Executive Summary

Strong beat-and-raise quarter: revenue $498.4M vs S&P consensus $464.3M* and Operating Adjusted EPS $0.35 vs $0.27*; Adjusted EBITDA $87.1M grew 17% YoY and margin expanded 130 bps YoY to 17.5% .
FY25 guidance raised: Adjusted EBITDA to $328–$333M (from $310–$320M) and Operating Adjusted EPS to $1.22–$1.26 (from $1.12–$1.17). GAAP income from continuing ops raised to $139–$144M; GAAP diluted EPS turns to a loss due to a Q4 deemed dividend from preferred repurchase .
Marketplace outperformed: dealer-to-dealer volumes +14% YoY; auction fees +20%; GMV $7.3B (+9% YoY); Finance loss rate contained at 1.6% with receivables up and margin steady .
Cash/Capital: Q3 operating cash flow $72.2M; Adjusted FCF $4.6M (timing impact from $140M portfolio growth). Company closed $550M term loan in Oct to repurchase 53% of Series A preferred—reducing fully diluted shares by ~19M on assumed conversion .

What Went Well and What Went Wrong

What Went Well
- Dealer-led momentum: “We grew dealer-to-dealer volumes by 14%, significantly outpacing the industry” and delivered $87M Adjusted EBITDA (+17% YoY) as the asset-light digital model scales .
- Finance resilience and discipline: Average receivables managed rose to ~$2.39B with net finance margin ~13.4% and loss provision 1.6%; management reiterated no portfolio red flags .
- Product/AI innovation: Launched “Audio Boost AI” to flag engine anomalies in condition reports, improving dealer confidence and speed in bids .
What Went Wrong
- Services revenue down 3% YoY (Q3) due to prior divestiture of the keys business; partially offset by higher transport/reconditioning revenue .
- Adjusted FCF conversion dipped to 61% LTM as OPENLANE pulled forward portfolio growth into Q3 to win share; management still targets ≥75% on a rolling 12-month basis .
- SG&A up 14% YoY on incentives and go-to-market/marketing investments (timing/lumpy); management guided to evaluate SG&A on an annual basis .

Financial Results

Quarterly progression and YoY/prior-quarter comparisons

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	459.8	460.1	481.7	498.4
Diluted EPS (GAAP)	$0.12	$0.18	$0.15	$0.25
Operating Adjusted EPS (Diluted)	$0.26	$0.31	$0.33	$0.35
Adjusted EBITDA ($M)	74.5	82.8	86.7	87.1
Adjusted EBITDA Margin %	16.2%	18.0%	18.0%	17.5%

Q3 2025 vs S&P Global consensus (beats in bold)

Metric	Consensus*	Actual
Revenue ($M)	464.3*	$498.4
EPS (Operating Adjusted, Diluted)	$0.274*	$0.35
EBITDA ($M)	77.6*	$107.5 (EBITDA GAAP)

Values retrieved from S&P Global*.

Segment performance (Q3)

Metric	Q3 2024	Q3 2025
Marketplace Revenue ($M)	354.3	389.4
Finance Revenue ($M)	105.5	109.0
Marketplace Adjusted EBITDA ($M)	35.8	43.6
Finance Adjusted EBITDA ($M)	38.7	43.5
Marketplace Adjusted EBITDA Margin %	10.1%	11.2%
Finance Adjusted EBITDA Margin %	36.7%	39.9%

KPI highlights

KPI	Q3 2024	Q3 2025
GMV ($B)	$6.7	$7.3
Total Vehicles Sold (000s)	359	372
Dealer Consignment Vehicles Sold (000s)	164	187
Auction Fees per Vehicle	$315	$366
Avg Receivables Managed (Finance, $M)	$2,157.6	$2,389.2
Finance Provision % of Avg Receivables	2.1%	1.6%
Receivables Delinquent %	0.9%	0.3%

Guidance Changes

Metric	Period	Previous Guidance (Aug 6, 2025)	Current Guidance (Nov 5, 2025)	Change
Income from Continuing Ops ($M)	FY25	$132–$140	$139–$144	Raised
Adjusted EBITDA ($M)	FY25	$310–$320	$328–$333	Raised
Operating Adjusted EPS (Diluted)	FY25	$1.12–$1.17	$1.22–$1.26	Raised
Income (Loss) per Share – Diluted (GAAP)	FY25	$0.61–$0.66	$(1.32)–$(1.28)	Lowered (mechanical due to deemed dividend)
Capital Expenditures ($M)	FY25	$50–$55	$50–$55	Maintained

Note: GAAP diluted EPS turns to a loss purely due to a Q4 deemed dividend from repurchasing Series A Preferred shares; guidance explains two‑class method impact and non-conversion of preferred in diluted share count .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Dealer-to-dealer growth & share gains	Q2: D2D +21% YoY; share gains vs AuctionNet; absolute sale feature adding ~$800 value; continued shift physical→digital	D2D +14% YoY; high-teens growth in U.S.; AuctionNet D2D low-single-digit; more sellers/buyers at record levels	Sustained outperformance; share gains accelerating
Off-lease/commercial recovery	Q2: High confidence in off-lease inflection from Q2’26; potential earlier Q1’26	Confirms inflection from Q2’26 and improved flow deeper into OPEN sale already (nearly 2x YoY in open channel)	Visibility improving; early funnel depth benefits
AI/Tech innovation	Q1/Q2: Visual Boost AI/Code Boost IQ; tech simplification; inspection scaling	Launch of Audio Boost AI in Sept enhances condition transparency and bidding confidence	Product moats deepening with AI
AFC cross-pollination	Q2: Carousel recommendations; streamlined registration; attach-rate push	900 bps QoQ increase in AFC dealers registered on marketplace; double-digit growth in AFC floorings on OPENLANE	Execution progress; synergy flywheel
Tariffs/macro	Q2: Greater clarity vs 90 days prior; still a potential headwind; seasonality considered in H2 guide	Monitoring affordability/delinquencies; competitive dynamics stable; some smaller digital disruptors exited	Macro watchful; competitive field consolidating
Credit/underwriting	Q1/Q2: Loss rate 1.5%–2% target; no red flags; short duration loans	Loss rate 1.6%; reiterate target and no red flags	Stable, disciplined

Management Commentary

CEO Peter Kelly: “OPENLANE’s strategy — and the investments we’ve made to accelerate it — produced another strong quarter of organic growth and profitability, including 8% consolidated revenue growth and $87 million in Adjusted EBITDA… We grew dealer-to-dealer volumes by 14%, significantly outpacing the industry” .
CFO Brad Herring: “Consolidated Adjusted EBITDA for the quarter was $87 million… Adjusted free cash flow was $5 million… the main driver for the lower conversion rate was strong growth in our financing segment that used cash on hand to fund a portion of the $140 million increase in our loan portfolio” .
CEO on competitive stance: “We are a leader in digital… competitive environment has been fairly stable… some smaller digital disruptive models exited… our presence and preference with dealers has improved” .
CEO on AFC synergy: “Nearly half of all AFC dealers can directly transact on our marketplace… [the carousel] has driven several hundred new registrations and 300+ weekly engagements” .

Q&A Highlights

Market share vs AuctionNet: U.S. D2D growth “high teens” vs AuctionNet low single-digits; record growth in active buyers/sellers and vehicles offered underpin share gains .
New OEM/captive onboarding: Launch moved from Q4 to early Q1 to de-risk timing; tech ready and migration plan in place .
Purchased vehicle revenue: ~70% from Europe (cross-border accounting), remainder largely from U.S. guarantee returns; “low-calorie” revenue, managed to breakeven+ via fee pools .
SG&A puts and takes: YoY up on incentives and GTM/marketing; quarterly timing/lumpiness; evaluate on 12-month lens .
Off-lease funnel dynamics: Despite top-of-funnel declines, U.S. commercial units sold in open channel nearly 2x YoY; blended ARPU may tick down as commercial returns, but marketplace gross margin should tick up on higher-margin commercial mix .

Estimates Context

Results vs S&P Global consensus (historical)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus ($M)	444.9*	454.5*	464.3*
Revenue Actual ($M)	460.1	481.7	498.4
EPS Consensus (Operating Adjusted, Diluted)	$0.22*	$0.22*	$0.274*
EPS Actual (Operating Adjusted, Diluted)	$0.31	$0.33	$0.35
EBITDA Consensus ($M)	75.7*	73.8*	77.6*
EBITDA Actual ($M, GAAP)	106.4	102.9	107.5

Values retrieved from S&P Global*.
Note: Company and S&P show EBITDA (GAAP definition); Street typically focuses on Adjusted EBITDA in guidance and valuation.

Implications: Consensus likely moves higher following a third straight revenue/EPS beat and a guidance raise; management flagged continued dealer momentum and disciplined finance growth supporting FY25 and the 2026 off‑lease tailwind .

Key Takeaways for Investors

Beat-and-raise confirms momentum; focus on sustained dealer share gains and FY25 execution as the 2026 off-lease cycle approaches .
Dealer flywheel strengthening: more sellers/buyers, higher auction fees per vehicle (+16% YoY), and product-led advantages (Audio Boost AI) should support pricing power and conversion .
Finance segment a steady engine with 1.6% loss rate and improving delinquency; watch for net yield mix (fees vs interest) as loan values rise .
Adjusted FCF softness is timing-driven; portfolio expansion pulled forward to capture share—management still targets ≥75% LTM conversion .
Capital structure actions: $550M term loan funded preferred repurchase, simplifying equity over time and lowering fully diluted count on assumed conversion; mind near-term GAAP EPS optics from deemed dividend .
Near-term trading setup: positive estimate revisions and raised FY guide are constructive; catalysts include early Q1 OEM/captive program go‑live and continued dealer-to-dealer growth outpacing peers .
Medium-term thesis: asset-light digital marketplace with growing moats (technology, OEM programs, AFC synergies) entering a cyclical volume upturn (off‑lease) in 2026 .

OPENLANE, Inc. (KAR)·Q3 2025 Earnings Summary