result in civil penalties, significant expenses, or damage to our reputation, which could have a material adverse effect on our business, sales and results of operations. We are subject to various legal proceedings.
A failure to maintain our culture could have a material adverse effect on our business, sales and results of operations. In addition, managing our response to a changing economic environment as well as our strategic initiatives require management, employees and contractors to adapt and learn new skills and capabilities.
A failure to maintain our culture could have a material adverse effect on our business, sales and results of operations. In addition, managing our response to a changing economic environment, evolving technologies and our strategic initiatives require management, employees and contractors to adapt and learn new skills and capabilities.
For example, if retail prices for used vehicles rise relative to retail prices for new vehicles, it could make buying a new vehicle more attractive to our customers than buying a used vehicle, which could have a material adverse effect on sales and results of operations and could result in decreased used margins.
For example, when retail prices for used vehicles rise relative to retail prices for new vehicles, it can make buying a new vehicle more attractive to our customers than buying a used vehicle, which can have a material adverse effect on sales and results of operations and can result in decreased used margins.
The use of third-party vendors represents an inherent risk to our company that could have a material adverse effect on our business, sales and results of operations. 16 Our business is sensitive to conditions affecting automotive manufacturers, including manufacturer recalls.
The use of third-party vendors represents an inherent risk to our company that could have a material adverse effect on our business, sales and results of operations. Our business is sensitive to conditions affecting automotive manufacturers.
Numerous national retailers have disclosed security breaches involving sophisticated cyber-attacks, including ransomware, that were not recognized or detected until after such retailers had been affected, notwithstanding the preventive measures such retailers had in place. Further, the rapid evolution and increased adoption of artificial intelligence technologies may increase our level of cybersecurity risk.
Numerous national retailers have disclosed security breaches involving sophisticated cyber- 17 attacks, including ransomware, that were not recognized or detected until after such retailers had been affected, notwithstanding the preventive measures such retailers had in place. Further, the rapid evolution and increased adoption of AI and other evolving technologies may increase our level of cybersecurity risk.
Our reputation as a retailer offering competitive, no-haggle prices, a broad selection of CarMax Quality Certified used vehicles and superior customer service is also critical to our success.
Our reputation as a retailer offering competitive, no-haggle prices, a broad selection of CarMax Quality Certified used vehicles, superior customer service and a seamless omni-channel experience is also critical to our success.
CarMax has experienced, and may continue to experience, steep market depreciation of its vehicle inventory due to changes in economic conditions, which could result in reduced retail and wholesale margins.
CarMax has experienced, and could experience in the future, steep market depreciation of its vehicle inventory due to changes in economic conditions, which could result in reduced retail and wholesale margins.
Although these companies do not compete with CarMax, the increasing use of such products by dealers who compete with CarMax could reduce the relative competitive advantage of CarMax’s internally developed proprietary systems. 12 If we fail to respond effectively to competitive pressures or to changes in the used vehicle marketplace, it could have a material adverse effect on our business, sales and results of operations.
The increasing use of such products by dealers who compete with CarMax could reduce the relative competitive advantage of CarMax’s internally developed proprietary systems. If we fail to respond effectively to competitive pressures or to changes in the used vehicle marketplace, it could have a material adverse effect on our business, sales and results of operations. CAF Competition.
We believe that one of the things that distinguishes CarMax is a culture centered on valuing our associates. Adapting to new dynamics, we provide flexible, hybrid and remote work arrangements for certain associates, which may impact associate engagement, integration of new associates and overall company culture.
We believe that one of the key factors that distinguishes CarMax is a culture centered on valuing our associates. We provide flexible, hybrid and remote work arrangements for certain associates, which may impact associate engagement, integration of new associates and overall company culture.
The expansion of our store base and implementation of new initiatives also requires us to recruit and retain the associates necessary to support that expansion. See the risk factor below titled “ Our success depends upon the continued contributions of our associates ” for discussion of this risk. The expansion of our business also requires real estate.
The expansion of our store base, addition of offsite production and auction facilities and implementation of new initiatives also requires us to recruit and retain the associates necessary to support that expansion. See the risk factor below titled “ Our success depends upon the continued contributions of our associates ” for discussion of this risk.
Our business, sales and results of operations may be negatively affected if we fail to provide a high quality and consistent customer experience, regardless of sales channel, if our omni-channel platform does not meet customer expectations, or if we are unable to attract, retain and manage the personnel at various levels who have the necessary skills and experience we need to implement our omni-channel initiatives.
Our business, sales and results of operations may be negatively affected if we fail to provide a high quality and consistent customer experience, regardless of sales channel, if our omni-channel platform or other initiatives do not meet customer expectations, or if we are unable to attract, retain and manage the personnel at various levels who have the necessary skills and experience we need to implement our initiatives. 14 Our failure to manage our growth and the related challenges could have a material adverse effect on our business, sales and results of operations.
We have made a considerable investment in our omni-channel platform and a failure to capture the benefits that we expect from the platform and our continued investments in enhancements to the platform could have a material adverse effect on our business, sales and results of operations. We must anticipate and meet our customers’ expectations in an evolving retail industry.
A failure to capture the benefits that we expect from the platform or these initiatives and our continued investments in enhancements to the platform or in these initiatives could have a material adverse effect on our business, sales and results of operations. We must anticipate and meet our customers’ expectations in an evolving retail marketplace.
These conditions include, but are not limited to, recession, inflation, interest rates, unemployment levels, the state of the housing market, gasoline prices, consumer credit availability, consumer credit delinquency and loss rates, personal discretionary spending levels, and consumer sentiment about the economy in general.
These conditions include, but are not limited to, recession, inflation, interest rates, unemployment levels, the state of the housing market, gasoline prices, consumer credit availability, consumer credit delinquency and loss rates, tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, or threats of such actions, personal discretionary spending levels, and consumer sentiment about the economy in general.
Because we do not have manufacturer authorization to complete recall-related repairs, some vehicles we sell may have unrepaired safety recalls.
In addition, manufacturer recalls are a common occurrence. Because we do not have manufacturer authorization to complete recall-related repairs, some vehicles we sell may have unrepaired safety recalls.
Adverse conditions, such as the 2023 United Auto Workers strike, affecting one or more automotive manufacturers could have a material adverse effect on our sales and results of operations and could impact the supply of vehicles, including the supply of late-model used vehicles. In addition, manufacturer recalls are a common occurrence.
Adverse conditions, such as the 2023 United Auto Workers strike and tariffs impacting the availability and price of vehicles and automotive parts, affecting one or more automotive manufacturers could have a material adverse effect on our sales and results of operations and could impact the supply of vehicles, including the supply of late-model used vehicles.
These conditions and the economy in general have, and in the future may, be affected by significant national or international events such as a global health crisis (including the COVID-19 pandemic) or current geopolitical conditions (including the Israel-Hamas War and the Russia-Ukraine War).
These conditions and the economy in general have been, and in the future may be, affected by significant national or international events such as a global health crisis or current geopolitical conditions.
We use a securitization program to fund the majority of the auto loans receivable originated by CAF. Changes in the condition of the asset-backed securitization market could lead us to incur higher costs to access funds in this market or require us to seek alternative means to finance CAF’s loan originations.
Changes in the condition of the asset-backed securitization market could lead us to incur higher costs to access funds in this market or require us to seek alternative means to finance CAF’s loan originations.
One or more of these third-party vendors may experience financial distress, technology challenges, cybersecurity incidents, staffing shortages or liquidity challenges, file for bankruptcy protection, go out of business, or suffer disruptions in their business.
One or more of these third-party vendors may experience financial distress, technology challenges, cybersecurity incidents, staffing shortages, liquidity challenges, file for bankruptcy protection, go out of business, suffer disruptions in their business or experience significant increases in the cost of their goods or services sold due to factors beyond their control, including tariffs.
We have incurred and will continue to incur capital and operating expenses and other costs to comply with these laws and regulations. We are subject to evolving regulations, disclosure requirements, and expectations relating to environmental, social and governance matters. Failure to satisfy these regulations, requirements, and expectations could adversely affect our business, sales, results of operations and financial condition.
We have incurred and will continue to incur capital and operating expenses and other costs to comply with these laws and regulations. 18 We are subject to evolving regulations, disclosure requirements, standards and expectations relating to environmental, social and governance matters.
Increased online used vehicle offerings and the growing consumer trend of buying vehicles online could make it more difficult for us to differentiate our customer offering from competitors’ offerings, could result in lower-than-expected retail margins, and could have a material adverse effect on our business, sales and results of operations.
Increased online used vehicle offerings and the growing consumer trend of buying vehicles online adds new competition in a segment that is growing and could result in lower-than-expected retail margins, and could have a material adverse effect on our business, sales and results of operations.
Changes in these laws and regulations, or our failure to comply, could have a material adverse effect on our business, sales, results of operations and financial condition.
REGULATORY AND LITIGATION RISKS We operate in a highly regulated industry and are subject to a wide range of federal, state and local laws and regulations. Changes in these laws and regulations, or our failure to comply, could have a material adverse effect on our business, sales, results of operations and financial condition.
Accordingly, if we fail to adjust appraisal offers to stay in line with broader market trade-in offer trends, or fail to recognize those trends, it could adversely affect our ability to acquire inventory. It could also force us to purchase a greater percentage of our inventory from third-party auctions, which is generally less profitable for CarMax.
Accordingly, if we fail to adjust appraisal offers to stay in line with broader market trade-in offer trends, or fail to recognize those trends, it could adversely affect our ability to acquire inventory. Acquiring inventory from third-party auctions or from other dealers through our MaxOffer channel is generally less profitable than acquiring it from our in-store and online appraisal products.
We have incurred and will continue to incur operating expenses and other costs to comply with the evolving set of regulations and disclosure requirements and respond to shareholder expectations related to ESG matters. Compliance with ESG-related regulations and disclosure requirements, including an evolving set of environmental and climate change laws, and shareholder expectations can be costly, challenging and time-consuming.
We have incurred and will continue to incur operating expenses and other costs to comply with the evolving set of laws and regulations and to respond to shareholder standards and expectations for ESG-related matters.
Our failure to realize the benefits associated with our omni-channel platform could have a material adverse effect on our business, sales and results of operations.
Our failure to realize the benefits associated with our omni-channel platform or initiatives designed to leverage evolving technologies, including AI, could have a material adverse effect on our business, sales and results of operations. We have made a considerable investment in our omni-channel platform, as well as investments in initiatives designed to leverage evolving technologies, including AI.
If this market ceased to exist and there were no immediate alternative funding sources available, we might be forced to curtail our lending practices for some period of time.
If this market ceased to exist and there were no immediate alternative funding sources available, we might be forced to curtail our lending practices for some period of time. The impact of reducing or curtailing CAF’s loan originations could have a material adverse effect on our business, sales and results of operations.
Sales growth requires that we continue to effectively execute our business strategies and implement new and ongoing initiatives to elevate the experience of our customers.
If we fail to effectively or efficiently manage our growth, it could have a material adverse effect on our business, sales and results of operations. Sales growth requires that we continue to effectively execute our business strategies and implement new and ongoing initiatives to elevate the experience of our customers.
Although, in recent years, internally generated cash flows have generally been sufficient to maintain our operations and fund our growth, there can be no assurance that we will continue to generate sufficient cash for these purposes.
Although internally generated cash flows have generally been sufficient to maintain our operations and fund our growth, there can be no assurance that we will continue to generate sufficient cash for these purposes. Failure to do so—or our decision to put our cash to other uses—would make us more dependent on external sources of financing to fund our growth.
A reduction in the availability of, or access to, sources of inventory, including parts used to recondition inventory, also could have a material adverse effect on our business, sales and results of operations.
A reduction in the availability of, or access to, sources of inventory, including parts used to recondition inventory, could have a material adverse effect on our business, sales and results of operations. We source a significant percentage of our vehicles through our appraisal process, which includes our online instant appraisal offers, and these vehicles are generally more profitable for CarMax.
Any failure to comply with these covenants or performance triggers could have a material adverse effect on our business, results of operations and financial condition. Disruptions in the capital and credit markets could adversely affect our ability to draw on our revolving credit facility or access our deposits generally.
Disruptions in the capital and credit markets could adversely affect our ability to draw on our revolving credit facility or access our deposits generally.
Our failure to manage our growth and the related challenges could have a material adverse effect on our business, sales and results of operations. Our growth is dependent on the success of our omni-channel platform, opening stores in new and existing markets, continued sales growth and the build-out of our offsite production and auction facilities.
Our growth is dependent on the success of our omni-channel platform, opening stores in new and existing markets, continued sales growth and the build-out of our offsite production and auction facilities. These enhancements and expansions place significant demands on our management team, our associates and our information systems.
Failure to do so—or our decision to put our cash to other uses—would make us more dependent on external sources of financing to fund our growth. Changes in the availability or cost of the long-term financing to support the origination of auto loans receivable through CAF could adversely affect sales and results of operations.
Changes in the availability or cost of the long-term financing to support the origination of auto loans receivable through CAF could adversely affect sales and results of operations. We use a securitization program to fund the majority of the auto loans receivable originated by CAF.
See the risk factor above titled “ We collect sensitive confidential information from our customers ” for the risks associated with a breach of confidential customer or associate information. 18 REGULATORY AND LITIGATION RISKS We operate in a highly regulated industry and are subject to a wide range of federal, state and local laws and regulations.
Such incidents could disrupt our business and have a material adverse effect on sales and results of operations. See the risk factor above titled “ We collect sensitive confidential information from our customers ” for the risks associated with a breach of confidential customer or associate information.
This could result in challenges to vehicle affordability, lower sales, decreased margins on units sold, and decreased profits for our CAF segment. For example, vehicle affordability challenges that stem from widespread inflationary pressures, higher interest rates, tightened lending standards and prolonged low consumer confidence are the primary drivers behind the overall decrease in demand for used vehicles.
This could result in challenges to vehicle affordability, lower sales, decreased margins on units sold, and decreased profits for our CAF segment. For example, tariffs impacting the availability and price of automotive parts, vehicles, or steel used in constructing new locations could also adversely impact our business.
We are subject to an increasing number of regulations and disclosure requirements relating to environmental, social and governance (“ESG”) matters, including environmental and climate change laws. Regulators, shareholders, associates and other stakeholders are increasingly focused on ESG matters and related disclosures.
Failure to satisfy these regulations, requirements, standards and expectations could adversely affect our business, sales, results of operations and financial condition. We are subject to regulations and disclosure requirements relating to environmental, social and governance (“ESG”) matters, including climate-related disclosure regulations.
Removed
We source a significant percentage of our vehicles through our appraisal process, which includes our online instant appraisal offers, and these vehicles are generally more profitable for CarMax.
Added
These ESG-related laws and regulations, as well as shareholder standards and expectations, continue to evolve, creating uncertainty for public companies.
Removed
These enhancements and expansions place significant demands on our management team, our associates and our information systems. If we fail to effectively or efficiently manage our growth, it could have a material adverse effect on our business, sales and results of operations.
Added
Our shareholders, customers and other stakeholders may hold differing views on ESG-related matters, including differing views on our response to concerns regarding ESG-related matters, which may result in pressure from various stakeholders, negative media attention, damage to our reputation, and a diversion of management’s attention and resources. These circumstances could have material adverse effects on our business.
Removed
Such incidents could disrupt our business and have a material adverse effect on sales and results of operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+1 added−0 removed10 unchanged
Biggest changeThe company’s CISO reports to the CITO, joined CarMax in 2015 and has served in various roles in information technology for over 20 years, including prior service as the vice president of information security, risk and compliance for a Fortune 500 company. The Board’s Technology and Innovation Committee assists in the Board’s oversight of the company’s cybersecurity risk.
Biggest changeThe company’s CISO reports to the CITO, joined CarMax in 2015 and has served in various roles in information technology and cybersecurity for over 30 years, including prior service as the vice president of information security, risk and compliance for a Fortune 500 company.
Our third-party intake process incorporates cybersecurity risk into the assessment of our third-party vendors when we engage a new vendor or experience a change in relationship with an existing vendor. Further, CarMax’s cybersecurity team conducts reviews of the company’s third-party vendors depending on the vendor’s risk profile as determined by the company’s cybersecurity team.
Our third-party intake process incorporates cybersecurity risk into the assessment of our third-party vendors when we engage a new vendor or experience a change in relationship with an existing vendor. Further, CarMax’s cybersecurity team conducts periodic reviews of the company’s third-party vendors depending on the vendor’s risk profile as determined by the company’s cybersecurity team.
CarMax engages in testing to improve our cybersecurity approach internally and with third-party vendors and conducts exercises based on current threat intelligence. Additionally, all CarMax associates are required to complete the company’s cybersecurity training program on an annual basis.
CarMax engages in testing to improve our cybersecurity 19 approach internally and with third-party vendors and conducts exercises based on current threat intelligence. Additionally, all CarMax associates are required to complete the company’s cybersecurity training program on an annual basis.
A breach of this confidentiality, whether due to a cybersecurity or other incident, could result in harm to our customers and damage to our brand” set forth under the heading “Risk Factors” included in Part I, Item 1A of this Form 10-K. 20
A breach of this confidentiality, whether due to a cybersecurity or other incident, could result in harm to our customers and damage to our brand ” set forth under the heading “Risk Factors” included in Part I, Item 1A of this Form 10-K. 20
For a discussion of whether and how any risks from cybersecurity threats are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition, refer to the risk factors captioned “We rely on third-party vendors for key components of our business” and “We collect sensitive confidential information from our customers.
For a discussion of whether and how any risks from cybersecurity threats are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition, refer to the risk factors captioned “ We rely on third-party vendors for key components of our business ” and “ We collect sensitive confidential information from our customers.
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Our CISO has various industry certifications, including the Certified in Risk and Information Systems Control (CRISC), the Certified in the Governance of Enterprise IT (CGEIT) and the Certified Information Systems Auditor (CISA) certifications. The Board’s Technology and Innovation Committee assists in the Board’s oversight of the company’s cybersecurity risk.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe leases are classified as follows: Land-only leases 27 Land and building leases 56 Total leased sites 83 During fiscal 2024, we opened our first stand-alone reconditioning center in Carrollton, Georgia. This facility is used to recondition used vehicles to be sold to customers at our stores in the Atlanta region, with the ability to move vehicles nationwide.
Biggest changeThe leases are classified as follows: Land-only leases 27 Land and building leases 56 Total leased sites 83 In addition to our stores, we operate two stand-alone reconditioning facilities and one stand-alone auction facility. These locations are used to balance capacity at our stores and drive efficiencies across our network.
As of February 29, 2024, we leased our CAF office building in Atlanta, Georgia, as well as office buildings for our customer experience centers in Atlanta, Georgia; Kansas City, Missouri; and Phoenix, Arizona. We also lease other ancillary properties to support our corporate and store operations.
As of February 28, 2025, we leased our CAF office building in Atlanta, Georgia, as well as office buildings for our customer experience centers in Atlanta, Georgia; Kansas City, Missouri; and Phoenix, Arizona. We also lease other ancillary properties to support our corporate and store operations.
U SED C AR S TORES B Y F ORMAT AS OF F EBRUARY 29, 2024 Production Stores Non-production Stores Store count 110 135 Store location size generally 10 - 25 acres generally 4 - 12 acres Stores located in small MSAs 14 43 U SED C AR S TORES B Y S TATE AS OF F EBRUARY 29, 2024 State Count State Count Alabama 5 Missouri 4 Arizona 5 Nebraska 1 California 32 Nevada 4 Colorado 6 New Hampshire 1 Connecticut 3 New Jersey 5 Delaware 1 New Mexico 2 Florida 24 New York 5 Georgia 11 North Carolina 13 Idaho 1 Ohio 6 Illinois 11 Oklahoma 3 Indiana 4 Oregon 3 Iowa 1 Pennsylvania 5 Kansas 2 Rhode Island 1 Kentucky 2 South Carolina 4 Louisiana 5 Tennessee 10 Maine 1 Texas 25 Maryland 7 Utah 1 Massachusetts 4 Virginia 12 Michigan 1 Washington 5 Minnesota 2 Wisconsin 4 Mississippi 3 Total 245 21 Of the 245 used car stores open as of February 29, 2024, 162 were located on owned sites and 83 were located on leased sites.
U SED C AR S TORES B Y F ORMAT AS OF F EBRUARY 28, 2025 Production Stores Non-production Stores Store count 111 139 Store location size generally 10 - 25 acres generally 4 - 12 acres Stores located in small MSAs 13 46 U SED C AR S TORES B Y S TATE AS OF F EBRUARY 28, 2025 State Count State Count Alabama 5 Missouri 4 Arizona 5 Nebraska 1 California 33 Nevada 4 Colorado 6 New Hampshire 1 Connecticut 3 New Jersey 6 Delaware 1 New Mexico 2 Florida 24 New York 5 Georgia 12 North Carolina 13 Idaho 1 Ohio 6 Illinois 11 Oklahoma 3 Indiana 4 Oregon 3 Iowa 1 Pennsylvania 5 Kansas 2 Rhode Island 1 Kentucky 2 South Carolina 4 Louisiana 5 Tennessee 10 Maine 1 Texas 27 Maryland 7 Utah 1 Massachusetts 4 Virginia 12 Michigan 1 Washington 5 Minnesota 2 Wisconsin 4 Mississippi 3 Total 250 21 Of the 250 used car stores open as of February 28, 2025, 167 were located on owned sites and 83 were located on leased sites.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeDaniels joined CarMax in 2008 as vice president, risk and analytics. In 2014, he was promoted to senior vice president, CarMax Auto Finance. Prior to joining CarMax, Mr. Daniels served as group director, credit risk management of HSBC and vice president of Metris. Mr.
Biggest changeDaniels served as group director, credit risk management of HSBC and vice president of Metris. Mr. Lyski joined CarMax in 2014 as senior vice president and chief marketing officer. In 2017, he was promoted to executive vice president and chief marketing officer.
Cafritz was named senior vice president and chief human resources officer, and in 2021, she was named senior vice president, general counsel, chief compliance officer and chief human resources officer. In 2022, Ms.
In 2017, Ms. Cafritz was named senior vice president and chief human resources officer, and in 2021, she was named senior vice president, general counsel, chief compliance officer and chief human resources officer. In 2022, Ms.
She was promoted to associate general counsel, director in 2005, deputy general counsel, assistant vice president in 2010, and vice president in 2014. During her tenure in the CarMax legal department, Ms. Cafritz managed commercial and consumer litigation, was responsible for operational regulatory guidance and led CarMax’s government affairs program. In 2017, Ms.
Cafritz joined CarMax in 2003 as assistant general counsel. She was promoted to associate general counsel, director in 2005, deputy general counsel, assistant vice president in 2010, and vice president in 2014. During her initial tenure in the CarMax legal department, Ms. Cafritz managed commercial and consumer litigation, was responsible for operational regulatory guidance and led CarMax’s government affairs program.
All executive officers are elected annually and serve for one year or until their successors are elected and qualify. The next election of officers will occur in June 2024. Name Age Office William D. Nash………………………..….……........... 54 President, Chief Executive Officer and Director Diane L.
All executive officers are elected annually and serve for one year or until their successors are elected and qualify. The next election of officers will occur in June 2025. Name Age Office William D. Nash………………………..….……........... 55 President, Chief Executive Officer and Director Diane L. Cafritz……………………....……………....... 54 Executive Vice President, Chief Innovation and People Officer Jon G.
In February 2016, he was promoted to president, and in September 2016, he was promoted to chief executive officer and named to the board of directors. Prior to joining CarMax, Mr. Nash worked at Circuit City. Ms. Cafritz joined CarMax in 2003 as assistant general counsel.
In February 2016, he was promoted to president, and in September 2016, he was promoted to chief executive officer and named to the board of directors. Prior to joining CarMax, Mr. Nash worked at Circuit City. In 2024, he was appointed as an independent member of the Board of Directors of eBay, Inc. Ms.
Cafritz was promoted to executive vice president, general counsel, chief compliance officer and chief human resources officer, and in 2023, she was named executive vice president, human resources, general counsel and chief compliance officer. Prior to joining CarMax, Ms. Cafritz was a partner at McDermott, Will & Emery. 22 Mr.
Cafritz was promoted to executive vice president, general counsel, chief compliance officer and chief human resources officer, and in 2023, she was named executive vice president, human resources, general 22 counsel and chief compliance officer. In 2024, Ms. Cafritz transitioned to executive vice president, chief innovation and people officer. Prior to joining CarMax, Ms.
Cafritz……………………....……………....... 53 Executive Vice President, Human Resources, General Counsel and Chief Compliance Officer James Lyski………………….……..…………….......... 61 Executive Vice President, Chief Innovation and Strategy Officer Enrique N. Mayor-Mora.................................................. 55 Executive Vice President, Chief Financial Officer Shamim Mohammad………………….……..…...…..... 55 Executive Vice President, Chief Information and Technology Officer C. Joseph Wilson............................................................. 51 Executive Vice President, Chief Operating Officer Jon G.
Daniels………………….……..………….......... 53 Executive Vice President, CarMax Auto Finance James Lyski………………….……..…………….......... 62 Executive Vice President, Chief Growth and Strategy Officer Enrique N. Mayor-Mora.................................................. 56 Executive Vice President, Chief Financial Officer Shamim Mohammad………………….……..…...…..... 56 Executive Vice President, Chief Information and Technology Officer C. Joseph Wilson............................................................. 52 Executive Vice President, Chief Operating Officer John M.
Lyski joined CarMax in August 2014 as senior vice president and chief marketing officer. In 2017, he was promoted to executive vice president and chief marketing officer. In 2023, he transitioned to executive vice president and chief innovation and strategy officer.
In 2023, he transitioned to executive vice president and chief innovation and strategy officer, and in 2024, he transitioned to executive vice president and chief growth and strategy officer.
Daniels………………….……..………….......... 52 Senior Vice President, CarMax Auto Finance Darren C. Newberry........................................................ 54 Senior Vice President, Store and CEC Execution Mr. Nash joined CarMax in 1997 as auction manager.
Stuckey, III........................................................ 51 Senior Vice President, General Counsel and Corporate Secretary Tyler Tuite....................................................................... 42 Senior Vice President, Chief Product Officer Mr. Nash joined CarMax in 1997 as auction manager.
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Newberry joined CarMax in March 2004 as location general manager-in-training in the Los Angeles region and was promoted to location general manager of the Duarte, California store in 2006. He was subsequently promoted to positions of increasing responsibility, including regional vice president general manager in 2013 and vice president, regional sales in 2016.
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Cafritz was a partner at McDermott, Will & Emery. Mr. Daniels joined CarMax in 2008 as vice president, risk and analytics. In 2014, he was promoted to senior vice president, CarMax Auto Finance. In 2025, Mr. Daniels was promoted to executive vice president, CarMax Auto Finance. Prior to joining CarMax, Mr.
Removed
In 2017, he was promoted to senior vice president, store operations, and in 2022, he was named senior vice president, store and customer experience center (“CEC”) execution. Prior to joining CarMax, Mr. Newberry served as a store manager and area manager for Bed, Bath and Beyond from 1994 to 2004. 23 PART II
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Stuckey joined CarMax in 2004 as corporate counsel and has held various positions of increasing responsibility within CarMax’s legal department. In 2015, he was promoted to vice president and deputy general counsel. In 2021, Mr.
Added
Stuckey was promoted to vice president, deputy general counsel and corporate secretary, and in 2024, he was promoted to senior vice president, general counsel, and corporate secretary. Prior to joining CarMax, Mr. Stuckey practiced securities, mergers and acquisitions law at Hunton & Williams, LLP (now Hunton Andrews Kurth LLP). Mr.
Added
Tuite joined CarMax in 2015 as director of corporate strategy and was promoted to assistant vice president in 2016. In 2020, Mr. Tuite was promoted to vice president, product and corporate strategy. In 2023, Mr. Tuite was promoted to senior vice president, product and corporate strategy and chief product officer. Prior to joining CarMax, Mr.
Added
Tuite was vice president of expansion at Alton Lane and a project leader at The Boston Consulting Group. 23 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeApproximate Dollar Value Total Number of Shares that Total Number Average of Shares Purchased May Yet Be of Shares Price Paid as Part of Publicly Purchased Under Period Purchased per Share Announced Programs the Programs (1) December 1-31, 2023 223,500 $ 71.53 223,500 $ 2,393,424,937 January 1-31, 2024 246,100 $ 70.92 246,100 $ 2,375,971,797 February 1-29, 2024 216,000 $ 73.26 216,000 $ 2,360,147,191 Total 685,600 685,600 (1) On October 23, 2018, the board authorized the repurchase of up to $2 billion of our common stock with no expiration date.
Biggest changeApproximate Dollar Value Total Number of Shares that Total Number Average of Shares Purchased May Yet Be of Shares Price Paid as Part of Publicly Purchased Under Period Purchased per Share Announced Programs the Programs (1) December 1-31, 2024 403,300 $ 84.59 403,300 $ 2,001,230,327 January 1-31, 2025 414,500 $ 81.32 414,500 $ 1,967,525,241 February 1-28, 2025 361,000 $ 84.96 361,000 $ 1,936,855,522 Total 1,178,800 1,178,800 (1) On October 23, 2018, the board authorized the repurchase of up to $2 billion of our common stock with no expiration date.
During fiscal 2024, we did not sell any CarMax equity securities in transactions that were not registered under the Securities Act. Issuer Purchases of Equity Securities The following table provides information relating to the company’s repurchase of common stock during the fourth quarter of fiscal 2024.
During fiscal 2025, we did not sell any CarMax equity securities in transactions that were not registered under the Securities Act. Issuer Purchases of Equity Securities The following table provides information relating to the company’s repurchase of common stock during the fourth quarter of fiscal 2025.
In April 2022, the board increased our share repurchase authorization by $2 billion. Purchases may be made in open market or privately negotiated transactions at management’s discretion and the timing and amount of repurchases are determined based on share price, market conditions, legal requirements and other factors.
In April 2022, the board increased our share repurchase authorization by $2 billion. Purchases may be made in open market transactions, including through Rule 10b5-1 plans, or privately negotiated transactions at management’s discretion and the timing and amount of repurchases are determined based on share price, market conditions, legal requirements and other factors.
The graph assumes an original investment of $100 in CarMax common stock and in each index on February 28, 2019, and the reinvestment of all dividends, as applicable.
The graph assumes an original investment of $100 in CarMax common stock and in each index on February 29, 2020, and the reinvestment of all dividends, as applicable.
As of February 29, 2024, there were 157,611,939 shares of CarMax common stock outstanding and we had approximately 2,600 shareholders of record. As of that date, there were no preferred shares outstanding. We have not paid any dividends on our common stock and do not plan to pay dividends on our common stock for the foreseeable future.
As of February 28, 2025, there were 153,319,678 shares of CarMax common stock outstanding and we had approximately 2,400 shareholders of record. As of that date, there were no preferred shares outstanding. We have not paid any dividends on our common stock and do not plan to pay dividends on our common stock for the foreseeable future.
As of February 29 or 28 2019 2020 2021 2022 2023 2024 CarMax $ 100.00 $ 140.60 $ 192.45 $ 176.05 $ 111.16 $ 127.18 S&P 500 Index $ 100.00 $ 108.19 $ 142.05 $ 165.33 $ 152.61 $ 199.08 S&P 500 Retailing Index $ 100.00 $ 111.77 $ 165.42 $ 177.05 $ 139.12 $ 214.62 Item 6. [Reserved] 25
As of February 29 or 28 2020 2021 2022 2023 2024 2025 CarMax $ 100.00 $ 136.88 $ 125.22 $ 79.06 $ 90.46 $ 94.99 S&P 500 Index $ 100.00 $ 131.29 $ 152.81 $ 141.05 $ 184.01 $ 217.88 S&P 500 Retailing Index $ 100.00 $ 147.99 $ 158.40 $ 124.47 $ 192.01 $ 222.34 Item 6. [Reserved] 25

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

85 edited+68 added−54 removed39 unchanged
Biggest changeCAF O RIGINATION I NFORMATION (A FTER THE I MPACT OF 3 - D AY P AYOFFS) Years Ended February 29 or 28 2024 2023 2022 Net loans originated (in millions) $ 8,270.0 $ 8,832.7 $ 9,371.2 Vehicle units financed 328,704 340,077 393,681 Net penetration rate (1) 42.9 % 42.1 % 42.6 % Weighted average contract rate 11.2 % 9.7 % 8.5 % Weighted average credit score (2) 719 708 703 Weighted average loan-to-value (LTV) (3) 88.7 % 88.3 % 88.7 % Weighted average term (in months) 65.4 66.0 66.6 (1) Vehicle units financed as a percentage of total used units sold.
Biggest changeS ELECTED CAF F INANCIAL I NFORMATION Years Ended February 28 or 29 (In millions) 2025 % (1) 2024 % (1) 2023 % (1) Interest margin: Interest and fee income $ 1,853.9 10.5 $ 1,677.4 9.7 $ 1,441.5 8.8 Interest expense (763.2) (4.3) (638.7) (3.7) (310.3) (1.9) Total interest margin $ 1,090.7 6.2 $ 1,038.7 6.0 $ 1,131.2 6.9 Provision for loan losses $ (334.7) (1.9) $ (310.5) (1.8) $ (317.0) (1.9) CarMax Auto Finance income $ 581.7 3.3 $ 568.3 3.3 $ 663.4 4.1 (1) Percent of total average managed receivables. 37 CAF O RIGINATION I NFORMATION (A FTER THE I MPACT OF 3 - D AY P AYOFFS) Years Ended February 28 or 29 2025 2024 2023 Net loans originated (in millions) $ 8,254.5 $ 8,270.0 $ 8,832.7 Vehicle units financed 336,595 328,704 340,077 Net penetration rate (1) 42.7 % 42.9 % 42.1 % Weighted average contract rate 11.3 % 11.2 % 9.7 % Weighted average credit score (2) 723 719 708 Weighted average loan-to-value (LTV) (3) 89.6 % 88.7 % 88.3 % Weighted average term (in months) 67.6 65.4 66.0 (1) Vehicle units financed as a percentage of total used units sold.
Liquidity Our primary ongoing sources of liquidity include funds provided by operations, proceeds from non-recourse funding vehicles, and borrowings under our revolving credit facility or through other financing sources. In addition to funding our operations, this liquidity has been used to fund the repurchase of common stock under our share repurchase program and our capital expenditures.
Liquidity Our primary ongoing sources of liquidity include funds provided by operations, proceeds from non-recourse funding vehicles, and borrowings under our revolving credit facility or through other financing sources. In addition to funding our operations, this liquidity has been used to fund our capital expenditures and the repurchase of common stock under our share repurchase program.
Our ability to quickly adjust appraisal offers to be consistent with the broader market trade-in trends and the pace of our inventory turns reduce our exposure to the inherent continual fluctuation in used vehicle values and contribute to our ability to manage gross profit dollars per unit. Gross profit per used unit is consistent across our omni-channel platform.
Our ability to quickly adjust appraisal offers to be consistent with trends in the broader trade-in market and the pace of our inventory turns reduce our exposure to the inherent continual fluctuation in used vehicle values and contribute to our ability to manage gross profit dollars per unit. Gross profit per used unit is consistent across our omni-channel platform.
(2) Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales. See Note 13 for details of share-based compensation expense by grant type. (3) Includes IT expenses, non-CAF bad debt, insurance, travel, charitable contributions, preopening and relocation costs and other administrative expenses.
(2) Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales. See Note 13 for details of share-based compensation expense by grant type. (3) Includes IT expenses, non-CAF bad debt, insurance, preopening and relocation costs, travel, charitable contributions and other administrative expenses.
Our strategy to increase our market share includes focusing on: • Delivering a customer-driven, omni-channel buying and selling experience that is a unique and powerful integration of our in-store and online capabilities. • Utilizing advertising to drive customer growth, educate customers about our omni-channel platform and to differentiate and elevate our brand. • Hiring, developing and retaining an engaged and skilled workforce. • Leveraging data and advanced analytics to continuously improve the customer experience as well as our processes and 29 systems. • Improving efficiency in our stores and CECs and our logistics and reconditioning operations to reduce waste. • Opening stores in new markets and expanding our presence in existing markets. • Becoming the leading retailer of used EVs in the market.
Our strategy to increase our market share includes focusing on: • Delivering a customer-driven, omni-channel buying and selling experience that is a unique and powerful seamless integration of our in-store and online capabilities. • Utilizing advertising to drive customer growth, educate customers about our omni-channel platform and to differentiate and elevate our brand. • Hiring, developing and retaining an engaged and skilled workforce. • Leveraging data and advanced analytics to continuously improve the customer experience as well as our processes and systems. • Improving efficiency in our stores and CECs as well as our logistics and reconditioning operations to reduce waste. • Opening stores in new markets and expanding our presence in existing markets. • Becoming the leading retailer of used EVs in the market.
Wholesale Vehicle Sales Vehicles sold at our wholesale auctions are, on average, approximately 10 years old with more than 100,000 miles and are primarily comprised of vehicles purchased through our appraisal process that do not meet our retail standards.
Wholesale Vehicle Sales Vehicles sold at our wholesale auctions are, on average, more than 10 years old with more than 100,000 miles and are primarily comprised of vehicles purchased through our appraisal process that do not meet our retail standards.
(2) An online retail sale is defined as a sale where the customer completes all four of the following activities remotely: reserving the vehicle; financing the vehicle, if needed; trading-in or opting out of a trade-in; and creating an online sales order.
(2) An online retail sale is defined as a sale where the customer completes all four of the following activities online: reserving the vehicle; financing the vehicle, if needed; trading-in or opting out of a trade-in; and creating an online sales order.
The net loss estimate is calculated by applying the loss rates developed using the methods described above to the amortized cost basis of the managed receivables. The output of the method is adjusted to take into account reasonable and supportable forecasts about the future.
The net loss estimate is calculated by applying the loss rates developed using the methods described above to the amortized cost basis of the managed receivables. 30 The output of the method is adjusted to take into account reasonable and supportable forecasts about the future.
See Note 12 for additional information on our revolving credit facility, term loans, senior notes and financing obligations. CAF auto loans receivable are primarily funded through our warehouse facilities and asset-backed term funding transactions.
See Note 12 for additional information on our revolving credit facility, term loan, senior notes and financing obligations. CAF auto loans receivable are primarily funded through our warehouse facilities and asset-backed term funding transactions.
Borrowings under our $2.00 billion unsecured revolving credit facility are available for working capital and general corporate purposes, and the unused portion is fully available to us. The credit facility, term loans and senior note agreements contain representations and warranties, conditions and covenants.
Borrowings under our $2.00 billion unsecured revolving credit facility are available for working capital and general corporate purposes, and the unused portion is fully available to us. The credit facility, term loan and senior note agreements contain representations and warranties, conditions and covenants.
Our wholesale auction prices usually reflect trends in the general wholesale market for the types of vehicles we sell, although they can also be affected by changes in vehicle mix or the average age, mileage or condition of the vehicles being sold. 32 Fiscal 2024 Versus Fiscal 2023.
Our wholesale auction prices usually reflect trends in the general wholesale market for the types of vehicles we sell, although they can also be affected by changes in vehicle mix or the average age, mileage or condition of the vehicles being sold. Fiscal 2025 Versus Fiscal 2024.
While SG&A as a percent of gross profit can fluctuate from quarter to quarter depending on variability in gross profit, our initial goal on the path to strengthening our SG&A to gross profit leverage over time is to achieve a rate in the mid-70% range on an annual basis.
While SG&A as a percent of gross profit can fluctuate from quarter to quarter depending on variability in gross profit and the timing of SG&A spending, our initial goal on the path to strengthening our SG&A to gross profit leverage over time is to achieve a rate in the mid-70% range on an annual basis.
CarMax Sales Operations Our sales operations segment consists of retail sales of used vehicles and related products and services, such as wholesale vehicle sales; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESPs”) and guaranteed asset protection (“GAP”); and vehicle repair service.
CarMax Sales Operations Our sales operations segment consists of retail sales of used vehicles and related products and services, such as wholesale vehicle sales; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESPs”) and guaranteed asset protection (“GAP”); advertising and subscription revenues; and vehicle repair service.
If these requirements are not met, all amounts outstanding or otherwise owed could become due and payable immediately and other limitations could be placed on our ability to use any available borrowing capacity. As of February 29, 2024, we were in compliance with these financial covenants.
If these requirements are not met, all amounts outstanding or otherwise owed could become due and payable immediately and other limitations could be placed on our ability to use any available borrowing capacity. As of February 28, 2025, we were in compliance with these financial covenants.
Strategic Update and Future Outlook Our omni-channel experience provides a common platform across all of CarMax that leverages our scale, nationwide footprint and infrastructure and empowers our customers to buy a vehicle on their terms, whether online, in-store or through an integrated combination of online and in-store experiences.
Strategic Update and Future Outlook Our omni-channel experience provides a common platform across all of CarMax that leverages our scale, nationwide footprint and infrastructure and empowers our customers to buy a vehicle on their terms, whether online, in-store or through a seamless combination of both experiences.
Due to the presentation differences between auto loans receivable and non-recourse notes payable on the consolidated statements of cash flows, fluctuations in these amounts can have a significant impact on our operating and financing cash flows without affecting our overall liquidity, working capital or cash flows.
Due to the presentation differences between auto loans receivable and non-recourse notes payable on the consolidated statements of cash flows, fluctuations in these amounts can impact our operating and financing cash flows without significantly affecting our overall liquidity, working capital or cash flows.
CAF income does not include any allocation of indirect costs. After the effect of 3-day payoffs and vehicle returns, CAF financed 42.9% of our retail used vehicle unit sales in fiscal 2024. As of February 29, 2024, CAF serviced approximately 1.1 million customer accounts in its $17.39 billion portfolio of managed receivables.
CAF income does not include any allocation of indirect costs. After the effect of 3-day payoffs and vehicle returns, CAF financed 42.7% of our retail used vehicle unit sales in fiscal 2025. As of February 28, 2025, CAF serviced approximately 1.1 million customer accounts in its $17.59 billion portfolio of managed receivables.
We believe we have the appropriate liquidity, access to capital and financial strength to support our operations and continue investing in our strategic initiatives for the next twelve months and thereafter for the foreseeable future.
We believe we have the appropriate liquidity, access to capital and financial strength to support our operations and continue investing in our business for the next 12 months and thereafter for the foreseeable future.
Non-recourse notes payable are typically used to fund changes in auto loans receivable (see “Operating Activities”). During fiscal 2024, cash provided by financing activities was impacted by stock repurchases of $94.1 million as well as net payments on our long-term debt of $111.5 million.
Non-recourse notes payable are typically used to fund changes in auto loans receivable (see “Operating Activities”). During fiscal 2025, cash used in financing activities was impacted by net payments on our long-term debt of $313.8 million as well as stock repurchases of $428.5 million.
Net issuances of non-recourse notes payable were $506.9 million in fiscal 2024 compared with $893.3 million in fiscal 2023 and are separately reflected as cash from financing activities.
Net issuances of non-recourse notes payable were $252.8 million in fiscal 2025 compared with $506.9 million in fiscal 2024 and are separately reflected as cash from financing activities.
L OAN P ERFORMANCE I NFORMATION As of and for the Years Ended February 29 or 28 (In millions) 2024 2023 2022 Total ending managed receivables $ 17,391.8 $ 16,767.9 $ 15,652.3 Total average managed receivables $ 17,313.2 $ 16,304.3 $ 14,934.0 Allowance for loan losses $ 482.8 $ 507.2 $ 433.0 Allowance for loan losses as a percentage of ending managed receivables 2.78 % 3.02 % 2.77 % Net credit losses on managed receivables $ 334.9 $ 242.8 $ 119.8 Net credit losses as a percentage of total average managed receivables 1.93 % 1.49 % 0.80 % Past due accounts as a percentage of ending managed receivables 5.44 % 5.00 % 4.02 % Average recovery rate (1) 53.0 % 64.2 % 70.8 % (1) The average recovery rate represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at our wholesale auctions.
L OAN P ERFORMANCE I NFORMATION As of and for the Years Ended February 28 or 29 (In millions) 2025 2024 2023 Total ending managed receivables $ 17,594.6 $ 17,391.8 $ 16,767.9 Total average managed receivables $ 17,683.9 $ 17,313.2 $ 16,304.3 Allowance for loan losses $ 458.7 $ 482.8 $ 507.2 Allowance for loan losses as a percentage of ending managed receivables 2.61 % 2.78 % 3.02 % Net credit losses on managed receivables $ 358.8 $ 334.9 $ 242.8 Net credit losses as a percentage of total average managed receivables 2.03 % 1.93 % 1.49 % Past due accounts as a percentage of ending managed receivables 4.85 % 5.44 % 5.00 % Average recovery rate (1) 47.2 % 53.0 % 64.2 % (1) The average recovery rate represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at our wholesale auctions.
U NIT S ALES Years Ended February 29 or 28 2024 Change 2023 Change 2022 Used vehicles 765,572 (5.2) % 807,823 (12.6) % 924,338 Wholesale vehicles 546,331 (6.6) % 585,071 (17.2) % 706,212 A VERAGE S ELLING P RICES Years Ended February 29 or 28 2024 Change 2023 Change 2022 Used vehicles $ 27,028 (4.3) % $ 28,251 7.8 % $ 26,207 Wholesale vehicles $ 8,707 (11.8) % $ 9,872 6.9 % $ 9,238 C OMPARABLE S TORE U SED V EHICLE S ALES C HANGES Years Ended February 29 or 28 (1) 2024 2023 2022 Used vehicle units (6.7) % (14.3) % 21.9 % Used vehicle revenues (10.6) % (7.6) % 54.3 % (1) Stores are added to the comparable store base beginning in their fourteenth full month of operation.
U NIT S ALES Years Ended February 28 or 29 2025 Change 2024 Change 2023 Used vehicles 789,050 3.1 % 765,572 (5.2) % 807,823 Wholesale vehicles 544,312 (0.4) % 546,331 (6.6) % 585,071 31 A VERAGE S ELLING P RICES Years Ended February 28 or 29 2025 Change 2024 Change 2023 Used vehicles $ 26,273 (2.8) % $ 27,028 (4.3) % $ 28,251 Wholesale vehicles $ 8,019 (7.9) % $ 8,707 (11.8) % $ 9,872 C OMPARABLE S TORE U SED V EHICLE S ALES C HANGES Years Ended February 28 or 29 (1) 2025 2024 2023 Used vehicle units 2.2 % (6.7) % (14.3) % Used vehicle revenues (0.4) % (10.6) % (7.6) % (1) Stores are added to the comparable store base beginning in their fourteenth full month of operation.
Financing Activities . Net cash provided by financing activities was $307.8 million in fiscal 2024, compared with net cash used in financing activities of $710.2 million in fiscal 2023. Included in these amounts were net issuances of non-recourse notes payable of $506.9 million in fiscal 2024 compared with $893.3 million in the prior year.
Net cash used in financing activities was $453.5 million in fiscal 2025, compared with net cash provided by financing activities of $307.8 million in fiscal 2024. Included in these amounts were net issuances of non-recourse notes payable of $252.8 million in fiscal 2025 compared with $506.9 million in the prior year.
Our operating cash flows are significantly impacted by changes in auto loans receivable, which increased $980.6 million in fiscal 2024 compared with $1.37 billion in fiscal 2023. The majority of the changes in auto loans receivable are accompanied by changes in non-recourse notes payable, which are issued to fund auto loans originated by CAF.
Our operating cash flows are significantly impacted by changes in auto loans receivable, which increased $565.6 million in fiscal 2025 compared with $980.6 million in fiscal 2024. A significant portion of the changes in auto loans receivable are accompanied by changes in non-recourse notes payable, which are issued to fund auto loans originated by CAF.
As of February 29, 2024, $13.13 billion and $3.74 billion of non-recourse notes payable were outstanding related to asset-backed term funding transactions and our warehouse facilities, respectively. During fiscal 2024, we funded a total of $6.63 billion in asset-backed term funding transactions. As of February 29, 2024, we had $2.06 billion of unused capacity in our warehouse facilities.
As of February 28, 2025, $13.24 billion and $3.88 billion of non-recourse notes payable were outstanding related to asset-backed term funding transactions and our warehouse facilities, respectively. During fiscal 2025, we funded a total of $6.82 billion in asset-backed term funding transactions. As of February 28, 2025, we had $2.22 billion of unused capacity in our warehouse facilities.
Used vehicle gross profit per unit in fiscal 2024 was consistent with the prior fiscal year. We continue to focus on striking the right balance between covering cost increases, maintaining margin and passing along efficiencies to consumers to support vehicle affordability.
Used vehicle gross profit per unit in fiscal 2025 was in line with the prior fiscal year. We continue to focus on striking the right balance between managing changes in vehicle costs, maintaining margin and passing along efficiencies to consumers to support vehicle affordability.
During fiscal 2023, cash used in financing activities was impacted by stock repurchases of $333.9 million as well as net payments on our long-term debt of $1.25 billion. 39 T OTAL D EBT AND C ASH AND C ASH E QUIVALENTS (In thousands) As of February 29 or 28 Debt Description (1) Maturity Date 2024 2023 Revolving credit facility (2) June 2028 $ — $ — Term loan (2) June 2024 300,000 300,000 Term loan (2) October 2026 699,633 699,493 3.86% Senior notes April 2023 — 100,000 4.17% Senior notes April 2026 200,000 200,000 4.27% Senior notes April 2028 200,000 200,000 Financing obligations Various dates through February 2059 516,544 522,526 Non-recourse notes payable Various dates through December 2030 16,866,972 16,360,092 Total debt (3) $ 18,783,149 $ 18,382,111 Cash and cash equivalents $ 574,142 $ 314,758 (1) Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.
During fiscal 2024, cash provided by financing activities was impacted by net payments on our long-term debt of $111.5 million as well as stock repurchases of $94.1 million. 40 T OTAL D EBT AND C ASH AND C ASH E QUIVALENTS (In thousands) As of February 28 or 29 Debt Description (1) Maturity Date 2025 2024 Revolving credit facility (2) June 2028 $ — $ — Term loan (2) June 2024 — 300,000 Term loan (2) October 2026 699,773 699,633 4.17% Senior notes April 2026 200,000 200,000 4.27% Senior notes April 2028 200,000 200,000 Financing obligations Various dates through February 2059 487,676 516,544 Non-recourse notes payable Various dates through June 2032 17,119,758 16,866,972 Total debt (3) $ 18,707,207 $ 18,783,149 Cash and cash equivalents $ 246,960 $ 574,142 (1) Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.
Refer to “Results of Operations” for further details on our revenues and profitability. A discussion regarding Results of Operations and Financial Condition for fiscal 2023 as compared to fiscal 2022 is included in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended February 28, 2023, filed with the SEC on April 13, 2023.
A discussion regarding Results of Operations and Financial Condition for fiscal 2024 as compared to fiscal 2023 is included in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended February 29, 2024, filed with the SEC on April 15, 2024.
Wholesale vehicle gross profit per unit in fiscal 2024 was in line with the prior fiscal year. Other Gross Profit Other gross profit includes profits related to EPP revenues, net third-party finance (fees)/income, advertising and subscription profits earned by our Edmunds business, and other revenues. Other revenues are predominantly comprised of service department operations, including used vehicle reconditioning.
Other Gross Profit Other gross profit includes profits related to EPP revenues, net third-party finance (fees)/income, advertising and subscription profits earned by our Edmunds business, and other revenues. Other revenues are predominantly comprised of service department operations, including used vehicle reconditioning.
RESULTS OF OPERATIONS – CARMAX SALES OPERATIONS AND OTHER NON-REPORTABLE SEGMENTS N ET S ALES AND O PERATING R EVENUES Years Ended February 29 or 28 (In millions) 2024 Change 2023 Change 2022 Used vehicle sales $ 20,922.3 (9.2) % $ 23,034.3 (5.7) % $ 24,437.1 Wholesale vehicle sales 4,975.8 (16.9) % 5,989.8 (11.4) % 6,763.8 Other sales and revenues: Extended protection plan revenues 401.8 (4.9) % 422.3 (11.7) % 478.4 Third-party finance (fees)/income, net (5.8) (183.6) % 7.0 351.7 % 1.5 Advertising & subscription revenues (1) 135.8 1.9 % 133.3 30.9 % 101.8 Other 106.2 8.1 % 98.2 (16.5) % 117.8 Total other sales and revenues 638.0 (3.5) % 660.8 (5.5) % 699.5 Total net sales and operating revenues $ 26,536.0 (10.6) % $ 29,684.9 (6.9) % $ 31,900.4 (1) Excludes intersegment sales and operating revenues that have been eliminated in consolidation.
RESULTS OF OPERATIONS – CARMAX SALES OPERATIONS N ET S ALES AND O PERATING R EVENUES Years Ended February 28 or 29 (In millions) 2025 Change 2024 Change 2023 Used vehicle sales $ 21,079.7 0.8 % $ 20,922.3 (9.2) % $ 23,034.3 Wholesale vehicle sales 4,587.5 (7.8) % 4,975.8 (16.9) % 5,989.8 Other sales and revenues: Extended protection plan revenues 451.7 12.4 % 401.8 (4.9) % 422.3 Third-party finance (fees)/income, net (1.5) 74.4 % (5.8) (183.6) % 7.0 Advertising & subscription revenues (1) 139.3 2.6 % 135.8 1.9 % 133.3 Other 96.8 (8.8) % 106.2 8.1 % 98.2 Total other sales and revenues 686.3 7.6 % 638.0 (3.5) % 660.8 Total net sales and operating revenues $ 26,353.4 (0.7) % $ 26,536.0 (10.6) % $ 29,684.9 (1) Excludes intercompany sales and operating revenues that have been eliminated in consolidation.
CAF also originates a small portion of auto loans to customers who typically would be financed by our Tier 2 and Tier 3 finance providers, in order to better understand the performance of these loans, mitigate risk and add incremental profits.
Historically, CAF has originated a small portion of auto loans to customers who typically would be financed by our Tier 2 and Tier 3 finance providers, in order to better understand the performance of these loans, mitigate risk and add incremental profits. The targeted percentage of Tier 2 and Tier 3 originations has fluctuated over the past several years.
Management regularly analyzes CAF’s operating results by assessing the competitiveness of our consumer offer, profitability, the performance of the auto loans receivable, including trends in credit losses and delinquencies, and CAF direct expenses. 26 Revenues and Profitability The sources of revenue and gross profit from the CarMax Sales Operations segment and other non-reportable segments for fiscal 2024 are as follows: Net Sales and Operating Revenues Gross Profit A high-level summary of our financial results for fiscal 2024 as compared to fiscal 2023 is as follows (1) : (Dollars in millions except per share or per unit data) 2024 Change from 2023 Income statement information Net sales and operating revenues $ 26,536.0 (10.6) % Gross profit $ 2,713.2 (3.1) % CAF income $ 568.3 (14.3) % Selling, general and administrative expenses $ 2,286.4 (8.1) % Net earnings $ 479.2 (1.1) % Unit sales information Used unit sales 765,572 (5.2) % Change in used unit sales in comparable stores (6.7) % N/A Wholesale unit sales 546,331 (6.6) % Per unit information Used gross profit per unit $ 2,288 — % Wholesale gross profit per unit $ 1,019 1.1 % SG&A as a % of gross profit 84.3 % (4.5) % Per share information Net earnings per diluted share $ 3.02 (0.3) % Online sales metrics Online retail sales (2) 14 % 2 % Omni sales (3) 55 % 2 % Revenue from online transactions (4) 31 % 1 % (1) Where applicable, amounts are net of intercompany eliminations.
Management regularly analyzes CAF’s operating results by assessing the competitiveness of our consumer offer, profitability, the performance of the auto loans receivable, including trends in credit losses and delinquencies, and CAF direct expenses. 26 Revenues and Profitability The sources of revenue and gross profit from the CarMax Sales Operations segment for fiscal 2025 are as follows: Net Sales and Operating Revenues Gross Profit A high-level summary of our financial results for fiscal 2025 as compared to fiscal 2024 is as follows (1) : (Dollars in millions except per share or per unit data) 2025 Change from 2024 Income statement information Net sales and operating revenues $ 26,353.4 (0.7) % Gross profit $ 2,897.9 6.8 % CAF income $ 581.7 2.4 % Selling, general and administrative expenses $ 2,435.4 6.5 % Net earnings $ 500.6 4.5 % Unit sales information Used unit sales 789,050 3.1 % Change in used unit sales in comparable stores 2.2 % N/A Wholesale unit sales 544,312 (0.4) % Per unit information Used gross profit per unit $ 2,311 1.0 % Wholesale gross profit per unit $ 1,024 0.5 % SG&A as a % of gross profit 84.0 % (0.3) % Per share information Net earnings per diluted share $ 3.21 6.3 % Online sales metrics Online retail sales (2) 15 % 1 % Omni sales (3)(5) 57 % 2 % Revenue from online transactions (4) 30 % (1) % (1) Where applicable, amounts are net of intercompany eliminations.
We monitor macroeconomic factors and pricing elasticity and adjust our pricing accordingly to optimize unit sales and profitability while also maintaining a competitively priced inventory. Fiscal 2024 Versus Fiscal 2023. Used vehicle gross profit decreased 5.2% in fiscal 2024, driven by the 5.2% decrease in total used unit sales.
We monitor macroeconomic factors and pricing elasticity and adjust our pricing accordingly to optimize unit sales and profitability while also maintaining competitively priced inventory. Fiscal 2025 Versus Fiscal 2024. Used vehicle gross profit increased 4.1% in fiscal 2025, primarily driven by the 3.1% increase in total used unit sales.
We believe consumers in the used car industry will increasingly prefer to have the ability to shop and transact digitally. Approximately 70% of our customers leveraged some or all of our digital capabilities to complete their transactions during the current fiscal year, compared to approximately 40% when we completed our initial omni-channel roll-out at the end of fiscal 2020.
We believe consumers in the used car industry will increasingly prefer to have the ability to shop and transact digitally. Approximately 80% of our customers leveraged some or all of our digital capabilities to complete their transactions during the current fiscal year.
The decrease in average retail selling price in fiscal 2024 reflected lower vehicle acquisition costs as well as shifts in the mix of our sales by vehicle age.
The decrease in average retail selling price in fiscal 2025 reflected lower vehicle acquisition costs, partially offset by shifts in the mix of our sales by vehicle age and class.
The majority of the remaining purchase obligations and commitments are due within the next three years. We have historically managed leverage based on a number of factors, including internal financial forecasts, consideration of CAF’s operational and capital needs, external peer benchmarking, requirements of our debt agreements and macroeconomic conditions.
We have historically managed leverage based on a number of factors, including internal financial forecasts, consideration of CAF’s operational and capital needs, external peer benchmarking, requirements of our debt agreements and macroeconomic conditions.
The extent of the improvement will be governed by sales performance given the leverage/deleverage nature of service. 34 C OMPONENTS OF SG&A E XPENSES AS A P ERCENTAGE OF T OTAL SG&A E XPENSES Fiscal Year 2024 Fiscal Year 2023 C OMPONENTS OF SG&A E XPENSES C OMPARED WITH P RIOR P ERIODS (1) Years Ended February 29 or 28 (In millions except per unit data) 2024 Change 2023 Change 2022 Compensation and benefits: Compensation and benefits, excluding share-based compensation expense $ 1,226.8 (4.3) % $ 1,282.4 4.7 % $ 1,224.4 Share-based compensation expense 114.1 36.4 % 83.6 (18.0) % 102.0 Total compensation and benefits (2) $ 1,340.9 (1.8) % $ 1,366.0 3.0 % $ 1,326.4 Store occupancy costs 271.4 1.5 % 267.3 16.3 % 229.9 Advertising expense 264.4 (8.4) % 288.5 (11.5) % 325.9 Other overhead costs (3) 409.7 (27.6) % 565.6 27.6 % 443.0 Total SG&A expenses $ 2,286.4 (8.1) % $ 2,487.4 7.0 % $ 2,325.2 SG&A as a % of gross profit 84.3 % (4.5) % 88.8 % 18.1 % 70.7 % (1) Amounts are net of intercompany eliminations.
C OMPONENTS OF SG&A E XPENSES AS A P ERCENTAGE OF T OTAL SG&A E XPENSES Fiscal Year 2025 Fiscal Year 2024 C OMPONENTS OF SG&A E XPENSES C OMPARED WITH P RIOR P ERIODS (1) Years Ended February 28 or 29 (In millions except per unit data) 2025 Change 2024 Change 2023 Compensation and benefits: Compensation and benefits, excluding share-based compensation expense $ 1,289.7 5.1 % $ 1,226.8 (4.3) % $ 1,282.4 Share-based compensation expense 126.9 11.3 % 114.1 36.4 % 83.6 Total compensation and benefits (2) $ 1,416.6 5.6 % $ 1,340.9 (1.8) % $ 1,366.0 Store occupancy costs 285.3 5.1 % 271.4 1.5 % 267.3 Advertising expense 260.7 (1.4) % 264.4 (8.4) % 288.5 Other overhead costs (3) 472.8 15.4 % 409.7 (27.6) % 565.6 Total SG&A expenses $ 2,435.4 6.5 % $ 2,286.4 (8.1) % $ 2,487.4 SG&A as a % of gross profit 84.0 % (0.3) % 84.3 % (4.5) % 88.8 % (1) Amounts are net of intercompany eliminations.
Comparable store calculations include results for a set of stores that were included in our comparable store base in both the current and corresponding prior year periods. 31 V EHICLE S ALES C HANGES Years Ended February 29 or 28 2024 2023 2022 Used vehicle units (5.2) % (12.6) % 22.9 % Used vehicle revenues (9.2) % (5.7) % 55.5 % Wholesale vehicle units (6.6) % (17.2) % 65.7 % Wholesale vehicle revenues (16.9) % (11.4) % 153.4 % U SED V EHICLE F INANCING P ENETRATION BY C HANNEL (B EFORE THE I MPACT OF 3 - D AY P AYOFFS) Years Ended February 29 or 28 (1) 2024 2023 2022 CAF (2) 45.8 % 45.4 % 46.1 % Tier 2 (3) 18.9 22.0 22.5 Tier 3 (4) 7.0 6.5 7.8 Other (5) 28.3 26.1 23.6 Total 100.0 % 100.0 % 100.0 % (1) Calculated as used vehicle units financed for respective channel as a percentage of total used units sold.
V EHICLE S ALES C HANGES Years Ended February 28 or 29 2025 2024 2023 Used vehicle units 3.1 % (5.2) % (12.6) % Used vehicle revenues 0.8 % (9.2) % (5.7) % Wholesale vehicle units (0.4) % (6.6) % (17.2) % Wholesale vehicle revenues (7.8) % (16.9) % (11.4) % U SED V EHICLE F INANCING P ENETRATION BY C HANNEL (B EFORE THE I MPACT OF 3 - D AY P AYOFFS) Years Ended February 28 or 29 (1) 2025 2024 2023 CAF (2) 45.0 % 45.8 % 45.4 % Tier 2 (3) 18.0 18.9 22.0 Tier 3 (4) 7.1 7.0 6.5 Other (5) 29.9 28.3 26.1 Total 100.0 % 100.0 % 100.0 % (1) Calculated as used vehicle units financed for respective channel as a percentage of total used units sold.
(2) Includes CAF’s Tier 2 and Tier 3 loan originations, which represent less than 2% of total used units sold. (3) Third-party finance providers who generally pay us a fee or to whom no fee is paid. (4) Third-party finance providers to whom we pay a fee.
(2) Includes CAF’s Tier 2 and Tier 3 loan originations, which represent approximately 2% of total used units sold. (3) Third-party finance providers who generally pay us a fee or to whom no fee is paid. (4) Third-party finance providers to whom we pay a fee. (5) Represents customers arranging their own financing and customers that do not require financing.
The decrease in average selling price in fiscal 2024 was primarily due to shifts in the mix of our sales by vehicle age as well as decreased acquisition costs resulting from steep market depreciation.
The decrease in average selling price in fiscal 2025 was primarily due to decreased acquisition costs and shifts in the mix of our sales by vehicle age.
Total interest margin reflects the spread between interest and fees charged to consumers and our funding costs. Changes in the interest margin on new originations affect CAF income over time. Increases in interest rates, which affect CAF’s funding costs, or other competitive pressures on consumer rates, could result in compression in the interest margin on new originations.
Total interest margin reflects the spread between interest and fees charged to consumers and our funding costs. Changes in the interest margin on new originations affect CAF income over time.
It does not include interest on the non-recourse notes payable, which is reflected within CAF income. Fiscal 2024 Versus Fiscal 2023. Interest expense of $124.8 million in fiscal 2024 was relatively consistent compared with $120.4 million in fiscal 2023. Other Income Other income of $10.3 million in fiscal 2024 was relatively consistent compared with $9.4 million in fiscal 2023.
It does not include interest on the non-recourse notes payable, which is reflected within CAF income. Fiscal 2025 Versus Fiscal 2024. Interest expense decreased to $107.9 million in fiscal 2025 compared with $124.8 million in fiscal 2024.
Our ability to adjust appraisal offers in response to the wholesale pricing environment is a key factor that influences wholesale gross profit. Fiscal 2024 Versus Fiscal 2023. Wholesale vehicle gross profit decreased 5.6% in fiscal 2024, driven by the 6.6% decrease in wholesale unit sales.
Our ability to adjust appraisal offers in response to the wholesale pricing environment is a key factor that influences wholesale gross profit. Fiscal 2025 Versus Fiscal 2024. Wholesale vehicle gross profit increased 0.1% in fiscal 2025.
All of the finance offers, whether by CAF or our third-party providers, are backed by a 3-day payoff option. As of February 29, 2024, we operated 245 used car stores in 109 U.S. television markets.
We provide financing to qualified retail customers through CAF and our arrangements with industry-leading third-party finance providers. All of the finance offers, whether by CAF or our third-party providers, are backed by a 3-day payoff option. As of February 28, 2025, we operated 250 used car stores in 109 U.S. television markets.
(3) Calculated as a percentage of its respective sales or revenue. 33 Used Vehicle Gross Profit We target a dollar range of gross profit per used unit sold.
(2) Calculated as category gross profit divided by its respective units sold, except the other category, which is divided by total used units sold. (3) Calculated as a percentage of its respective sales or revenue. Used Vehicle Gross Profit We target a dollar range of gross profit per used unit sold.
Capital expenditures primarily included land purchases and construction costs to support our growth capacity initiatives and new store openings as well as investments in technology. We maintain a multi-year pipeline of sites to support our store and capacity growth, so portions of capital spending in one year may relate to locations that we open in subsequent fiscal years.
We maintain a multi-year pipeline of sites to support our store and capacity growth, so portions of capital spending in one year may relate to locations that we open in subsequent fiscal years. Financing Activities .
Achieving this annual rate will require continued efficiency gains in our operating model, gross profit growth and healthier consumer demand. In fiscal 2025, we expect to require low-single-digit gross profit growth to lever SG&A.
Achieving this annual rate will require continued efficiency gains in our operating model, gross profit growth and healthier consumer demand. In fiscal 2026, we expect to require low-single-digit gross profit growth to lever SG&A. This will be supported by our goal of becoming omni cost neutral for the first time for the full year of fiscal 2026.
Changes in the allowance for loan losses as a percentage of ending managed receivables reflect the effect of changes in loss and delinquency experience and economic factors on our outlook for net losses expected to occur over the remaining contractual life of the loans receivable as well as changes in the mix of credit quality originated.
Changes to the allowance are primarily driven by loss and delinquency experience, economic factors on our outlook for net losses expected to occur over the remaining contractual life of the loans receivable as well as changes in the mix of credit quality of originations. CAF’s managed portfolio is composed primarily of loans originated over the past several years.
Our contractual obligations primarily consist of long-term debt and related interest payments, leases, purchase obligations and commitments, income taxes and defined benefit retirement plans. See Notes 12 and 16 for amounts outstanding as of February 29, 2024 related to debt and leases, respectively.
Our contractual obligations primarily consist of long-term debt and related interest payments, leases, purchase obligations and commitments, income taxes and defined benefit retirement plans.
C HANGE IN U SED C AR S TORE B ASE Years Ended February 29 or 28 2024 2023 2022 Used car stores, beginning of year 240 230 220 Store openings 5 10 10 Used car stores, end of year 245 240 230 During fiscal 2024, we opened 5 stores in existing television markets (Winchester, VA; Algonquin, IL; Victorville, CA; Green Brook, NJ; and Smithtown, NY).
C HANGE IN U SED C AR S TORE B ASE Years Ended February 28 or 29 2025 2024 2023 Used car stores, beginning of year 245 240 230 Store openings 5 5 10 Used car stores, end of year 250 245 240 During fiscal 2025, we opened 5 stores in existing television markets (El Paso, TX; Gainesville, GA; Alliance, TX; Mays Landing, NJ; and Visalia, CA). 32 Used Vehicle Sales Fiscal 2025 Versus Fiscal 2024.
Used Vehicle Sales Fiscal 2024 Versus Fiscal 2023. The 9.2% decrease in used vehicle revenues in fiscal 2024 was primarily driven by a 5.2% decrease in used unit sales and a 4.3% decrease in average retail selling price, or approximately $1,200. The decrease in used units included a 6.7% decrease in comparable store used unit sales.
The 0.8% increase in used vehicle revenues in fiscal 2025 was primarily driven by a 3.1% increase in used unit sales, partially offset by a 2.8% decrease in average retail selling price, or approximately $800. The increase in used units included a 2.2% increase in comparable store used unit sales.
Shares repurchased are deemed authorized but unissued shares of common stock. As of February 29, 2024, a total of $4 billion of board authorizations for repurchases was outstanding, with no expiration date, of which $2.36 billion remained available for repurchase.
Shares repurchased are deemed authorized but unissued shares of common stock. As of February 28, 2025, a total of $2 billion of board authorizations for repurchases was outstanding, with no expiration date, of which $1.94 billion remained available for repurchase. See Note 13 for more information on share repurchase activity. 41 Fair Value Measurements.
G ROSS P ROFIT Years Ended February 29 or 28 (1) (In millions) 2024 Change 2023 Change 2022 Used vehicle gross profit $ 1,752.0 (5.2) % $ 1,848.2 (9.3) % $ 2,038.4 Wholesale vehicle gross profit 556.8 (5.6) % 589.8 (22.9) % 764.5 Other gross profit 404.4 11.7 % 362.2 (25.2) % 484.6 Total $ 2,713.2 (3.1) % $ 2,800.2 (14.8) % $ 3,287.5 (1) Amounts are net of intercompany eliminations.
G ROSS P ROFIT Years Ended February 28 or 29 (1) (In millions) 2025 Change 2024 Change 2023 Used vehicle gross profit $ 1,823.2 4.1 % $ 1,752.0 (5.2) % $ 1,848.2 Wholesale vehicle gross profit 557.6 0.1 % 556.8 (5.6) % 589.8 Other gross profit 517.1 27.9 % 404.4 11.7 % 362.2 Total $ 2,897.9 6.8 % $ 2,713.2 (3.1) % $ 2,800.2 (1) Amounts are net of intercompany eliminations. 33 G ROSS P ROFIT P ER U NIT Years Ended February 28 or 29 (1) 2025 2024 2023 $ per unit (2) % (3) $ per unit (2) % (3) $ per unit (2) % (3) Used vehicle gross profit $ 2,311 8.6 $ 2,288 8.4 $ 2,288 8.0 Wholesale vehicle gross profit $ 1,024 12.2 $ 1,019 11.2 $ 1,008 9.8 Other gross profit $ 655 75.4 $ 528 63.4 $ 448 54.8 (1) Amounts are net of intercompany eliminations.
These loans have higher loss and delinquency rates than the remainder of the CAF portfolio, as well as higher contract rates. CAF income does not include any allocation of indirect costs. Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.
CAF income does not include any allocation of indirect costs. Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions. Examples of indirect costs not allocated to CAF include retail store expenses and corporate expenses.
The change in net cash provided by operating activities for fiscal 2024 compared with fiscal 2023 reflected the decrease in inventory, as discussed above, combined with the prior year decrease in inventory, partially offset by the changes in auto loans receivable, as well as the net impact of volume and timing-related changes in accounts receivable and accounts payable.
This increase was partially offset by the change in inventory, as discussed above, as well as the net impact of volume and timing-related changes in accounts receivable and accounts payable. Investing Activities . Net cash used in investing activities totaled $461.0 million in fiscal 2025 compared with $467.0 million in fiscal 2024.
Current period originations reflect current trends in both our retail sales and the CAF business, including the volume of loans originated, current interest rates charged to consumers, loan terms and average credit scores. Loans originated in a given fiscal period impact CAF income over time, as we recognize income over the life of the underlying auto loan.
Trends in receivable growth and interest margins primarily reflect the cumulative effect of changes in the business over a multi-year period. Current period originations reflect current trends in both our retail sales and the CAF business, including the volume and credit mix of loans originated, current interest rates charged to consumers and loan terms.
We believe we have the appropriate liquidity, access to capital and financial strength to support our operations and continue investing in our strategic initiatives for the next twelve months and thereafter for the foreseeable future. 38 We are party to contractual obligations involving commitments to make payments to third parties. These obligations impact our liquidity and capital resource needs.
We believe we have the appropriate liquidity, access to capital and financial strength to support our operations and continue investing in our business for the next 12 months and thereafter for the foreseeable future.
Within the Tier 2 space, CAF continues to originate loans on a test basis and we slightly increased our investment in this space starting in the second quarter of fiscal 2024. Any future adjustments in Tier 2 and Tier 3 will consider the broader lending environment, which includes funding availability, along with the long-term sustainability of the change.
Any future adjustments in Tier 2 and Tier 3 will consider the broader lending environment, which includes funding availability, along with the long-term sustainability of the change.
Fiscal 2024 Versus Fiscal 2023 (Decrease of $201.0 million or 8.1% ). Factors contributing to the net decrease include the following: • $155.9 million decrease in other overhead costs, which included a $67.2 million benefit in connection with the receipt of settlement proceeds in a class action lawsuit related to the economic loss associated with vehicles containing Takata airbags.
Factors contributing to the increase include the following: • $63.1 million increase in other overhead costs driven by the $67.2 million benefit in the prior year in connection with the receipt of settlement proceeds in a class action lawsuit related to the economic loss associated with vehicles containing Takata airbags. • $62.9 million increase in compensation and benefits, excluding share-based compensation expense, driven by an increase in the corporate bonus accrual.
(4) Revenue from online transactions is defined as revenue from retail sales that qualify as an online retail sale, as well as any related EPP and third-party finance contribution, wholesale sales where the winning bid was taken from an online bid and all revenue earned by Edmunds. 27 Net earnings per diluted share during fiscal 2024 included a benefit of $0.32 in connection with the receipt of settlement proceeds in a class action lawsuit related to the economic loss associated with vehicles containing Takata airbags.
(4) Revenue from online transactions is defined as revenue from retail sales that qualify as an online retail sale, as well as any related EPP and third-party finance contribution, wholesale sales where the winning bid was taken from an online bid and all revenue earned by Edmunds.
The achievement of these targets is dependent on macroeconomic factors that could result in ongoing volatility in consumer demand. In calendar 2023, we estimate we sold approximately 3.7% of the age 0- to 10-year old vehicles sold on a nationwide basis, a decrease from 4.0% in calendar 2022.
In calendar 2024, we estimate we sold approximately 3.7% of the age 0- to 10-year old vehicles sold on a nationwide basis, consistent with calendar 2023.
During the third quarter of fiscal 2024, we resumed our share repurchases after a pause initiated during the third quarter of the prior fiscal year. See Note 13 for more information on share repurchase activity. 40 Fair Value Measurements. We recognize money market securities, mutual fund investments, certain equity investments and derivative instruments at fair value.
We recognize money market securities, mutual fund investments, certain equity investments and derivative instruments at fair value. See Note 6 for more information on fair value measurements.
Since fiscal 2013, we have also elected to use cash for our share repurchase program. Our primary ongoing sources of liquidity include funds provided by operations, proceeds from non-recourse funding vehicles and borrowings under our revolving credit facility or through other financing sources. Our current capital allocation strategy is to focus on our core business.
FINANCIAL CONDITION Liquidity and Capital Resources Our primary ongoing cash requirements are to fund our existing operations, store and capacity expansion, store improvement, CAF, strategic growth initiatives and our share repurchase program. Our primary ongoing sources of liquidity include funds provided by operations, proceeds from non-recourse funding vehicles and borrowings under our revolving credit facility or through other financing sources.
Our CAF segment consists solely of our own finance operation that provides financing to customers buying retail vehicles from CarMax. Our consolidated financial statements include the financial results related to our Edmunds Holding Company (“Edmunds”) business, which does not meet the definition of a reportable segment.
Our CAF segment consists solely of our own finance operation that provides financing to customers buying retail vehicles from CarMax.
To the extent that actual performance differs from our estimates, additional provision for 30 credit losses may be required that would reduce net earnings. A 10% change in the estimated loss rates would have changed the allowance for loan losses by approximately $48.3 million as of February 29, 2024.
To the extent that actual performance differs from our estimates, additional provision for credit losses may be required that would reduce net earnings. To demonstrate the sensitivity of credit loss assumptions and macroeconomic scenarios used in our estimated allowance for loan losses, we compared our February 28, 2025, modeled allowance base case scenario to a downside scenario.
The increase was primarily due to higher rates charged to customers in response to the current interest rate environment. ◦ The increase in past due accounts as a percentage of ending managed receivables for fiscal 2024 reflects an increase in delinquencies as well as our expansion of Tier 2 originations within CAF's portfolio.
The increase was primarily due to our expansion of Tier 2 originations within CAF’s portfolio, partially offset by a reduction in Tier 3 originations. ◦ The decrease in past due accounts as a percentage of ending managed receivables for fiscal 2025 primarily reflects the impact of enhancements to our payment extension policy, as discussed above.
Our contractual obligations related to income taxes represent the net unrecognized tax benefits related to uncertain tax positions. See Note 10 for information related to income taxes. Our contractual obligations related to defined benefit retirement plans represent the funded status recognized as of February 29, 2024. See Note 11 for information related to these plans.
See Notes 12 and 16 for amounts outstanding as of February 28, 2025 related to debt and leases, respectively. 39 Our contractual obligations related to income taxes represent the net unrecognized tax benefits related to uncertain tax positions. See Note 10 for information related to income taxes.
While in any individual period conditions may vary, over the past 10 fiscal years, the annual recovery rate has ranged from a low of 46% to a high of 71%, and it is primarily affected by the wholesale market environment. 37 Fiscal 2024 Versus Fiscal 2023. • CAF income decreased $95.1 million, or 14.3%, reflecting a decrease in the net interest margin percentage, partially offset by an increase in average managed receivables and a decrease in the provision for loan losses. • Total interest margin decreased as a percentage of average managed receivables to 6.0% in fiscal 2024 compared with 6.9% in fiscal 2023.
While in any individual period conditions may vary, over the past 10 fiscal years, the annual recovery rate has ranged from a low of 46% to a high of 71%, and it is primarily affected by the wholesale market environment.
Generally, we expect to use our revolving credit facility and other financing sources, together with stock repurchases, to maintain a leverage profile that ensures operating flexibility while supporting continued investment in the business. Operating Activities . During fiscal 2024, net cash provided by operating activities totaled $458.6 million compared with $1.28 billion in fiscal 2023.
Generally, we expect to use our revolving credit facility and other financing sources, together with stock repurchases, to maintain a leverage profile that ensures operating flexibility while supporting continued investment in the business. We are party to contractual obligations involving commitments to make payments to third parties. These obligations impact our liquidity and capital resource needs.
Changes in originations by one tier of credit providers may also affect the originations made by providers in other tiers. Fiscal 2024 Versus Fiscal 2023. Other sales and revenues decreased 3.5% in fiscal 2024, reflecting a decline in EPP revenue and an unfavorable change in net third-party finance (fees)/income.
Changes in originations by one tier of credit providers may also affect the originations made by providers in other tiers. Fiscal 2025 Versus Fiscal 2024. Other sales and revenues increased 7.6% in fiscal 2025, reflecting an increase in EPP revenues. EPP revenues increased 12.4%, largely reflecting increased margins and an increase in retail unit sales, partially offset by decreased penetration.
The decrease in the allowance percentage from the prior year primarily reflects CAF's tightened underwriting standards in response to the current environment, partially offset by CAF's continued investment in the Tier 2 business as well as unfavorable loss performance. • Loan Performance ◦ The decline in net loan originations in fiscal 2024 resulted from decreases in used unit sales and the average amount financed, partially offset by an increase in the net penetration rate. ◦ CAF net penetration for fiscal 2024 increased compared to the prior fiscal year, primarily reflecting changes in the underlying credit mix of customers applying for financing. ◦ The weighted average contract rate increased to 11.2% in fiscal 2024, compared with 9.7% in the prior year.
Despite the anticipated increase in our provision, we expect CAF income to increase in fiscal 2026. • Loan Performance ◦ The decline in net loan originations in fiscal 2025 resulted from decreases in the average amount financed and the net penetration rate, partially offset by an increase in used unit sales. ◦ The weighted average contract rate increased to 11.3% in fiscal 2025, compared with 11.2% in the prior year.
Our customers finance the majority of the retail vehicles purchased from us, and availability of on-the-spot financing is a critical component of the sales process. We provide financing to qualified retail customers through CAF and our arrangements with industry-leading third-party finance providers.
Our associates, stores, technology and digital capabilities seamlessly tied together enable us to provide the most customer centric car buying and selling experience, a key differentiator. Our customers finance the majority of the retail vehicles purchased from us, and availability of on-the-spot financing is a critical component of the sales process.
The increase in delinquencies primarily reflects customer hardship in the current economic environment. PLANNED FUTURE ACTIVITIES We anticipate opening a total of seven locations in fiscal 2025, including five stores, one stand-alone reconditioning center and one stand-alone auction facility. We currently estimate capital expenditures will total between $500 million and $550 million in fiscal 2025.
PLANNED FUTURE ACTIVITIES We anticipate opening a total of ten locations in fiscal 2026, including six stores and four stand-alone reconditioning/auction centers. We currently estimate capital expenditures will total approximately $575 million in fiscal 2026. Capital expenditures were $467.9 million in fiscal 2025. The year-over-year increase in planned spending is primarily driven by timing related to land purchases.
We offer competitive, no-haggle prices; a broad selection of CarMax Quality Certified used vehicles; value-added EPP products; and superior customer service. Our omni-channel platform, which gives us the largest addressable market in the used car industry, empowers our retail customers to buy a car on their terms – online, in-store or an integrated combination of both.
We offer competitive, no-haggle prices; a broad selection of CarMax Quality Certified used vehicles; value-added EPP products; and superior customer service.
Accordingly, changes in the relative mix of the components of other gross profit can affect the composition and amount of other gross profit. Fiscal 2024 Versus Fiscal 2023.
Accordingly, changes in the relative mix of the components of other gross profit can affect the composition and amount of other gross profit. Fiscal 2025 Versus Fiscal 2024. Other gross profit increased 27.9% in fiscal 2025, primarily driven by a $70.7 million improvement in service department margins as well as an increase in EPP revenues, as discussed above.
Purchase obligations and commitments consist of certain enforceable and legally binding obligations related to real estate purchases, third-party outsourcing services and advertising. As of February 29, 2024, our purchase obligations and commitments were approximately $428.2 million, of which $213.3 million are due in fiscal 2025.
Our contractual obligations related to defined benefit retirement plans represent the funded status recognized as of February 28, 2025. See Note 11 for information related to these plans. Purchase obligations and commitments consist of certain enforceable and legally binding obligations related to real estate purchases, third-party outsourcing services and advertising.
Income Taxes The effective income tax rate was 25.3% in fiscal 2024 compared with 23.9% in fiscal 2023. The increase in the effective income tax rate was primarily driven by an increase in our state effective tax rate and a decrease in tax credits.
The change was primarily driven by expenses of $12.3 million related to an Edmunds lease impairment and $4.2 million related to equipment and leasing arrangements in our logistics operations. Income Taxes The effective income tax rate was 25.2% in fiscal 2025 compared with 25.3% in fiscal 2024.
Capital expenditures were $465.3 million in fiscal 2024. The year-over-year increase in planned spending is primarily related to the timing of spend for new stores. Planned capital spending in fiscal 2025 largely consists of spending to support our future long-term growth in stand-alone reconditioning and auction facilities, as well as our new stores.
Planned capital spending in fiscal 2026 largely consists of spending to support our future long-term growth in offsite reconditioning and auction facilities, as well as our new stores. RECENT ACCOUNTING PRONOUNCEMENTS See Note 1(X) to the consolidated financial statements for information on recent accounting pronouncements applicable to CarMax.
As of February 29, 2024, total inventory was $3.68 billion, representing a decrease of $48.1 million, or 1.3%, compared with the balance as of the start of the fiscal year.
During fiscal 2025, net cash provided by operating activities totaled $624.4 million compared with $458.6 million in fiscal 2024. As of February 28, 2025, total inventory was $3.93 billion, representing an increase of $256.6 million, or 7.0%, compared with the balance as of the start of the fiscal year.
During fiscal 2024, we opened five stores and our first stand-alone reconditioning center in the Atlanta metro market. During fiscal 2025, we anticipate opening five stores, one stand-alone reconditioning center and one stand-alone auction facility.
The format and operating models utilized in our stores are continuously evaluated and may change or evolve over time based upon market and consumer expectations. During fiscal 2025, we opened five stores, one stand-alone auction facility in Chino, California and our second stand-alone reconditioning center in Richland, Mississippi.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeC OMPOSITION OF N ON -R ECOURSE N OTES P AYABLE As of February 29 or 28 (In millions) 2024 2023 Fixed-rate $ 10,437.1 $ 10,416.4 Variable-rate (1) 6,429.9 5,943.7 Total $ 16,867.0 $ 16,360.1 (1) Variable-rate debt includes borrowings under our warehouse facilities as well as the variable portion of borrowings under our asset-backed term funding transactions.
Biggest changeC OMPOSITION OF N ON -R ECOURSE N OTES P AYABLE As of February 28 or 29 (In millions) 2025 2024 Fixed-rate $ 10,933.1 $ 10,437.1 Variable-rate (1) 6,186.7 6,429.9 Total $ 17,119.8 $ 16,867.0 (1) Variable-rate debt includes borrowings under our warehouse facilities as well as the variable portion of borrowings under our asset-backed term funding transactions.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Interest Rate Exposure - Non-Recourse Notes Payable As of February 29, 2024 and February 28, 2023, all loans in our portfolio of managed receivables were fixed-rate installment contracts. Financing for these receivables was achieved primarily through non-recourse funding vehicles that, in turn, issued both fixed- and variable-rate notes.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Interest Rate Exposure - Non-Recourse Notes Payable As of February 28, 2025 and February 29, 2024, all loans in our portfolio of managed receivables were fixed-rate installment contracts. Financing for these receivables was achieved primarily through non-recourse funding vehicles that, in turn, issued both fixed- and variable-rate notes.
See Note 12. Interest Rate Exposure - Other Debt We have interest rate risk from changing interest rates related to borrowings under our revolving credit facility. We also have interest rate risk from changing interest rates related to borrowings under our term loans; however, a portion of the variable-rate risk is mitigated by derivative instruments.
See Note 12. Interest Rate Exposure - Other Debt We have interest rate risk from changing interest rates related to borrowings under our revolving credit facility. We also have interest rate risk from changing interest rates related to borrowings under our term loan; however, a portion of the variable-rate risk is mitigated by derivative instruments.
As our cash-settled restricted stock units are liability awards, the related compensation expense is sensitive to changes in the company’s stock price. The mark-to-market effect on the liability depends on each award’s grant price and previously 41 recognized expense.
As our cash-settled restricted stock units are liability awards, the related compensation expense is sensitive to changes in the company’s stock price. The mark-to-market effect on the liability depends on each award’s grant price and previously 42 recognized expense.
Due to the relatively young overall age of the plan’s participants, a 100-basis point change in the discount rate has approximately a 15% effect on the PBO balance. A 100-basis point decrease in the discount rate would have decreased our fiscal 2024 net earnings per share by less than $0.01. See Note 11 for more information on our benefit plans.
Due to the relatively young overall age of the plan’s participants, a 100-basis point change in the discount rate has approximately a 14% effect on the PBO balance. A 100-basis point decrease in the discount rate would have decreased our fiscal 2025 net earnings per share by less than $0.01. See Note 11 for more information on our benefit plans.
Absent any additional actions by the company to further mitigate risk, a 100-basis point increase in market interest rates associated with non-recourse funding vehicles would have decreased our fiscal 2024 net earnings per share by approximately $0.19. Credit risk is the exposure to nonperformance of another party to an agreement.
Absent any additional actions by the company to further mitigate risk, a 100-basis point increase in market interest rates associated with non-recourse funding vehicles would have decreased our fiscal 2025 net earnings per share by approximately $0.18. Credit risk is the exposure to nonperformance of another party to an agreement.
Substantially all of these borrowings are variable-rate debt based on SOFR. A 100-basis point increase in market interest rates would have decreased our fiscal 2024 net earnings per share by approximately $0.02. Other Market Exposures Our pension plan has interest rate risk related to its projected benefit obligation (“PBO”).
Substantially all of these borrowings are variable-rate debt based on SOFR. A 100-basis point increase in market interest rates would have decreased our fiscal 2025 net earnings per share by approximately $0.01. Other Market Exposures Our pension plan has interest rate risk related to its projected benefit obligation (“PBO”).
At February 29, 2024, a 10% increase in the company’s stock price would have affected fiscal 2024 net earnings per share by approximately $0.02. 42
At February 28, 2025, a 10% increase in the company’s stock price would have affected fiscal 2025 net earnings per share by approximately $0.03. 43