Executive Summary

Record Q2 2025 revenue of $9.58B (+3.8% YoY) and diluted EPS $9.87 (+25% YoY); adjusted diluted EPS $10.24 (+30% YoY). Results were aided by robust aftersales, record financing operations income, and lower floor plan interest expense .
Versus consensus, LAD delivered a modest revenue beat (~~$23M), a clear adjusted EPS beat (~~$0.43), and a sizable EBITDA beat (~$52M). Management also raised buybacks to target up to 50% of free cash flows, a potential stock-supportive catalyst.* [GetEstimates Q2 2025]
Aftersales gross profit rose 11.5% YoY with same‑store aftersales margins expanding ~180 bps to 57.8%. Finance operations income reached $20.1M (+179% YoY), with DFC originations of $731M, U.S. penetration 14.8%, and NIM 4.6% .
Q2 dividend declared at $0.55 per share; LAD repurchased ~387K shares at ~$306 during Q2, with ~$568.8M remaining under authorization .
Preliminary Q2 guide mid-month (EPS $9.70–$10.00) was exceeded by final adjusted EPS ($10.24), reinforcing estimate revision momentum ahead of H2 .

What Went Well and What Went Wrong

What Went Well

Aftersales strength: same-store aftersales gross profit +8.5% YoY; margin expanded to 57.8%, with warranty gross profit up strongly; management emphasized aftersales contributing >60% of net income and headroom to compound growth .
Financing operations: income of $20.1M (+179% YoY); DFC originations $731M, penetration 14.8%, NIM 4.6%, with CFO highlighting quality underwriting (avg FICO ~747) and the segment’s maturing profit trajectory .
Capital allocation: Buybacks accelerated, targeting up to 50% of free cash flows; CEO framed shares as undervalued vs peers, positioning repurchases as a value‑accretive complement to M&A .

What Went Wrong

New vehicle GPUs declined YoY on same‑store basis (-8.1% to $3,175) despite unit growth; management acknowledged mix/footprint constraints and the need for store‑level execution to close gaps vs peers .
SG&A leverage remains a focus: adjusted SG&A/gross profit improved just ~20 bps YoY to 67.7%; management “slightly increased” near‑term SG&A outlook and laid out multi‑quarter levers (tech stack, vendor contracts, automation, Pinewood AI) .
UK headwinds persist: higher SG&A vs U.S. and a challenging industry backdrop; profitability up ~3% YoY but management views optimization as ongoing .

Financial Results

Consolidated Performance (sequential and YoY)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$9.22	$9.18	$9.58
Diluted EPS ($)	$8.12	$7.94	$9.87
Adjusted Diluted EPS ($)	$7.79	$7.66	$10.24
Gross Profit Margin (%)	14.9%	15.4%	15.5%
SG&A as % of Gross Profit (Adj)	66.3%	68.2%	67.7%
Operating Profit as % of Revenue (Adj)	4.4%	4.3%	4.5%
Pretax Margin (%) (Adj)	3.0%	3.0%	3.8%
Net Profit Margin (%) (Adj)	2.3%	2.2%	2.8%

Consensus vs Actual (Q2 2025)

Metric	Consensus	Actual	Beat/Miss
Revenue ($USD Billions)	$9.56*	$9.58	+$0.02B*
Adjusted Diluted EPS ($)	$9.81*	$10.24	+$0.43*
EBITDA ($USD Millions)	$453.3*	$505.8*	+$52.5*

Values marked with * were retrieved from S&P Global.

Segment Revenue Mix (Q2 2025 vs Q2 2024)

Segment ($USD Millions)	Q2 2024	Q2 2025
New Vehicle Retail	$4,403.7	$4,498.4
Used Vehicle Retail	$2,986.0	$3,094.8
Used Vehicle Wholesale	$289.5	$383.1
Finance & Insurance	$360.9	$373.8
Aftersales	$950.7	$1,023.4
Fleet & Other	$241.0	$209.5
Total	$9,231.8	$9,583.0

Key KPIs (Q2 2025 vs Q2 2024; Same‑Store where noted)

KPI	Q2 2024	Q2 2025
New Retail Units (same‑store)	90,179	91,947
Used Retail Units (same‑store)	102,875	106,894
New ASP ($) (same‑store)	$47,679	$47,679
Used ASP ($) (same‑store)	$27,558	$28,249
New GPU ($) (same‑store)	$3,455	$3,175
Used GPU ($) (same‑store)	$1,897	$1,900
F&I per Vehicle ($) (same‑store)	$1,815	$1,841
Aftersales Margin (%) (same‑store)	56.0%	57.8%
New Inventory Days’ Supply	76 (Q2’24)	63 (Q2’25)
Used Inventory Days’ Supply	47 (Q2’24)	48 (Q2’25)
Finance Operations Income ($M)	$7.2	$20.1
DFC Originations ($M)	—	$731
DFC U.S. Penetration (%)	—	14.8%
DFC Net Interest Margin (%)	—	4.6%

Non‑GAAP adjustments: Q2 adjusted results exclude ~$0.37 per diluted share (net loss on disposal, insurance reserves, acquisition expenses; partially offset by tax attributes), lifting adjusted EPS to $10.24 from $9.87 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
New Vehicle Volume Growth	FY 2025	Mid single-digit	Low single-digit	Lowered
SG&A as % of Gross Profit (near-term)	H2 2025	Glide path to mid-50s LT; near-term stable	Outlook “slightly increased” balancing H1 actuals with discipline	Raised near-term
Front-end GPU (midpoint)	FY 2025	Prior midpoint	Raised by ~$200 per unit	Raised
Share Repurchases (% of FCF)	FY 2025	30–40% (Q4’24 commentary)	Up to 50%	Raised
Financing Operations Income	FY 2025	$50–$60M (deck)	$60–$70M (mgmt commentary)	Raised
Dividend	Q2 2025	—	$0.55 per share	Initiated for quarter

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q4 2024; Q-1: Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology initiatives (Pinewood AI; My Driveway)	Q4: MyDriveway portal launch with 250+ functions ; Q1: ecosystem execution, DFC scaling	JV transfer back to Pinewood AI; pilot in H2’25; rollout 2027–2028; My Driveway users scaling	Strengthening adoption; execution ramp
Tariffs/Macro	Q4: inventory positioned; SAAR recovery view	Minimal tariff impact in Q2; OEM pricing/incentives expected to adjust; affordability focus	Monitoring; limited near-term effect
Aftersales	Q4: warranty-led growth; margin ~55.8% same-store	Margin 57.8% same-store; gross profit up 11.9%	Accelerating
Used/Value autos	Q4: value autos +24.6% YoY; overall used softness	Value autos +50% same-store; used units up; GPUs flat	Improving mix and throughput
UK operations	Q4: closure/rationalization; higher SG&A	Profitability +3% YoY; SG&A structurally higher than U.S.	Stabilizing; ongoing optimization
Financing operations (DFC)	Q4: first profitable year; NIM expansion	Income $20.1M; penetration ~15%; run-rate improving	Maturing; scaling contribution
Capital allocation	Q4: 30–40% FCF to buybacks	Up to 50% FCF to buybacks; continued disciplined M&A	More aggressive buybacks

Management Commentary

CEO on the model’s differentiation: “The scalability of our omnichannel ecosystem, including Driveway, DFC, and our recent acquisitions is driving market-share gains, earnings growth and capital efficiency… We are well positioned to accelerate our growth in the second half of 2025 and beyond.”
CFO on SG&A and efficiency: “We did increase the outlook slightly as we think about SG&A… levers to reclaim operating margin [include] technology, vendor contracts, automating workflows… glide path down toward the long-term target of 55% SG&A as a percentage of gross profit.”
CFO on buybacks: “We’re accelerating our share repurchases to target up to 50% of free cash flows… compound returns for shareholders while still preserving capacity for high return strategic acquisitions.”
CEO on DFC trajectory: “We made $20 million in the quarter… targeting $60–$70 million for the year… At a $50 billion domestic revenue base, we’re going to make half a billion dollars.”

Q&A Highlights

SG&A/gross profit leverage: Street sought clarity; management acknowledged near-term uptick but reiterated multi‑year tech/vendor/process levers to bend SG&A down while sustaining growth .
UK dynamics: Management noted higher SG&A structurally, but profitability up ~3% YoY and portfolio now “clean,” supporting forward performance .
DFC run-rate and profitability: Analysts pressed for run-rate magnitude; management pointed to seasonality and CECL effects, but affirmed trajectory and penetration targets (15–20%) .
Used/value autos sourcing & competition: LAD emphasized consumer‑direct sourcing (~70% of vehicles) and Driveway’s AI valuations improving sourcing economics vs auctions/online pure plays .
Tariffs and OEM pricing: Minimal Q2 impact; expectation for OEM decontenting and incentives to preserve affordability and GPUs; retailer adaptability highlighted .

Estimates Context

Q2 2025 results exceeded consensus on revenue, adjusted EPS, and EBITDA, driven by aftersales margin expansion and financing operations strength.* [GetEstimates Q2 2025]
Q1 2025 saw revenue and EPS light vs consensus but a significant EBITDA outperformance, reflecting cost actions and adjacency contributions.* [GetEstimates Q1 2025]
Near-term estimate revisions likely to trend higher for EPS/EBITDA given Q2 beats, stronger aftersales mix, and DFC profitability run-rate, offset by modest GPU normalization and slightly higher near-term SG&A outlook .