Carma delivered a much larger operation in FY26, with revenue up 59% and gross profit doubling, but the online used-car retailer remains deeply loss-making. Its next test is converting new sourcing and reconditioning capacity into faster inventory turnover and lower cash burn.
- Revenue rose 59% to $113.8 million
- Gross profit more than doubled to $10.5 million
- Statutory loss after tax widened to $49.6 million
- Sell-to Carma supplied 89% of vehicle purchases
- FY27 revenue growth forecast above 80%
Growth accelerates as Carma builds scale
Carma Limited (ASX:CMA) more than doubled its gross profit in its first full year as a listed company, but the online used-car retailer remains a long way from profitability. Revenue climbed 59% to $113.8 million in FY26, while gross profit rose 102% to $10.5 million as vehicle deliveries increased 86% to 5,416.
The operating model is becoming materially larger. Carma purchased 6,235 vehicles, up 127%, reconditioned 3,743 retail units, up 99%, and lifted gross profit margin from 7.3% to 9.2%. Gross profit per retail unit increased 35% to $3,300, while underlying operating expenses fell from 43% of revenue to 35%.
The results extend the trajectory described in Carma’s August FY26 results, which reported the same $113.8 million revenue figure and outlined the planned expansion of reconditioning capacity.
Direct sourcing reshapes vehicle economics
Carma’s consumer sourcing network has become the centrepiece of its strategy. Purchases through Sell-to Carma reached 5,577 vehicles during the year, including trade-ins, representing 89% of total purchases. The network ended FY26 with nine centres, after expanding beyond Sydney into Newcastle and Wollongong.
That shift supported higher margins and gave Carma more control over vehicle supply, but it also changed the inventory mix. Older vehicles generally sell at lower prices, pushing the average retail selling price down 6% to $28,900. Carma said greater reconditioning throughput helped offset that pressure, with retail gross profit per unit rising 22% to $2,500.
The company also expanded its wholesale channel, delivering 2,260 vehicles, up 180%. Wholesale gross profit per unit rose 95% to $400, although dealer demand softened sharply as the used-car market weakened late in the financial year.
Market softening exposes inventory risk
Carma said conditions became more difficult from March, with higher fuel prices, weaker consumer confidence and falling used-car values contributing to slower sales. Online inventory days reached 52 in the June quarter, compared with 29 days across the first nine months, even though the full-year average improved to 36 days from 40.
The June quarter still produced Carma’s highest retail and wholesale delivery volumes, including 1,003 retail units, up 30% on the previous quarter. But the late-year deterioration led to lower margins on vehicles held for longer than 60 days. The company recognised a $473,000 inventory write-down during FY26.
Losses and cash usage remain substantial
Statutory EBITDA was negative $33.0 million, compared with negative $25.4 million a year earlier, while the statutory loss after tax widened to $49.6 million from $35.9 million. Carma’s pro forma EBITDA loss was $30.2 million, or negative 26.5% of revenue, and the business consumed $46.7 million in operating cash during the year.
The balance sheet was strengthened by the November 2025 IPO, which raised $70.0 million in new equity before costs, and by the conversion of convertible notes into shares. Carma ended June with $16.0 million in cash and $25.3 million of available bailment funding. The facility had only $409,000 drawn at year-end and was renewed until March 2027, but the company remains dependent on continued sales growth, margin improvement and access to inventory finance.
FY27 depends on using capacity efficiently
Carma expects FY27 revenue growth of more than 80% and plans to add a second shift at its St Peters reconditioning facility in the March 2027 quarter. The move is expected to lift capacity to about 60 retail units per operating day using the existing line and equipment, with the company targeting more than 35 retail units reconditioned per operating day by the end of FY27.
Project Apollo, launched in July, is reviewing processes ahead of the next doubling in retail volume, while Carma says 18 AI-native systems have been put into production across pricing, valuations, bookings, logistics and sales since March. Those initiatives offer a route to better operating leverage, but the annual report’s numbers leave little room for execution slippage: inventory ageing has already shown how quickly market conditions can erode margins, and the business is still funding a sizeable operating deficit.
Bottom Line?
Carma has built sourcing and reconditioning capacity quickly; the harder FY27 question is whether demand, inventory turnover and gross profit can improve fast enough to reduce cash consumption.
Questions in the middle?
- Can Carma sustain more than 80% FY27 revenue growth without allowing inventory days and write-downs to rise again?
- Will the second St Peters shift deliver the expected throughput without a matching increase in operating costs?
- How long can the current cash and bailment funding position support the business if EBITDA remains negative?