CarParts.com NASDAQ: PRTS reported its third consecutive quarter of positive adjusted EBITDA in the third quarter of 2026, as the online auto-parts retailer cited cost reductions, a more capital-light sales mix and progress in its last-mile delivery network.
Net sales rose 1.2% year over year to $129.3 million, marking the company’s first year-over-year revenue increase in several quarters, according to Interim Chief Financial Officer Mark DiSiena. Gross profit totaled $43.2 million, while gross margin expanded 30 basis points from the prior-year period and 20 basis points sequentially to 33.4%.
CarParts.com posted a GAAP net loss of $4.1 million, an improvement from a $10.9 million loss a year earlier. Adjusted EBITDA was positive $1 million, compared with an adjusted EBITDA loss of $2.5 million in the third quarter of 2025. The result followed adjusted EBITDA of $585,000 in the first quarter and $1.8 million in the second quarter.
“Q3 2026 marks our third consecutive quarter of positive adjusted EBITDA,” Chief Executive Officer David Meniane said. He characterized the performance as evidence that the company’s restructuring and operating changes were producing a “structural improvement” in the business.
Costs, inventory and liquidity
Total operating expenses declined 10% year over year to $47 million. DiSiena said the reduction reflected distribution-center consolidation, improved advertising efficiency and fixed-cost actions taken in earlier periods. He said there were no material non-recurring items in third-quarter operating expenses.
The company ended the quarter with approximately $33.8 million in cash, an undrawn $25 million revolving credit facility and no near-term liquidity concerns, DiSiena said. Inventory was approximately $77 million, down from $84 million at the end of the second quarter and $95 million a year earlier.
Management attributed the inventory reduction partly to the growth of its drop-ship partnerships, which require less owned inventory. Convertible notes outstanding totaled $25.5 million, with a split-adjusted conversion price of $12 per share. The company had approximately 8.1 million shares outstanding following its one-for-10 reverse stock split.
Shift toward drop-ship partnerships
Meniane emphasized that gross margin percentage alone does not fully reflect the changing revenue mix. The company is expanding its drop-ship business through A-Premium, additional adjacent-category assortment and the JC Whitney brand on third-party marketplaces.
While the model can affect reported gross margin rates, Meniane said it requires less working capital, reduces inventory and obsolescence risk, and produces attractive contribution margins relative to capital deployed. The company said it does not intend to move to an entirely drop-ship model and will continue to stock inventory where it has a competitive advantage.
A-Premium exited the quarter at an approximately $55 million annualized revenue run rate, surpassing the company’s stated $50 million third-quarter target. Its catalog is now six times larger than CarParts.com’s legacy private-label mechanical catalog, Meniane said, and the economics per unit are more than twice as profitable as the comparable legacy private-label offering. The company’s longer-term A-Premium target is $100 million in annualized revenue.
JC Whitney exited the quarter with 7,000 products listed on Amazon, and the company added more than 8,000 additional products in early October, bringing the total to 15,000 SKUs. The partnership’s annualized revenue run rate increased to approximately $3 million from $2.5 million in the second quarter. Meniane said JC Whitney recently generated roughly $100,000 in weekly revenue, representing a $5 million annualized pace, and that the company expects to bring the brand’s products to CarParts.com soon.
Private-label products represented about 73% of third-quarter revenue, down from approximately 83% a year earlier, reflecting the deliberate shift toward third-party premium brands and drop-ship offerings. Collision and replacement parts accounted for approximately 60% of revenue, versus 65% in the prior-year period, as mechanical parts grew faster.
Last-mile delivery and customer initiatives
CarParts.com delivered more than 6,000 packages through its last-mile network in the third quarter, roughly double the second-quarter pace. Next-day delivery was active from distribution centers in Las Vegas, Dallas and Jacksonville, with Chicago expected to come online during the fourth quarter.
The company is targeting 300,000 annual packages through the network, or roughly 5% of total outbound volume. Meniane said the initiative is intended to reduce freight costs and delivery times while giving the company greater control over customer experience.
The company also launched its CarParts+ Rewards loyalty program on Oct. 13 after a soft launch in early September. More than 200,000 members enrolled organically during that period, Meniane said. The free tier provides one point per dollar spent, while the $79-per-year Gold membership includes triple points, free shipping on more than 1 million parts, roadside assistance, extended returns and VIP customer support.
CarParts.com also partnered with Klarna to offer buy now, pay later financing at checkout. Meniane said the option is intended to provide payment flexibility for repair expenses and could improve conversion and average order value.
Mobile-app sales accounted for approximately 14.5% of e-commerce revenue, up from 12.9% a year earlier. Owned channels represented about 73% of revenue, while retention channels including email, SMS and push notifications accounted for 9.6% of e-commerce revenue.
Management said its fee-income platform, including the CarParts.com Mastercard, memberships and warranty products, was approaching a $5 million annualized run rate, compared with roughly $4 million during the second half of 2025.
For the fourth quarter, the company said it is targeting A-Premium revenue above its $55 million annualized rate, JC Whitney revenue at or near a $7.5 million annualized rate, and next-day delivery from all four distribution centers.
About CarParts.com (NASDAQ:PRTS)
CarParts.com, Inc is an e-commerce retailer specializing in replacement and aftermarket automotive parts and accessories. Through its online platform, the company serves owners, do-it-yourself customers, professional installers and collision-repair businesses seeking parts for cars, trucks and sport utility vehicles.
Its product offerings include collision and body components such as bumpers, fenders, hoods, mirrors and lighting, as well as mechanical parts for braking, suspension, steering, engine, transmission, exhaust and cooling systems.
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