Financial Data and Key Metrics Changes - OpenLane reported consolidated revenues of $482 million, representing a 9% year-over-year growth [22] - Adjusted EBITDA for the quarter was $87 million, reflecting a 21% increase, with an adjusted EBITDA margin of 18%, showing a margin expansion of 190 basis points [23][24] - Adjusted free cash flow for the quarter was $87 million, achieving a conversion rate of 100% [24] Business Segment Data and Key Metrics Changes - In the marketplace segment, total gross merchandise value (GMV) processed was $7.5 billion, a 10% increase, with dealer GMV growing by 32% while commercial GMV remained flat [25][26] - Auction fees in the marketplace grew by 24%, while service revenues decreased by 3% [26] - Adjusted EBITDA for the marketplace segment was $45 million, representing a 36% growth and a 220 basis points margin expansion [26] - The finance segment reported average outstanding receivables of $2.3 billion, up 4%, with adjusted EBITDA increasing by 9% to $42 million [27] Market Data and Key Metrics Changes - Dealer-to-dealer volumes increased by 21%, marking the third consecutive quarter of double-digit growth [6][11] - Commercial vehicle volumes were down as expected, but recovery is anticipated starting in 2026 [10][16] Company Strategy and Development Direction - OpenLane's growth strategy focuses on enhancing the marketplace, technology, and customer experience to make wholesale easier for customers [7][8] - The company aims to leverage its digital platform to capture market share from traditional physical auctions, with a significant opportunity in the dealer-to-dealer segment [10][19] - OpenLane is committed to integrating its marketplace and finance segments to accelerate growth and enhance customer value [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic path, highlighting the transition to digital solutions in the industry and the expected recovery in commercial vehicle volumes [16][19] - The company raised its full-year guidance for adjusted EBITDA from $290 million - $310 million to $310 million - $320 million, reflecting strong performance and market conditions [30] Other Important Information - OpenLane ended the quarter with a cash balance of $119 million and zero net debt after paying off outstanding senior notes [28] - The company has repurchased approximately 1.3 million shares at a total cost of about $31 million under its share repurchase program [28] Q&A Session Summary Question: Impact of broader macro tariffs on dealer volumes - Management noted strong dealer volume growth of 21% year-over-year, attributing it to strategic execution and technology investments, with a minor benefit from macro factors [36][40] Question: U.S. versus international growth - Management indicated comparable growth rates in both Canada and the U.S., with a stronger market position in Canada [43][44] Question: Selling capacity and future benefits - Management highlighted the scalability of the business and the focus on building the buyer network after successful supply-side investments [46][49] Question: Second half guidance and market expectations - Management acknowledged uncertainty in the market but indicated a conservative approach to guidance, factoring in potential deceleration in growth [54][56] Question: Update on win-back customer onboarding - The project is on track for a launch by the end of the year, which could positively impact commercial volume growth in 2026 [105][106] Question: Cross-pollination projects between AFC and OpenLane - Management discussed synergies between AFC and OpenLane, emphasizing the potential for enhanced customer relationships and streamlined processes [92][94]

Financial Performance - OPENLANE achieved consolidated revenue growth of 9% reaching $481.7 million in Q2 2025[10, 40] - Adjusted EBITDA increased by 21% to $86.7 million[10, 40] - Adjusted EBITDA margin improved by 190 basis points to 18%[40] - Income from continuing operations saw a significant increase of 212% reaching $33.4 million[40] - Adjusted Free Cash Flow increased by 34% to $86.5 million[40] - Operating Adjusted EPS increased by 74% to $0.33[40] Segment Performance - The marketplace segment experienced substantial growth, with dealer vehicles sold increasing by 21%[11] - The finance segment demonstrated strong performance, growing average managed receivables and increasing adjusted EBITDA[11] Guidance - OPENLANE raised its 2025 guidance, with revised expectations for Income from Continuing Operations between $132 million and $140 million[12, 52] - Adjusted EBITDA guidance was revised upward to a range of $310 million to $320 million[12, 53] - Operating Adjusted EPS guidance was also increased to a range of $1.12 to $1.17[53]

[EBITDA and Adjusted EBITDA Measures](index=2&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Measures) This section defines EBITDA and Adjusted EBITDA as non-GAAP measures and provides their reconciliation to net income across various periods [Definition and Purpose](index=2&type=section&id=1.1%20Definition%20and%20Purpose) EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management and creditors to evaluate performance - EBITDA and Adjusted EBITDA are **non-GAAP measures** used to evaluate performance and are not substitutes for GAAP financials[2](index=2&type=chunk)[3](index=3&type=chunk) - EBITDA is calculated as **net income (loss) + interest expense (net of interest income) + income tax provision (benefit) + depreciation and amortization**[3](index=3&type=chunk) - Adjusted EBITDA includes supplementary adjustments to EBITDA based on senior secured credit agreement covenant calculations[3](index=3&type=chunk) [Reconciliation to Net Income](index=2&type=section&id=1.2%20Reconciliation%20to%20Net%20Income) The company provides detailed reconciliations of income (loss) from continuing operations to EBITDA and Adjusted EBITDA for various periods [Three Months Ended June 30, 2025 and 2024](index=2&type=section&id=1.2.1%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the three months ended June 30, 2025, consolidated Adjusted EBITDA increased to $86.7 million from $71.4 million in the prior year Consolidated EBITDA and Adjusted EBITDA (Three Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Income (loss) from continuing operations | $33.4 | $10.7 | $22.7 | 212.1% | | EBITDA | $102.9 | $79.4 | $23.5 | 29.6% | | Adjusted EBITDA | $86.7 | $71.4 | $15.3 | 21.4% | Marketplace Segment EBITDA and Adjusted EBITDA (Three Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Income (loss) from continuing operations | $8.6 | $(16.1) | $24.7 | -153.4% | | EBITDA | $37.3 | $12.4 | $24.9 | 200.8% | | Adjusted EBITDA | $44.5 | $32.7 | $11.8 | 36.1% | Finance Segment EBITDA and Adjusted EBITDA (Three Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Income (loss) from continuing operations | $24.8 | $26.8 | $(2.0) | -7.5% | | EBITDA | $65.6 | $67.0 | $(1.4) | -2.1% | | Adjusted EBITDA | $42.2 | $38.7 | $3.5 | 9.0% | [Six Months Ended June 30, 2025 and 2024](index=3&type=section&id=1.2.2%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the six months ended June 30, 2025, consolidated Adjusted EBITDA increased to $169.5 million from $146.2 million in the prior year Consolidated EBITDA and Adjusted EBITDA (Six Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Income (loss) from continuing operations | $70.3 | $29.2 | $41.1 | 140.8% | | EBITDA | $209.3 | $172.2 | $37.1 | 21.5% | | Adjusted EBITDA | $169.5 | $146.2 | $23.3 | 15.9% | Marketplace Segment EBITDA and Adjusted EBITDA (Six Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Income (loss) from continuing operations | $15.9 | $(29.0) | $44.9 | -154.8% | | EBITDA | $73.5 | $37.9 | $35.6 | 93.9% | | Adjusted EBITDA | $81.6 | $67.8 | $13.8 | 20.4% | Finance Segment EBITDA and Adjusted EBITDA (Six Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Income (loss) from continuing operations | $54.4 | $58.2 | $(3.8) | -6.5% | | EBITDA | $135.8 | $134.3 | $1.5 | 1.1% | | Adjusted EBITDA | $87.9 | $78.4 | $9.5 | 12.1% | [Twelve Months Ended June 30, 2025](index=4&type=section&id=1.2.3%20Twelve%20Months%20Ended%20June%2030%2C%202025) For the twelve months ended June 30, 2025, consolidated Net Income was $151.0 million, with Adjusted EBITDA reaching $316.7 million Consolidated EBITDA and Adjusted EBITDA (Twelve Months Ended June 30, 2025) | Metric | Amount (Millions) | | :-------------------------------- | :---------------- | | Net income | $151.0 | | Income from continuing operations | $151.0 | | EBITDA | $433.9 | | Adjusted EBITDA | $316.7 | - Key adjustments for the twelve months included **$11.6 million in non-cash stock-based compensation**, a **$(103.1) million securitization interest deduction**, and a **$(31.6) million gain on sale of business**[6](index=6&type=chunk) [Results of Operations - OPENLANE Consolidated](index=5&type=section&id=Results%20of%20Operations%20-%20OPENLANE%20Consolidated) OPENLANE's consolidated results show significant revenue and profit growth for both the three and six months ended June 30, 2025 [Consolidated Financial Performance](index=5&type=section&id=2.1%20Consolidated%20Financial%20Performance) OPENLANE's consolidated results show significant revenue and profit growth for both the three and six months ended June 30, 2025 [Three Months Ended June 30, 2025 vs 2024](index=5&type=section&id=2.1.1%20Three%20Months%20Ended%20June%2030%2C%202025%20vs%202024) For the three months ended June 30, 2025, OPENLANE reported a 9% increase in total operating revenues and a substantial 212.1% increase in income from continuing operations Consolidated Financial Highlights (Three Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Total operating revenues | $481.7 | $443.8 | $37.9 | 8.5% | | Operating profit | $47.4 | $23.9 | $23.5 | 98.3% | | Income from continuing operations | $33.4 | $10.7 | $22.7 | 212.1% | | Net income | $33.4 | $10.7 | $22.7 | 212.1% | | Diluted EPS | $0.15 | $0.00 | $0.15 | - | - Revenue increased by **$37.9 million, or 9%**, to **$481.7 million** for Q2 2025, compared to $443.8 million for Q2 2024[8](index=8&type=chunk) [Six Months Ended June 30, 2025 vs 2024](index=7&type=section&id=2.1.2%20Six%20Months%20Ended%20June%2030%2C%202025%20vs%202024) For the six months ended June 30, 2025, total operating revenues grew by 8% to $941.8 million, and income from continuing operations more than doubled to $70.3 million Consolidated Financial Highlights (Six Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Total operating revenues | $941.8 | $873.7 | $68.1 | 7.8% | | Operating profit | $99.1 | $60.7 | $38.4 | 63.3% | | Income from continuing operations | $70.3 | $29.2 | $41.1 | 140.8% | | Net income | $70.3 | $29.2 | $41.1 | 140.8% | | Diluted EPS | $0.33 | $0.05 | $0.28 | 560.0% | - Revenue increased by **$68.1 million, or 8%**, to **$941.8 million** for the six months ended June 30, 2025, compared to $873.7 million for the same period in 2024[17](index=17&type=chunk) [Key Financial Metrics Analysis](index=5&type=section&id=2.2%20Key%20Financial%20Metrics%20Analysis) Analysis of key financial metrics reveals a decrease in depreciation and amortization and interest expense, alongside a significant increase in other income due to foreign currency gains [Depreciation and Amortization](index=5&type=section&id=2.2.1%20Depreciation%20and%20Amortization) Depreciation and amortization decreased by 5% for the three months and 6% for the six months ended June 30, 2025, primarily due to assets becoming fully amortized and depreciated - Q2 2025: Depreciation and amortization decreased by **$1.1 million (5%)** to **$23.0 million**[9](index=9&type=chunk) - YTD Q2 2025: Depreciation and amortization decreased by **$2.7 million (6%)** to **$45.7 million**[18](index=18&type=chunk) - The decrease is primarily due to assets becoming fully amortized and depreciated[9](index=9&type=chunk)[18](index=18&type=chunk) [Interest Expense](index=5&type=section&id=2.2.2%20Interest%20Expense) Interest expense significantly decreased by 44% for both the three and six months ended June 30, 2025, mainly due to reduced borrowings on lines of credit and the repayment of senior notes - Q2 2025: Interest expense decreased by **$2.4 million (44%)** to **$3.1 million**[10](index=10&type=chunk) - YTD Q2 2025: Interest expense decreased by **$5.5 million (44%)** to **$7.1 million**[19](index=19&type=chunk) - The decrease is primarily due to reduced borrowings on lines of credit and repayment of senior notes in Q2 2025[10](index=10&type=chunk)[19](index=19&type=chunk) [Other (Income) Expense, Net](index=6&type=section&id=2.2.3%20Other%20(Income)%20Expense%2C%20Net) Other (income) expense, net, shifted from an expense to a significant income for both periods, primarily driven by foreign currency gains on intercompany balances - Q2 2025: **Other income of $7.4 million**, compared to other expense of $0.2 million in Q2 2024[11](index=11&type=chunk) - YTD Q2 2025: **Other income of $12.4 million**, compared to other expense of $0.7 million in YTD Q2 2024[20](index=20&type=chunk) - The increase in other income is mainly due to foreign currency gains on intercompany balances (**$5.6 million in Q2 2025, $8.9 million YTD Q2 2025**)[11](index=11&type=chunk)[20](index=20&type=chunk) [Income Taxes](index=6&type=section&id=2.2.4%20Income%20Taxes) The effective tax rate decreased for both periods, but was unfavorably impacted by an increase in the valuation allowance against the U.S. net deferred tax asset - Q2 2025: Effective tax rate was **35.4%**, down from 41.2% in Q2 2024[12](index=12&type=chunk) - YTD Q2 2025: Effective tax rate was **32.7%**, down from 38.4% in YTD Q2 2024[21](index=21&type=chunk) - The effective tax rate was unfavorably impacted by an increase in the valuation allowance related to the U.S. net deferred tax asset (**$38.2 million at June 30, 2025**)[12](index=12&type=chunk)[13](index=13&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) is estimated to decrease the deferred tax position and related valuation allowance in 2025, to be recorded in Q3 2025[15](index=15&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - Pillar Two global minimum corporate tax rules are not expected to materially impact the Company's consolidated financial statements[14](index=14&type=chunk)[23](index=23&type=chunk) [Impact of Foreign Currency](index=6&type=section&id=2.2.5%20Impact%20of%20Foreign%20Currency) Foreign currency fluctuations had a mixed impact, with the euro exchange rate positively affecting revenue, operating profit, and net income, while the Canadian dollar exchange rate had a negative impact - Q2 2025: Euro exchange rate increased revenue by **$4.9 million**, operating profit by **$0.3 million**, and net income by **$0.2 million**[16](index=16&type=chunk) - Q2 2025: Canadian dollar exchange rate decreased revenue by **$1.3 million**, operating profit by **$0.3 million**, and net income by **$0.1 million**[16](index=16&type=chunk) - YTD Q2 2025: Canadian dollar exchange rate decreased revenue by **$7.6 million**, operating profit by **$1.9 million**, and net income by **$0.8 million**[26](index=26&type=chunk) - YTD Q2 2025: Euro exchange rate increased revenue by **$2.3 million**, operating profit by **$0.1 million**, and net income by **$0.1 million**[26](index=26&type=chunk) [Marketplace Segment Results](index=8&type=section&id=Marketplace%20Segment%20Results) The Marketplace segment demonstrated strong growth, with significant increases in total revenue and a shift from operating loss to profit for both the three and six months ended June 30, 2025 [Marketplace Financial Performance](index=8&type=section&id=3.1%20Marketplace%20Financial%20Performance) The Marketplace segment demonstrated strong growth, with significant increases in total revenue and a shift from operating loss to profit for both the three and six months ended June 30, 2025 [Three Months Ended June 30, 2025 vs 2024](index=8&type=section&id=3.1.1%20Three%20Months%20Ended%20June%2030%2C%202025%20vs%202024) For Q2 2025, Marketplace revenue increased by 12% to $375.5 million, and the segment swung from an operating loss of $8.2 million to an operating profit of $11.9 million Marketplace Financial Highlights (Three Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Total Marketplace revenue | $375.5 | $336.0 | $39.5 | 11.7% | | Gross profit | $120.6 | $87.9 | $32.7 | 37.2% | | Operating profit (loss) | $11.9 | $(8.2) | $20.1 | -245.1% | | Total vehicles sold (000s) | 380 | 368 | 12 | 3.3% | | GMV (billions) | $7.5 | $6.8 | $0.7 | 10.3% | - Total Marketplace revenue increased by **$39.5 million, or 12%**, to **$375.5 million**[28](index=28&type=chunk) - Total vehicles sold increased by **3% to 380,000**, driven by a **21% increase in dealer consignment volumes**, partially offset by a 9% decrease in commercial volumes[27](index=27&type=chunk)[29](index=29&type=chunk) [Six Months Ended June 30, 2025 vs 2024](index=11&type=section&id=3.1.2%20Six%20Months%20Ended%20June%2030%2C%202025%20vs%202024) For the six months ended June 30, 2025, Marketplace revenue increased by 11% to $726.7 million, and operating profit improved significantly from a loss of $3.4 million to a profit of $23.9 million Marketplace Financial Highlights (Six Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Total Marketplace revenue | $726.7 | $654.3 | $72.4 | 11.1% | | Gross profit | $229.3 | $189.7 | $39.6 | 20.9% | | Operating profit (loss) | $23.9 | $(3.4) | $27.3 | -802.9% | | Total vehicles sold (000s) | 743 | 740 | 3 | 0.4% | | GMV (billions) | $14.4 | $13.8 | $0.6 | 4.3% | - Total Marketplace revenue increased by **$72.4 million, or 11%**, to **$726.7 million**[39](index=39&type=chunk) - Total vehicles sold slightly increased by **0.4% to 743,000**, with an **18% increase in dealer consignment volumes** offsetting an 11% decrease in commercial volumes[27](index=27&type=chunk)[40](index=40&type=chunk) [Key Marketplace Metrics Analysis](index=8&type=section&id=3.2%20Key%20Marketplace%20Metrics%20Analysis) The Marketplace segment saw strong growth in auction fees and purchased vehicle sales, driven by price increases and a favorable mix shift towards dealer consignment vehicles [Total Marketplace Revenue](index=8&type=section&id=3.2.1%20Total%20Marketplace%20Revenue) Total Marketplace revenue increased by 12% for Q2 and 11% for YTD Q2 2025, primarily driven by a significant increase in dealer consignment vehicles sold and higher auction fees - Q2 2025 revenue increased by **$39.5 million (12%)** to **$375.5 million**, primarily due to a **21% increase in dealer consignment vehicles sold**[28](index=28&type=chunk) - YTD Q2 2025 revenue increased by **$72.4 million (11%)** to **$726.7 million**, primarily due to an **18% increase in dealer consignment vehicles sold**[39](index=39&type=chunk) - Foreign currency fluctuations had a net increase of **$3.9 million on Q2 2025 revenue** and a net decrease of **$3.7 million on YTD Q2 2025 revenue**[28](index=28&type=chunk)[39](index=39&type=chunk) [Auction Fees](index=9&type=section&id=3.2.2%20Auction%20Fees) Auction fees saw substantial growth, increasing by 24% for Q2 and 19% for YTD Q2 2025, with auction fees per vehicle sold rising by 20% and 19% respectively - Q2 2025: Auction fees increased by **$26.2 million (24%)** to **$134.9 million**[30](index=30&type=chunk) - Q2 2025: Auction fees per vehicle sold increased by **$60 (20%)** to **$355**[30](index=30&type=chunk) - YTD Q2 2025: Auction fees increased by **$41.5 million (19%)** to **$260.1 million**[41](index=41&type=chunk) - YTD Q2 2025: Auction fees per vehicle sold increased by **$55 (19%)** to **$350**[41](index=41&type=chunk) [Service Revenue](index=9&type=section&id=3.2.3%20Service%20Revenue) Service revenue decreased by 3% for Q2 and 5% for YTD Q2 2025, primarily due to the sale of the automotive key business in 2024 and decreases in repossession and inspection revenues - Q2 2025: Service revenue decreased by **$5.0 million (3%)** to **$142.1 million**[31](index=31&type=chunk) - YTD Q2 2025: Service revenue decreased by **$14.9 million (5%)** to **$282.4 million**[42](index=42&type=chunk) - The decrease was mainly due to the sale of the automotive key business (**$9.4 million in Q2, $19.9 million YTD Q2**) and decreases in repossession and inspection revenue, partially offset by increased transportation revenue[31](index=31&type=chunk)[42](index=42&type=chunk) [Purchased Vehicle Sales](index=9&type=section&id=3.2.4%20Purchased%20Vehicle%20Sales) Purchased vehicle sales increased significantly by 23% for Q2 and 33% for YTD Q2 2025, driven by higher volumes in the U.S. marketplace and increased average selling prices in Europe - Q2 2025: Purchased vehicle sales increased by **$18.3 million (23%)** to **$98.5 million**[32](index=32&type=chunk) - YTD Q2 2025: Purchased vehicle sales increased by **$45.8 million (33%)** to **$184.2 million**[43](index=43&type=chunk) - The increase was primarily due to higher purchased vehicle sales in the U.S. and increased average selling prices in Europe[32](index=32&type=chunk)[43](index=43&type=chunk) [Gross Profit](index=9&type=section&id=3.2.5%20Gross%20Profit) Gross profit for the Marketplace segment increased substantially by 37% for Q2 and 21% for YTD Q2 2025, with gross profit as a percentage of revenue improving due to pricing, a higher mix of dealer consignment vehicles, and the benefit of lower Canadian DST - Q2 2025: Gross profit increased by **$32.7 million (37%)** to **$120.6 million**[33](index=33&type=chunk) - Q2 2025: Gross profit as a percentage of revenue increased to **32.1%** from 26.2%[34](index=34&type=chunk) - YTD Q2 2025: Gross profit increased by **$39.6 million (21%)** to **$229.3 million**[44](index=44&type=chunk) - YTD Q2 2025: Gross profit as a percentage of revenue increased to **31.6%** from 29.0%[45](index=45&type=chunk) - Improvements were driven by pricing, higher mix of dealer consignment vehicles, and lower Canadian DST (**$10.5 million benefit in Q2, $9.1 million YTD Q2**)[33](index=33&type=chunk)[44](index=44&type=chunk) - The Canadian government plans to rescind the Canadian DST, which will lead to a reversal of recorded expenses in the period of official rescission[35](index=35&type=chunk)[46](index=46&type=chunk) [Provision for Credit Losses](index=9&type=section&id=3.2.6%20Provision%20for%20Credit%20Losses) Provision for credit losses in the Marketplace segment significantly decreased by 85% for Q2 and 86% for YTD Q2 2025, reflecting successful initiatives to reduce risk and bad debt expense - Q2 2025: Provision for credit losses decreased by **$1.1 million (85%)** to **$0.2 million**[36](index=36&type=chunk) - YTD Q2 2025: Provision for credit losses decreased by **$3.0 million (86%)** to **$0.5 million**[47](index=47&type=chunk) - The decrease is primarily due to initiatives implemented to reduce risk and bad debt expense in the marketplace[36](index=36&type=chunk)[47](index=47&type=chunk) [Selling, General and Administrative](index=9&type=section&id=3.2.7%20Selling%2C%20General%20and%20Administrative) Selling, general and administrative (SG&A) expenses for the Marketplace segment increased by 8% for Q2 and 5% for YTD Q2 2025, mainly due to higher incentive-based compensation and sales-related expenses - Q2 2025: SG&A expenses increased by **$7.2 million (8%)** to **$99.9 million**[37](index=37&type=chunk) - YTD Q2 2025: SG&A expenses increased by **$9.3 million (5%)** to **$194.6 million**[48](index=48&type=chunk) - Increases were driven by incentive-based compensation (**$7.9 million in Q2, $12.2 million YTD Q2**) and sales-related expenses[37](index=37&type=chunk)[48](index=48&type=chunk) - Offsetting factors included decreases in severance, IT costs, and costs related to the automotive key business sale[37](index=37&type=chunk)[48](index=48&type=chunk) [Loss on Sale of Property](index=11&type=section&id=3.2.8%20Loss%20on%20Sale%20of%20Property) The Marketplace segment recorded a $7.0 million loss on the sale of excess property in Montreal in April 2025, which was acquired as part of the December 2023 Manheim Canada acquisition - A **$7.0 million loss on sale of property** was recorded in Q2 2025 due to the sale of excess property in Montreal[38](index=38&type=chunk)[49](index=49&type=chunk) - The property was originally purchased as part of the December 2023 Manheim Canada acquisition[38](index=38&type=chunk)[49](index=49&type=chunk) [Finance Segment Results](index=13&type=section&id=Finance%20Segment%20Results) The Finance segment experienced a slight decrease in total revenue for both the three and six months ended June 30, 2025, primarily due to lower interest yields [Finance Financial Performance](index=13&type=section&id=4.1%20Finance%20Financial%20Performance) The Finance segment experienced a slight decrease in total revenue for both the three and six months ended June 30, 2025, primarily due to lower interest yields [Three Months Ended June 30, 2025 vs 2024](index=13&type=section&id=4.1.1%20Three%20Months%20Ended%20June%2030%2C%202025%20vs%202024) For Q2 2025, Finance segment revenue decreased by 1% to $106.2 million, but operating profit increased by 10.6% to $35.5 million Finance Financial Highlights (Three Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Total Finance revenue | $106.2 | $107.8 | $(1.6) | -1.5% | | Finance interest expense | $26.9 | $31.9 | $(5.0) | -15.7% | | Net Finance margin | $79.3 | $75.9 | $3.4 | 4.5% | | Operating profit | $35.5 | $32.1 | $3.4 | 10.6% | | Total loan transaction units (000s) | 409 | 413 | (4) | -1.0% | | Average receivables managed (billions) | $2.337.7 | $2.243.6 | $0.094.1 | 4.2% | - Revenue decreased by **$1.6 million (1%)** to **$106.2 million**, primarily due to decreases in interest yields and a 1% decrease in loan transaction units, partially offset by an increase in loan values[53](index=53&type=chunk) [Six Months Ended June 30, 2025 vs 2024](index=14&type=section&id=4.1.2%20Six%20Months%20Ended%20June%2030%2C%202025%20vs%202024) For YTD Q2 2025, Finance segment revenue decreased by 2% to $215.1 million, but operating profit increased by 17.3% to $75.2 million Finance Financial Highlights (Six Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :--------- | | Total Finance revenue | $215.1 | $219.4 | $(4.3) | -2.0% | | Finance interest expense | $54.5 | $64.5 | $(10.0) | -15.5% | | Net Finance margin | $160.6 | $154.9 | $5.7 | 3.7% | | Operating profit | $75.2 | $64.1 | $11.1 | 17.3% | | Total loan transaction units (000s) | 843 | 837 | 6 | 0.7% | | Average receivables managed (billions) | $2.350.8 | $2.270.4 | $0.080.4 | 3.5% | - Revenue decreased by **$4.3 million (2%)** to **$215.1 million**, primarily due to decreases in interest yields, partially offset by a 1% increase in loan transaction units[59](index=59&type=chunk) [Key Finance Metrics Analysis](index=13&type=section&id=4.2%20Key%20Finance%20Metrics%20Analysis) The Finance segment's revenue was impacted by lower interest yields, but profitability improved due to a significant decrease in finance interest expense [Revenue](index=13&type=section&id=4.2.1%20Revenue) Finance revenue decreased slightly for both periods, primarily due to lower interest yields driven by a decrease in prime rates - Q2 2025: Total Finance revenue decreased by **$1.6 million (1%)** to **$106.2 million**[53](index=53&type=chunk) - YTD Q2 2025: Total Finance revenue decreased by **$4.3 million (2%)** to **$215.1 million**[59](index=59&type=chunk) - The decrease was primarily due to lower interest yields driven by a decrease in prime rates[53](index=53&type=chunk)[59](index=59&type=chunk) [Finance Interest Expense](index=14&type=section&id=4.2.2%20Finance%20Interest%20Expense) Finance interest expense decreased significantly by 16% for both periods, mainly due to a 1.6% decrease in the average interest rate on securitization obligations - Q2 2025: Finance interest expense decreased by **$5.0 million (16%)** to **$26.9 million**[54](index=54&type=chunk) - YTD Q2 2025: Finance interest expense decreased by **$10.0 million (16%)** to **$54.5 million**[60](index=60&type=chunk) - The decrease was attributable to an approximately **1.6% decrease in the average interest rate on securitization obligations**[54](index=54&type=chunk)[60](index=60&type=chunk) [Net Finance Margin (Annualized)](index=14&type=section&id=4.2.3%20Net%20Finance%20Margin%20(Annualized)) The net Finance margin percentage remained relatively stable, showing a slight increase for both periods, indicating efficient management of interest income and expense - Q2 2025: Net Finance margin percent was **13.6%**, up from 13.5% in Q2 2024[55](index=55&type=chunk) - YTD Q2 2025: Net Finance margin percent was **13.8%**, up from 13.7% in YTD Q2 2024[61](index=61&type=chunk) [Finance Provision for Credit Losses](index=14&type=section&id=4.2.4%20Finance%20Provision%20for%20Credit%20Losses) Finance provision for credit losses decreased significantly by 29% for Q2 and 32% for YTD Q2 2025, with the provision rate falling to 1.5% of average receivables managed - Q2 2025: Provision for credit losses decreased by **$3.5 million (29%)** to **$8.5 million**[56](index=56&type=chunk) - Q2 2025: Provision for credit losses as a percentage of average receivables managed decreased to **1.5%** from 2.1%[56](index=56&type=chunk) - YTD Q2 2025: Provision for credit losses decreased by **$8.1 million (32%)** to **$17.5 million**[62](index=62&type=chunk) - YTD Q2 2025: Provision for credit losses as a percentage of average receivables managed decreased to **1.5%** from 2.3%[62](index=62&type=chunk) - The long-term expectation for provision for credit losses is approximately **2% or under** of the average receivables managed balance[56](index=56&type=chunk)[62](index=62&type=chunk) [Cost of Services](index=14&type=section&id=4.2.5%20Cost%20of%20Services) Cost of services for the Finance segment increased moderately by 6% for Q2 and 4% for YTD Q2 2025, primarily due to increases in incentive-based compensation and general compensation expense - Q2 2025: Cost of services increased by **$1.0 million (6%)** to **$17.8 million**[57](index=57&type=chunk) - YTD Q2 2025: Cost of services increased by **$1.3 million (4%)** to **$34.9 million**[63](index=63&type=chunk) - The increase was primarily due to increases in incentive-based compensation and compensation expense[57](index=57&type=chunk)[63](index=63&type=chunk) [Selling, General and Administrative](index=14&type=section&id=4.2.6%20Selling%2C%20General%20and%20Administrative) Selling, general and administrative expenses for the Finance segment increased by 20% for Q2 and 4% for YTD Q2 2025, mainly driven by higher incentive-based compensation and stock-based compensation - Q2 2025: SG&A expenses increased by **$2.4 million (20%)** to **$14.4 million**[58](index=58&type=chunk) - YTD Q2 2025: SG&A expenses increased by **$1.0 million (4%)** to **$26.9 million**[64](index=64&type=chunk) - Increases were primarily due to incentive-based compensation (**$1.2 million in Q2, $1.5 million YTD Q2**) and stock-based compensation (**$0.8 million in Q2**)[58](index=58&type=chunk)[64](index=64&type=chunk) [Select Finance Balance Sheet Items](index=15&type=section&id=4.2.7%20Select%20Finance%20Balance%20Sheet%20Items) As of June 30, 2025, the Finance segment reported total assets of $2,713.6 million and tangible parent equity of $495.9 million Select Finance Balance Sheet Items (Millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :-------------- | :---------------- | | Total assets | $2,713.6 | $2,677.7 | | Intangible assets | $259.1 | $260.1 | | Tangible assets | $2,454.5 | $2,417.6 | | Total parent equity | $755.0 | $789.0 | | Tangible parent equity | $495.9 | $528.9 | - Tangible parent equity, a non-GAAP measure of AFC's capital, decreased from **$528.9 million** at December 31, 2024, to **$495.9 million** at June 30, 2025[65](index=65&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section outlines OPENLANE's liquidity sources, including cash, working capital, and credit facilities, and summarizes cash flow activities [Liquidity Overview](index=16&type=section&id=5.1%20Liquidity%20Overview) OPENLANE's primary sources of liquidity include cash on hand, working capital, and amounts available under Revolving Credit Facilities - Sources of liquidity include cash on hand, working capital, and Revolving Credit Facilities[66](index=66&type=chunk) Liquidity Position (Millions) | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :------------------------------------ | :-------------- | :---------------- | :-------------- | | Cash and cash equivalents | $119.1 | $143.0 | $60.9 | | Working capital | $395.4 | $286.0 | $198.0 | | Amounts available under Revolving Credit Facilities | $410.9 | $397.9 | $346.5 | [Summary of Cash Flows](index=16&type=section&id=5.2%20Summary%20of%20Cash%20Flows) For the six months ended June 30, 2025, OPENLANE experienced a net decrease in cash balances, with strong cash generation from operating activities offset by cash used in investing and financing activities Summary of Cash Flows (Six Months Ended June 30, Millions) | Activity | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Operating activities - continuing operations | $194.2 | $137.7 | | Investing activities - continuing operations | $(29.4) | $5.9 | | Financing activities - continuing operations | $(218.9) | $(166.5) | | Net decrease in cash, cash equivalents and restricted cash | $(34.9) | $(30.3) | [Operating Activities](index=16&type=section&id=5.2.1%20Operating%20Activities) Net cash provided by continuing operating activities increased to $194.2 million for the six months ended June 30, 2025, up from $137.7 million in the prior year - Net cash provided by operating activities (continuing operations) was **$194.2 million** for YTD Q2 2025, an increase from $137.7 million in YTD Q2 2024[68](index=68&type=chunk) - The increase was primarily attributable to increased profitability and changes in operating assets and liabilities due to timing of collections and disbursement of funds to consignors[68](index=68&type=chunk) [Investing Activities](index=16&type=section&id=5.2.2%20Investing%20Activities) Net cash used by investing activities from continuing operations was $29.4 million for the six months ended June 30, 2025, a shift from cash provided in the prior year - Net cash used by investing activities (continuing operations) was **$29.4 million** for YTD Q2 2025, compared to net cash provided of $5.9 million in YTD Q2 2024[70](index=70&type=chunk) - Cash used was primarily from an increase in finance receivables held for investment and purchases of property and equipment, partially offset by proceeds from property sales[70](index=70&type=chunk) [Financing Activities](index=17&type=section&id=5.2.3%20Financing%20Activities) Net cash used by financing activities from continuing operations increased to $218.9 million for the six months ended June 30, 2025, primarily due to payments on long-term debt, repayments on lines of credit, and dividends - Net cash used by financing activities (continuing operations) was **$218.9 million** for YTD Q2 2025, compared to $166.5 million in YTD Q2 2024[71](index=71&type=chunk) - Cash used was primarily due to payments on long-term debt, repayments on lines of credit, and dividends paid on Series A Preferred Stock[71](index=71&type=chunk) [Discontinued Operations Cash Flows](index=17&type=section&id=5.2.4%20Discontinued%20Operations%20Cash%20Flows) There were no cash flows from discontinued operations for the six months ended June 30, 2025, indicating the completion of any prior discontinued activities - No operating, investing, or financing activities from discontinued operations for the six months ended June 30, 2025[72](index=72&type=chunk)[73](index=73&type=chunk)

Core Insights - OPENLANE, Inc. reported strong second quarter results with a 24% increase in auction fee revenue, $87 million in Adjusted EBITDA, and $87 million in Adjusted Free Cash Flow [2][7] - The company experienced a 21% growth in dealer volume and significant market share gains, positioning itself well for the transition from physical to digital in the industry [2][3] - OPENLANE raised its full-year guidance for Adjusted EBITDA and Operating Adjusted EPS, reflecting confidence in its scalability and growth strategy [3][7] Financial Performance - Revenue for the second quarter reached $482 million, a 9% year-over-year increase, driven by a 24% growth in auction fee revenue [7] - Income from continuing operations was $33 million, representing a 212% year-over-year growth [7] - Adjusted EBITDA for the quarter was $87 million, a 21% increase compared to the previous year [7] Guidance Update - The revised annual guidance for 2025 includes: - Income from continuing operations: $132 - $140 million (previously $100 - $114 million) - Adjusted EBITDA: $310 - $320 million (previously $290 - $310 million) - Operating Adjusted EPS: $1.12 - $1.17 (previously $0.90 - $1.00) [3][25] Market Position - OPENLANE's marketplace segment now accounts for 51% of its consolidated Adjusted EBITDA, highlighting the effectiveness of its asset-light, digital operating model [2][3] - The company is well-positioned to benefit from the anticipated increase in off-lease supply beginning in 2026, indicating a favorable outlook for future growth [2][3]

Group 1 - OPENLANE is expected to report quarterly earnings of $0.24 per share, reflecting a year-over-year increase of +26.3%, with revenues projected at $449 million, up 4% from the previous year [3] - The consensus EPS estimate has been revised 2.17% higher in the last 30 days, indicating a positive reassessment by analysts [4] - OPENLANE has a positive Earnings ESP of +5.63%, suggesting a strong likelihood of beating the consensus EPS estimate, supported by a Zacks Rank of 1 [12] Group 2 - In the last reported quarter, OPENLANE exceeded the expected earnings of $0.24 per share by delivering $0.31, resulting in a surprise of +29.17% [13] - Over the past four quarters, OPENLANE has beaten consensus EPS estimates two times [14] - The company is viewed as a compelling earnings-beat candidate, although other factors should also be considered before making investment decisions [17] Group 3 - EVgo Inc., another player in the automotive industry, is expected to report a loss of $0.1 per share, with revenues anticipated to be $87.36 million, up 31.1% year-over-year [18] - The consensus EPS estimate for EVgo has been revised 2.4% lower in the last 30 days, resulting in a negative Earnings ESP of -30%, making it challenging to predict an earnings beat [19]

Market Overview - Wall Street's winning streak continues, driven by positive trade news and strong economic data, with the S&P 500 reaching a record high following a significant trade deal between the United States and Japan, which lowers tariffs and opens up $550 billion in new investments [1] - Retail sales exceeded expectations in June, and jobless claims decreased, indicating a robust labor market and steady consumer spending despite ongoing tariff concerns [1][9] Trade Negotiations and Economic Environment - Progress in trade negotiations with the U.K., Indonesia, and the Philippines, along with positive signals from China and the EU, creates an encouraging backdrop for equities [2] - The current earnings season is contributing to market momentum, suggesting that focusing on relative price strength can help investors identify leading stocks [2] Stock Recommendations - Recommended stocks based on relative price strength include Western Digital Corporation (WDC), Flowserve Corporation (FLS), OPENLANE, Inc. (KAR), AngloGold Ashanti plc (AU), and Jabil Inc. (JBL) [3][9] - These stocks are outperforming their peers, supported by strong relative price strength metrics [9] Relative Price Strength Strategy - Earnings growth and valuation multiples are crucial for assessing a stock's potential returns and its performance relative to peers [4] - Investors are advised to avoid underperforming stocks and focus on those that are outperforming their respective industries or benchmarks [5] Screening Parameters - Stocks are screened based on relative price changes over 12 weeks, 4 weeks, and 1 week, as well as positive current-quarter estimate revisions [8] - Stocks that have shown better performance than the S&P 500 over the last 1 to 3 months and have solid fundamentals are considered for investment [6] Company Profiles - **Western Digital Corporation (WDC)**: Market cap of $23.4 billion, expected EPS growth of 2,465% year-over-year for fiscal 2025, with a trailing four-quarter earnings surprise of approximately 7.3% [11][12] - **Flowserve Corporation (FLS)**: Market cap not specified, expected EPS growth rate of 14.2% over three to five years, with a 22.1% year-over-year growth estimate for 2025 [13][14] - **OPENLANE, Inc. (KAR)**: Market cap of $2.7 billion, expected EPS growth of 17.7% year-over-year for 2025, shares up 44% in a year [14][15] - **AngloGold Ashanti plc (AU)**: Market cap of $21.8 billion, expected EPS growth of 125.8% year-over-year for 2025, shares up 89% in a year [16] - **Jabil Inc. (JBL)**: Market cap not specified, expected EPS growth rate of 16.6% over three to five years, with a 10.6% year-over-year growth estimate for 2025 [17][18]

Company Overview - OPENLANE (KAR) currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting a favorable outlook compared to the market [3] Price Performance - Over the past week, KAR shares increased by 1.24%, while the Zacks Automotive - Original Equipment industry remained flat [5] - In the last month, KAR's shares rose by 9.31%, outperforming the industry's 4.26% [5] - Over the past quarter, shares of OPENLANE have risen by 35.76%, and are up 37.62% in the last year, compared to the S&P 500's increases of 19.69% and 14.71%, respectively [6] Trading Volume - KAR's average 20-day trading volume is 1,053,398 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Estimates - In the past two months, 2 earnings estimates for the full year have moved higher, while none have decreased, raising the consensus estimate from $0.98 to $1.00 [9] - For the next fiscal year, 3 estimates have increased with no downward revisions during the same period [9] Conclusion - Considering the strong price performance, positive earnings revisions, and high momentum score, KAR is positioned as a solid investment opportunity [11]

Core Insights - OPENLANE, Inc. is set to release its second quarter 2025 financial results on August 6, 2025, before market opening [1] - The earnings conference call will take place on the same day at 8:30 a.m. ET, hosted by CEO Peter Kelly and CFO Brad Herring [2] - A live webcast of the call will be available on the investor relations section of OPENLANE's website, with an archive for replay afterward [3] Company Overview - OPENLANE, Inc. operates in the global wholesale used vehicle industry, providing technology-driven remarketing solutions [4] - The company offers an integrated platform that supports whole car sales, financing, logistics, and related services, aimed at reducing risk and improving transaction transparency [4] - OPENLANE is headquartered in Carmel, Indiana, with a workforce spread across the United States, Canada, Europe, Uruguay, and the Philippines [4]

Core Viewpoint - OPENLANE (KAR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. OPENLANE's Earnings Outlook - For the fiscal year ending December 2025, OPENLANE is expected to earn $0.98 per share, which remains unchanged from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for OPENLANE has increased by 0.3%, reflecting a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - OPENLANE's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Viewpoint - OPENLANE reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, and showing an increase from $0.19 per share a year ago, indicating a 29.17% earnings surprise [1][2] Financial Performance - The company achieved revenues of $460.1 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.99%, compared to $416.3 million in the same quarter last year [2] - OPENLANE has exceeded consensus revenue estimates four times over the last four quarters [2] Stock Performance - OPENLANE shares have declined approximately 2.5% since the beginning of the year, while the S&P 500 has decreased by 4.7% [3] - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $447.04 million, and for the current fiscal year, it is $0.97 on revenues of $1.77 billion [7] - The estimate revisions trend for OPENLANE is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Automotive - Original Equipment industry, to which OPENLANE belongs, is currently ranked in the bottom 25% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact OPENLANE's stock performance [5]