Carma Reports 59% Revenue Growth and 26.5% Pro Forma EBITDA Margin in FY26

Strong FY26 Growth Driven by Sell-to Carma Expansion

Carma Limited (ASX:CMA) delivered a robust FY26 performance, with revenue surging 59% to $113.8 million and gross profit more than doubling to $10.5 million. The standout driver was the rapid growth of the Sell-to Carma consumer vehicle sourcing network, which accounted for 89% of all vehicle purchases during the year and expanded to nine locations across New South Wales, including new centres in Newcastle and Wollongong.

The company delivered 5,416 vehicles in total, up 86% year-on-year, comprising 3,156 retail units (+50%) and 2,260 wholesale units (+180%). This surge was supported by a near doubling in reconditioning throughput, with retail units reconditioned per shift rising from 7.5 in FY25 to 15.1 in FY26, and hitting a record 21.7 units per shift in the June quarter.

Upgraded St Peters Facility Unlocks Efficiency Gains

Central to Carma’s operational improvements was the completion of major upgrades to its 35,000m2 St Peters reconditioning facility in August 2025. The consolidation of three sites into one, combined with lean manufacturing principles and rapid paint facilities, enabled the company to scale capacity and reduce reconditioning costs per vehicle. Management highlights that the facility is currently operating one shift but is built for two, with the second shift scheduled to launch in the March quarter of FY27, potentially doubling daily retail reconditioning capacity to around 60 vehicles.

Margin Expansion Despite Market Challenges

Gross profit margin improved by 196 basis points to 9.2%, with gross profit per retail unit increasing 35% to $3,300. This was achieved despite a 6% decline in average retail selling price, reflecting a higher proportion of older vehicles sourced through Sell-to Carma. Wholesale gross profit per unit also nearly doubled to $400, benefiting from larger and more frequent auctions. The company’s proprietary AI-driven pricing models and rapid inventory turnover helped keep vehicle write-downs low and inventory days at a healthy 36 days, four days better than FY25.

However, the final quarter of FY26 saw margin pressure due to sharp increases in fuel prices and softer used car market conditions, including slower turnover and declining wholesale demand. Carma responded by adjusting pricing models, maintaining reconditioning output, and shifting marketing spend towards direct channels, which helped deliver record deliveries in Q4 despite these headwinds.

Path to Profitability Underpinned by AI and Operational Scale

Carma’s management outlined a clear path to profitability, expecting to reach positive EBITDA when reconditioning averages between 45 and 60 retail units per operating day. With the second shift at St Peters planned to start in early 2027, the company aims to exit FY27 reconditioning more than 35 units per day and scale rapidly thereafter. This capacity expansion is supported by $41.3 million in available funding, including $16 million in cash and $25.3 million in undrawn bailment finance facility.

The company is also investing heavily in technology, migrating its core systems onto an in-house platform and deploying 18 AI-native systems since March 2026. These AI tools span pricing, valuations, logistics, sales coaching, and customer interactions, offering a structural advantage over traditional dealerships by automating and optimizing every step of the vehicle lifecycle.

Governance, Financial Position, and Executive Remuneration

Carma’s FY26 statutory net loss widened to $49.6 million, including $13.3 million of non-recurring IPO and convertible note costs. On a pro forma basis, which excludes these one-offs and adjusts for listed company costs, the loss after tax improved modestly to $36.7 million with a 1,652 basis point margin improvement. The company strengthened its balance sheet through a successful $70 million IPO in November 2025, converting all convertible notes to equity and lifting net assets to $52.2 million.

The Board features experienced executives and independent directors, with recent changes including the resignation of Non-Executive Director Melinda Snowden and the appointment of Owen Wilson as Interim Chair of the Audit and Risk Committee. Executive remuneration is heavily weighted towards equity incentives aligned with long-term shareholder returns, with FY26 short-term incentive outcomes at 61% of maximum for the CEO and CCO.