Carma Limited delivered a robust H1 FY26 performance with a 102% surge in gross profit, driven by strong unit growth and strategic expansion of its Sell-to Carma locations and reconditioning capacity.
- 49% increase in units delivered, reaching 2,225 vehicles
- 34% revenue growth to $50.9 million
- 102% jump in gross profit to $4.7 million
- Gross profit margin improved by 310 basis points to 9.2%
- Expansion of Sell-to Carma network with seven locations operational
Strong Growth in a Fragmented Market
Carma Limited has reported a striking first half of fiscal year 2026, showcasing its ability to scale rapidly within Australia's $118 billion used car market. The company achieved a 49% increase in units delivered, totaling 2,225 vehicles, while revenue climbed 34% to $50.9 million. This translated into a remarkable 102% increase in gross profit, reaching $4.7 million, underscoring the effectiveness of Carma’s business model and operational execution.
Operating primarily in New South Wales, which alone represents a $34 billion segment of the used car market, Carma is carving out a significant presence by addressing a traditionally fragmented industry with over 4,000 dealers and no dominant national brand. The company’s focus on convenience, transparency, and technology-driven solutions is resonating with consumers wary of the complexities and risks associated with buying and selling used vehicles.
Scaling the Sell-to Carma Network and Reconditioning Capacity
A key driver of Carma’s growth has been the expansion of its Sell-to Carma platform, which now operates seven locations across Sydney, with four new sites opened in H1 FY26 and plans for further expansion into Newcastle and Wollongong. This network facilitates a fast, safe, and easy way for Australians to sell their cars, supported by real-time pricing models enhanced by machine learning and AI technologies.
The company also completed a significant upgrade to its St Peters reconditioning facility, consolidating operations into a 35,000 square metre site with capacity to recondition up to 60 retail units per day. This facility has seen a consistent increase in throughput, with retail units reconditioned per shift rising 91% year-on-year and reaching a record 16.2 units in February 2026. These operational improvements have driven a 73% increase in gross profit per unit, contributing to a healthier gross profit margin of 9.2%, up 310 basis points from the prior period.
Financial Position and Outlook
Despite the positive momentum, Carma’s EBITDA remains negative at -$13.7 million, though the margin has improved from -32.9% to -26.9% when adjusted for IPO costs. The company maintains a robust balance sheet with $58.3 million in cash and cash equivalents and a $30 million bailment finance facility, providing ample liquidity to support ongoing expansion and operational scaling.
Marketing expenses have increased, reflecting investments in brand awareness and the Sell-to Carma channel, but efficiencies in retail marketing have helped contain costs relative to revenue. The company’s leadership remains confident in meeting FY26 prospectus forecasts, with trading updates indicating a 76% revenue increase in the first two months of the second half, driven by continued unit growth.
Positioning for Nationwide Expansion
Looking ahead, Carma plans to leverage its technology, marketing, and operational infrastructure to expand beyond New South Wales into other eastern mainland markets, which collectively represent 85% of Australia’s population and a potential $100 billion market. The blueprint for growth includes replicating the Sell-to Carma model and scaling reconditioning capacity to meet increasing demand, aiming for a retail unit revenue capacity approaching $1 billion annually.
Carma’s strategic focus on improving unit economics, enhancing customer experience, and expanding its footprint positions it well to disrupt the highly fragmented used car market. However, the company will need to continue balancing growth investments with progress toward profitability as it scales.
Bottom Line?
Carma’s strong H1 FY26 results and operational expansion set the stage for a pivotal year, but sustained profitability remains the next critical milestone.
Questions in the middle?
- How quickly can Carma replicate its NSW success in other Australian states?
- What impact will increasing competition in online used car sales have on Carma’s margins?
- When can investors expect Carma to achieve positive EBITDA and net profitability?