We test goodwill for impairment annually as of December 1, or whenever events and circumstances indicate that the carrying value of a reporting unit may be higher than its fair value. Goodwill is tested for impairment at the reporting unit level, which are determined in accordance with the provisions of ASC 350, Intangibles – Goodwill and Other. Subsequent to the operating segment change made during the first quarter of fiscal 2025, the goodwill acquired as part of the Edmunds acquisition of $141.3 million was allocated solely to our CarMax Sales Operations reporting unit.

The quantitative goodwill impairment test requires determination of whether the fair value of a reporting unit is less than its carrying value. The fair value of our reporting units is estimated using a combination of an income approach, which uses discounted cash flow (“DCF”) analysis, and a market approach, which relies on valuation multiples derived from operating values and financial and/or operating measures for publicly traded comparable companies. The fair value is intended to represent our estimate of the price a potential market participant would be willing to pay for the reporting unit in an arms-length transaction. If the carrying value of a reporting unit exceeds its estimated fair value, an impairment charge is recognized.

The DCF analysis requires the use of estimates and assumptions including, but not limited to, revenue growth rates, margin rates, capital expenditures, and weighted-average costs of capital. In connection with the quantitative goodwill impairment test, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization, including consideration of a reasonable control premium that represents the estimated amount a market participant would pay to obtain a controlling interest in our equity securities. Our cash flow projections are based on our recent financial performance, expectations of future performance, knowledge of the automotive industry, and other assumptions we believe to be reasonable but that are inherently uncertain. Actual future results may differ from those estimates.

As a result of our annual impairment test, we recorded a non-cash goodwill impairment charge of $141.3 million during the fourth quarter of fiscal 2026, all of which related to our CarMax Sales Operations reporting unit. This non-cash charge is reflected as goodwill impairment in the accompanying consolidated statements of earnings. The impairment was driven by a combination of a significant decline in market capitalization resulting from the decrease in our share price, pressured financial performance during fiscal 2026 and downward revisions to our forecasted financial outlook relative to the prior year’s outlook. The decline in market capitalization accelerated late in the third quarter of fiscal 2026 and carried forward into the fourth quarter, creating significant pressure on the results of our market capitalization reconciliation procedures described above.


	As of February 28, 2026
	Gross Carrying		Accumulated		Net
(In thousands)	Amount		Amortization		Amount
Intangible assets not subject to amortization:
Trade name	$	31,900	$	—	$	31,900

Intangible assets subject to amortization:
Internally developed software	52,900		(35,896)		17,004
Customer relationships	133,200		(37,218)		95,982
Total intangible assets	$	218,000	$	(73,114)	$	144,886


	As of February 28, 2025
	Gross Carrying		Accumulated		Net
	Amount		Amortization		Amount
Intangible assets not subject to amortization:
Trade name	$	31,900	$	—	$	31,900

Intangible assets subject to amortization:
Internally developed software	52,900		(28,339)		24,561
Customer relationships	133,200		(29,382)		103,818
Total intangible assets	$	218,000	$	(57,721)	$	160,279

We estimate that amortization expense related to intangible assets will be $15.4 million in each of the next two fiscal years, $9.7 million in fiscal 2029 and $7.8 million in fiscal 2030 and fiscal 2031.