CarMax reported solid operating performance in QQ2 2025, with revenue of $7.013B and net income of $132.8M, delivering EPS of $0.85. The quarter marks a notable turning point in operating profitability, as operating income rose to $149.9M from a modest prior-quarter or year-ago trajectory, producing a positive margin (2.14%) despite a high debt burden. Gross margin stood at 10.84%, supported by a favorable product mix and cost discipline in selling, general, and administrative expenses. Cash flow performance remained robust, with operating cash flow of $619.1M and free cash flow of $509.9M, underscoring the company’s ability to fund working capital needs and capital expenditures while maintaining liquidity. Nevertheless, CarMax continues to carry a substantial leverage position (total debt around $19.21B and net debt ~ $18.68B) and a relatively tight liquidity liquidity buffer given a current ratio of 2.25 and quick ratio of 0.68. The balance sheet health is adequate to weather cyclical volatility, but the debt load and modest inventory turnover imply ongoing monitoring of debt deleveraging, working capital efficiency, and capital allocation strategy. From a market standpoint, the trailing four-quarter results reflect a mature, cash-generative model in a competitive used-vehicle environment, with upside potential tied to financing profitability, cost controls, and selective store and product mix optimization.