KMX - 1QCY26 Prev: Modestly raising ests; How much GPU did they have to give back?

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KMX - 1QCY26 Prev: Modestly raising ests; How much GPU did they have to give back?

Price (Jun. 12, 2026) $51.26 The “middle” is a tough place to be – CarMax seems caught between Carvana in the

52-Wk Range $71.57-$30.88 online segment of the used vehicle market (Carvana dominates the ecom channel from

Market Cap ($M) $7,279 a mindshare/market share perspective) and traditional dealers that have deeper pools of

ADTV 2,261,844 inventory and “brand knowledge” for specific makes/models than CarMax has, with its

Shares Out (M) 142 “superstore” model. The ecom segment appears to be the fastest growing channel in used

Short Interest Ratio/% Of Float 11.1% vehicle distribution and while CarMax has online capabilities, we believe that its customer

Enterprise Value ($M) $9,380 experience is much clunkier than it is for Carvana. In addition, due to the proliferation of

information in the auto industry, we think customers are increasingly zeroing in on what Cash & Equivalents ($M) $123

specific make/model they want. In which case, the best place to go for that specific vehicle Total Debt ($M) $2,224

may be traditional dealers, which have deeper pools of inventory and brand knowledge

relative to CarMax, which has more breadth but less depth.

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Will be tricky to improve pricing and the customer experience while reducing costs –

While we are sure the company can operate more efficiently than they do today, we suspect

Reasons for this report they probably need to invest in price and technology to improve their market positioning.

However, Starboard is arguing for significant cost reductions and mgmt is targeting a ~

✓ Earnings Preview $150mm reduction in annual SG&A spend. We believe it may be difficult to achieve both of