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Equity-Based Compensation | 9 Months Ended
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Sep. 30, 2025
Share-Based Payment Arrangement [Abstract] |
Equity-Based Compensation | NOTE 12 — EQUITY-BASED COMPENSATION Equity-based compensation is recognized based on amortizing the grant-date fair value on a straight-line basis over the requisite service period, which is generally the vesting period of the award, less actual forfeitures. A summary of equity-based compensation recognized during the three and nine months ended September 30, 2025 and 2024 is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
| (in millions)
Restricted Stock Units and Awards | $ | 22 |  |  | $ | 21 |  |  | $ | 69 |  |  | $ | 62 |
Options | 5 |  |  | 6 |  |  | 14 |  |  | 16 |
Total equity-based compensation | 27 |  |  | 27 |  |  | 83 |  |  | 78 |
Equity-based compensation capitalized to property and equipment | (2) |  |  | (2) |  |  | (6) |  |  | (7) |
Equity-based compensation capitalized to inventory | (1) |  |  | (1) |  |  | (3) |  |  | (2) |
Equity-based compensation, net of capitalized amounts | $ | 24 |  |  | $ | 24 |  |  | $ | 74 |  |  | $ | 69 |
During each of the three months ended September 30, 2025 and 2024, the Company capitalized $2 million of equity-based compensation to property and equipment related to software development and $1 million each period to inventory related to reconditioning and inbound transportation of vehicles. During the nine months ended September 30, 2025 and 2024, the Company capitalized $6 million and $7 million, respectively, of equity-based compensation to property and equipment related to software development and $3 million and $2 million, respectively, to inventory related to reconditioning and inbound transportation of vehicles. Equity-based compensation expense in cost of sales was less than $1 million and $1 million during the three months ended September 30, 2025 and 2024, respectively, and $2 million and $1 million during the nine months ended September 30, 2025 and 2024, respectively. Equity-based compensation expense in selling, general and administrative expense was $24 million and $23 million during the three months ended September 30, 2025 and 2024, respectively, and $74 million and $70 million during the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, the total unrecognized equity-based compensation related to outstanding awards was $191 million, which the Company expects to recognize over a weighted-average period of approximately 2.4 years. Total unrecognized equity-based compensation will be adjusted for actual forfeitures. 2017 Omnibus Incentive Plan In connection with the IPO, the Company adopted the 2017 Omnibus Incentive Plan (the "2017 Incentive Plan"). The number of shares authorized for issuance under the 2017 Incentive Plan is subject to an automatic annual increase (the "Automatic Increase") of the lesser of two percent of the Company's outstanding Class A common stock or an amount determined by the Compensation and Nominating Committee of the Board. On each of January 1, 2025 and 2024, the number of shares authorized for issuance under the 2017 Incentive Plan increased by two percent of the then outstanding Class A common stock under the Automatic Increase. As of September 30, 2025, 20 million shares remained available for future equity-based award grants under this plan. Employee Stock Purchase Plan In May 2021, the Company adopted an employee stock purchase plan (the "ESPP"), which went into effect on July 1, 2021. The ESPP allows substantially all employees, excluding members of senior management, to acquire shares of the Company's Class A common stock through payroll deductions over six-month offering periods, commencing on January 1 and July 1 of each year. The per share purchase price is equal to 90% of the fair market value of a share of the Company's Class A common stock on the last day of the offering period. Participant purchases are limited to maximums that may vary between $10,000 and $25,000 of stock per calendar year. The Company is authorized to grant up to 0.5 million shares of Class A common stock under the ESPP. During the nine months ended September 30, 2025 and 2024, the Company issued 3,212 and 6,136 shares of Class A common stock, respectively, and as of September 30, 2025, 364,756 shares of Class A common stock remained available for future issuance. During each of the three and nine months ended September 30, 2025 and 2024, the Company recognized less than $1 million of equity-based compensation expense related to the ESPP. Class A Units During 2018, the Company granted certain employees Class A Units with service-based vesting over two- to four-year periods and a grant-date fair value of $18.58 per Class A Unit. The grantees entered into the Exchange Agreement under which each LLC Unitholder (and certain permitted transferees thereof) may receive shares of the Company's Class A common stock in exchange for their LLC Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting. Class B Units In March 2015, Carvana Group adopted the LLC Equity Incentive Plan. Under the LLC Equity Incentive Plan, Carvana Group could grant Class B Units to eligible employees, non-employee officers, consultants and directors with service-based vesting, typically four to five years. In connection with the completion of the IPO, Carvana Group discontinued the grant of new awards under the LLC Equity Incentive Plan, however the LLC Equity Incentive Plan will continue in connection with administration of existing awards that remain outstanding. Grantees may receive shares of the Company's Class A common stock in exchange for Class B Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting and the respective participation threshold for Class B Units. Class B Units do not expire. There were no Class B Units issued during the three and nine months ended September 30, 2025 or 2024. As of September 30, 2025, outstanding Class B Units had participation thresholds between $0.00 to $12.00.

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