(Bloomberg) -- Carvana Co. reported stronger earnings with revenue topping expectations as the company digs into its restructuring plan and regains sales momentum.

The used car retailer reported net income of $49 million, a reversal of analyst expectations for a $116 million loss. The profit was helped by a $75 million gain on the value of warrants that Carvana holds in insurer Root Inc. Even without that windfall, the company would have bested expectations, Carvana said Wednesday in a statement.

For Carvana, the results are a sign that it may be moving past a period of restructuring and into a better position to grow the business. The online retailer grew vehicles sales for the first time in six quarters. It had been cutting back ad spending and vehicle inventory for the past year to lower costs after years of heavy borrowing. 

Carvana shares jumped 35% as of 9:46 a.m. in New York, the stock’s biggest rise since Feb. 23.

In his letter to shareholders, Chief Executive Officer Ernest Garcia III said the company expects to show continued sales growth in the second quarter and another increase in ebitda.

Vehicle sales were up 16% to 92,000 units, which drove surprisingly strong revenue of $3.1 billion. The company said it earned 23 cents a share, beating the 64 cents a share loss forecast.

JP Morgan analyst Rajat Gupta upgraded the stock to the equivalent of a buy rating, saying stronger sales and margins should give the company breathing room to grow, despite its debt load.

“The rapid progress on margin expansion and overall EBITDA, combined with existing cash on the balance sheet, should put to rest any lingering concerns around optionality to reduce debt/interest burden over time,” Gupta wrote in a research note.

There are still challenges. The company has more than $6 billion in debt, which is about the same that it had a year ago, and despite restructuring its borrowings last year, interest payments rose by $14 million to $173 million. 

Carvana beat the analyst consensus forecast on earnings before interest, taxes, depreciation and amortization of $130.9 million by $105 million.

(Updates with share price and analyst comment from fourth paragraph)

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