Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 107

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 8
Chunk 107
---
 in the period the impressions are delivered or certain activities occurred.  Subscription revenues are derived from packages sold to automotive dealers that include car leads, inventory listings and enhanced placement in Edmunds’ dealer locator and are recognized over the period that the services are made available to the dealers.  Subscription revenues also include a digital marketing subscription service, which allows dealers to gain exposure on third party partner websites.  Revenues for this service are recognized on a net basis.Service Revenues.  Service revenue consists of labor and parts income related to vehicle repair service, including repairs of vehicles covered under an ESP we sell or warranty program.  Service revenue is recognized at the time the work is completed.Other Revenues.  Other revenues include miscellaneous goods and services, which are immaterial to our consolidated financial statements.

3.    CARMAX AUTO FINANCE

CAF provides financing to qualified retail customers purchasing vehicles from CarMax.  CAF provides us the opportunity to capture additional profits, cash flows and sales while managing our reliance on third-party finance sources.  Management regularly analyzes CAF’s operating results by assessing profitability, the performance of the auto loans receivable, including trends in credit losses and delinquencies, and CAF direct expenses.  The CODM reviews CAF income to assess CAF’s performance and make operating decisions, including resource allocations.We typically use securitizations or other funding arrangements to fund loans originated by CAF, as discussed in Note 1(F).  CAF income primarily reflects the interest and fee income generated by the auto loans receivable less the interest expense associated with the debt issued to fund these receivables, a provision for estimated loan losses and direct CAF expenses.CAF income does not include any allocation of indirect costs.  Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.  Examples of indirect costs not allocated to CAF include retail store expenses and corporate expenses.  In addition, except for auto loans receivable, which are disclosed in Note 4, CAF assets are not separately reported nor do we allocate assets to CAF because such allocation would not be useful to management in making operating decisions.

59

Components of CAF IncomeYears Ended February 28 or 29(In millions)2025% (1)2024% (1)2023% (1)Interest margin:Interest and fee income$1,853.9 10.5 $1,677.4 9.7