• Consolidated Revenue: $455 million, up 12% year-over-year.
• Adjusted EBITDA: $73 million for Q4, up 18%; $293 million for the full year, up 8%.
• Marketplace Revenue: $349 million, up 8%.
• Marketplace Adjusted EBITDA: $31 million for Q4, up 30%; $135 million for the full year, up 24%.
• Cash Flow from Operations: $293 million for the year.
• Gross Merchandise Value: Grew 12% to $27 billion.
• SG&A Expenses: $100 million for Q4, down 2%; $409 million for the full year, down 3%.
• Dealer Volumes: Up 15% in Q4.
• Finance Segment Adjusted EBITDA: $42 million, up 10%.
• Net Finance Margin: $78 million, with a yield of 13.8%.
• Provision for Credit Losses: 1.9%, the lowest rate in eight quarters.
• Share Repurchase: Approximately 1.8 million shares bought back in 2024.
• 2025 Guidance: Adjusted EBITDA expected between $290 million and $310 million; operating adjusted EPS between $0.90 and $1.
• Capital Expenditures: Expected to be between $50 million and $55 million in 2025.

• Warning! GuruFocus has detected 5 Warning Signs with KAR.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Openlane Inc (NYSE:KAR) reported a 12% increase in consolidated revenue and an 18% rise in consolidated adjusted EBITDA for the fourth quarter of 2024.
• The Marketplace segment saw a 9% increase in volumes, with dealer volumes growing by 15%, marking the seventh consecutive quarter of year-over-year volume growth.
• Openlane Inc (NYSE:KAR) generated $293 million in cash flow from operations and achieved a 12% growth in gross merchandise value to $27 billion.
• The company successfully integrated new digital assets, divested physical assets, and improved its balance sheet strength.
• Openlane Inc (NYSE:KAR) has been recognized as a rapidly growing brand in the industry, with positive feedback from dealers and increasing market share in the dealer-to-dealer space.

Negative Points

• The company faces challenges due to the low point in off-lease maturities, which is expected to continue through 2025.
• There are macroeconomic uncertainties, including a strengthening US dollar, which could create translation headwinds.
• Openlane Inc (NYSE:KAR) anticipates increased investments in its US go-to-market strategy, which may impact short-term profitability.
• The sale of the automotive key business, which represented 2% to 3% of consolidated net revenue and adjusted EBITDA, may affect overall financial performance.
• The company is navigating a competitive environment with new entrants in the auction space, which could impact market share and pricing strategies.

Q & A Highlights

Q: With the industry decline in off-lease vehicles, how are dealers handling trade-ins? Are they keeping more and setting less auction, or have volumes been steady? A: Peter Kelly, CEO: Volumes have been steady or strong. Our dealer-to-dealer (D2D) volume growth in the fourth quarter was 15%, the strongest growth we had all year. We grew our active base of sellers and buyers, and had strong months of new dealer sign-ups in the U.S. in the fourth quarter. Volume of listings grew even faster than the 15% volume of sales, so I'm not noticing any lack of inventory at dealers.

Q: Do you expect Canadian wholesale volumes to be affected by tariffs and trade wars? A: Peter Kelly, CEO: OPENLANE is well-positioned to prosper in any environment. We saw strong progress on both the commercial and dealer fronts in the fourth quarter. There's speculation about tariffs, but I'm confident that OPENLANE is well-positioned to thrive regardless of the environment.

Q: Could you give us a sense of what the market did in the quarter and what your share gains were in the U.S., specifically? A: Peter Kelly, CEO: In the U.S., we made strategic investments in technology, sales, and marketing, which are paying off. Our market share in the U.S. is relatively small, but our offering is strong, and I feel bullish about the D2D market as a source of sustainable long-term growth. On the commercial side, 2025 will be challenging due to low lease originations in 2022, but we expect strong performance and acceleration in 2026 and beyond.

Q: Can you provide more color on the off-lease side, specifically regarding the customer that had left and come back? A: Peter Kelly, CEO: It's a customer that had left and come back. They ran an RFP late last year, and we were successful. We'll be onboarding them towards the end of this year, with volumes starting to show up in 2026 and beyond. It's considered incremental share at this point.

Q: How are you integrating commercial inventory on the dealer platform? A: Peter Kelly, CEO: We launched the OPENLANE Marketplace brand in the U.S. over a year ago, integrating commercial off-lease inventory into what was the BacklotCars Marketplace. We've seen significant growth in franchise dealers purchasing vehicles. The recent launch of One App allows dealers to seamlessly toggle between buying and selling, connecting private label franchise dealers directly into the OPENLANE Marketplace.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.