KAR Auction Services (KAR) 6 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the OPENLANE Third Quarter 2024 Earnings Call. Please note this event is being recorded. [Operator Instructions]. I would now like to turn the conference over to Ms. Itunu Orelaru.

Chuck. Thanks, everyone. afternoon, Good Third Earnings OPENLANE's Quarter to Call. XXXX Welcome Kelly, OPENLANE; of and me today Lakhia, of Peter are CFO With Brad CEO EVP OPENLANE. and

today rules press of on discussed non-GAAP results Reform to Factors such the today call under issued within and Reconciliations With and the forward-looking in filings. measures such financial release uncertainties remarks Peter. in Relations forward-looking statements. cause the to that in to Certain risks meaning over Private GAAP differences our available provided differ Investor in may our actual from website. will that, SEC Our statements section involve our I'll as defined cause and Securities performance include our of Act Peter? earnings include non-GAAP of this Litigation our that XXXX. or those turn Such could the SEC measures are discussed materials statements be call. of materially

now average EBITDA, view quarter the increase of and and contributed the from and and a quarter, and I'm Marketplace million EBITDA, the digital to gross straight cash increasingly significantly very last EBITDA, the million Lakhia in over while QX, our a of good third adjusted volume clearly generate in XX% consolidated EBITDA. value risk where results the again demonstrate in call delivering pleased provide high-level I'll investments the quarter strong the Brad a our the million profit differentiated leader a strong marketplace was in across nearly positive generating details year-to-date, contributor Thank is AFC $XX QX quarters on OPENLANE third adjusted Marketplace then grew metrics. results technology, that delivered XX% growth has XX% financial additional our improved X% And market performance to and our of year. third we've the offerings. over and true year. was reflect strategy our detail strategic model. XX% will consolidated reflect revenue of I for growth, a approximately increased Similar how that's third results up And some customers OPENLANE in That QX from the $XX results three These year. adjusted in while an with asset-light revenue to a believe profitable Itunu, operating and the third this last the share seeing to start managing that costs reducing quarter. quarter portfolio. $XXX third On same our these segment. results. increase On million the everybody. representing performance, $XX pleased strong over around scalability of adjusted outlook to effectively operations. and generated and innovation, today segment in quarter and for prior and ability around also in our OPENLANE's OPENLANE of making to you, and had is here our future, I positive turn experience. very our characteristics we're a be afternoon, people customer we're basis, our I'm we SG&A in

in growth this for profitability. All share fuels of volume, optimism market my and our long-term

plan to how strategy turn build we momentum. to this and our So positive let me on

X make so be purpose, said, previously is wholesale focusing enabling I've is by in anchored wholesale easy And can to customers growth which more As successful. our for easy we're strategy on our priorities. our making

more expanding marketplace, available. the buyers more best sellers to offering and the inventory delivering and most by is First diverse

third, and and the informed make OPENLANE technologies, to delivering experience, making best keeping that better services customers the easy decisions innovative the transact help customers and outcomes; transparent, for utilized fair our best fast, it making our marketplace delivering marketplace. most and by by the and customer products most and Second, achieve preferred

we're positioning I'll about European begin these us with quarter detail year-on-year from and each me future. advancing Marketplace and OPENLANE's the our And marketplaces. they're U.S., marked sixth the how consecutive how for of with marketplace. contributions in best our the growth positive quarter let Canadian of So third creating segment

During vehicles. of sold, with number vehicles and delivering we offered dealer-owned both commercial increased the the growth quarter, and

value increase Our the which of merchandise billion, a was marketplace same over nearly $X last facilitated a XX% quarter gross year.

quarters on of our unique recruitment since We one our platform. XXXX strongest our as also new delivering increase well marketplace as dealer double-digit in increased participation, transacting buyers

marketplace All in low the our vibrancy delivers the and sale, point the of selling OPENLANE and high of rates, of to customers. of OPENLANE the that value terms offering, excellent conversion speed strength these financial of for our outcomes costs

as opportunity volumes, growth longer-term Focusing ever dealer my dealer strong on remains the of our we OPENLANE's seeing in and around are optimism power network space. as effect, clearly the

quarter, trajectory Momentum marketplace, over me this significant digital which and increased and of us share a auctions, outpacing much our efforts we for a that large are and to We quarter year. marketplace. the market the in accelerated addressable go-to-market half and is increased both our volumes the When very most market of to digital. optimism generating from course attribute seeing dealer the increased believe of year. and our our franchise also to continue towards we this next by preceding of four the four investments, as also the our still as growth and to fourth scaling marketing recent for the customers capture. sellers X%, And buyers into quarters, quarters brand a During we're first comparing gives versus representing grew quarter, gravitate our physical improvement and there participation in volume dealer from dealers, and the is taking independent

pleased I of to commercial see and our remains terms OPENLANE the a in was growing leader, In commercial clear off-lease volumes third quarter. volumes, market

and of off-lease calls and level XXXX materially and low this half in XXXX, prior will off-lease discussed grow leases not the volumes volumes that and second late in the are written XXXX beyond. that have year in XXXX until headwind to a of We on

financial background, that new off-lease to held vehicle volumes sale, I positioned be OPENLANE pleased quarter, and OPENLANE those well Given when also originations positive how straight increase which increase QX. will conversion, costs a I'm in delivering pleased remains faster sales the lease commercial for lower and speed see higher leases up was industry better sellers, mature. our outcomes. with with for sixth of

to is substantial bringing customers sellers XX% selling physical premium at the nearly is vehicles In them that converting fact, that their OPENLANE. auction. have inventory me to commercial OPENLANE a commented of of in now one And our they're many

our So, from integration leveraging market interaction growing base in through strong will greater summary, relationships combined and the and power both dealer the on with OPENLANE of with our OPENLANE exposure, sets commercial marketplace. benefit customers. position is focused customer And

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on our an momentum Absolute sellers U.S. even provide customize feature. around data sell control our sold gives financial Europe Award almost Fleet buyers to the for offerings a average, We Absolute Canada, are recently recommendations experience bids every label and of ability are our and enriching in our and private they the receive X,XXX improvements powerful comprehensive continues turn prepare Absolute and this between are we're after deepening a by buying OPENLANE we And And easy In expanding customers, we're customer time. providing how wholesale which through dealer systems. XX more to self-service to exceptional build networks. incremental to the an condition selling enhancements this for our commercial sale feature. major In figure who we our We're an data their into also year, transactions marketplace integrations me now Innovation operational selling in the to to $XXX franchise activate deploying Sale Already the received programs That's And and deployed that we help real providing half Sale. vehicle offering, digital to sellers, the Remarketing overall seeing finally, for AI-powered connection their vehicle the in committed experience. and we an experience. commercial enhance more on over create making sale. a launch closer About then have for future their offered let and dealer other Europe, customers increase. vehicle back-end with and sellers

with how conviction strong terms It's their OPENLANE many to in away they connect relationships also inventory During with and significant to came source their is they value to of the sell a opportunity and meetings OPENLANE a increasingly with retail digital our had quarter, OPENLANE's a spend looking from and I how the terms I customers valued are those customers that customers. customers. time that also future me partner. business that in clear of

and delivering easy but that investing also sophisticated, are to So are we very highly use. value focusing in those on relationships real technologies through

getting European early operational to more the Score, range great our dealers quarter, platform. the U.S., results AI reduce or launched from integrating and to on excellent marketplaces. resolve from and standardized and during issues to and feedback Promoter transactional Net administrative to our consistently. NPS, tasks third and are processes we're across We system Canadian The Also workflows good service we into a depending help quickly customer

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all month. So that we you of with look information later to this sharing forward

So momentum offerings are OPENLANE out customer comments close in I the to is our the want that market differentiated my that to and positioned very well reinforce on just quarter, loyalty. gaining and

over represented months and key the that value proposition clear to grow on efforts and believe of to a quarter in more positioned is used capture innovation I that dealer there product America asset-light we're for leader record third what Europe, an results our That performance. North in It's a platform step And development. XX for track market enabling both vehicles. investors, large well is the us and is and accelerate brand another now volumes. to consolidation our are The consistent and commercial past OPENLANE our opportunities digital positive addressable marketplace wholesale much reinforce

us financial financial Our focus on operational in improving that also our given invest innovation to also the headroom while efficiency has results.

earnings We strong has and next flow the the several our positive meaningful to growth balance deliver that cash a with we believe years. sheet, capability over are business

OPENLANE that that quarter regarding I my in will But and Brad leaving the finalizing end before Brad pursue I the assist ensure to that XXXX third transition. call remarks concludes opportunity. February have to fourth be So Brad turn the Lakhia, is over one the quarter. announcement, will to and a remain also our help year-end through of results and at another company smooth other to

search for national already have a initiated CFO. new a We

have helps teams. a institutional management, in across OPENLANE. his at innovation. have areas allocation capital are investing very strength and during very strong and cost a we our time areas bench foundation We solid also Brad and all that These of finance And knowledge here enhance

has updated offer you So a any been all I'll results. context Brad named. that and let covers like keep will he our provide additional And Brad? he'd I up when to successor informed financial before

positioned OPENLANE home. the company communicating team difficult decision Thank And to commuting trajectory as and I'm evidenced be strong just clear the have incredibly talented the you, regarding get was the to a I Peter. And into leave my very to OPENLANE the results made with opportunity that the closer here technology to before be company I we people capture its to remarks Peter a is opportunities I on ahead. between want quarter, is one third Ohio at family at more very to weeks core, me my and started and the innovation, OPENLANE, Since in grateful I work a spend and by OPENLANE. for quarter with personal been investments management today. The and will with one. Indiana, most making I've are the very this positive allow and time

will and that I mentioned, to and analysts be time. to Peter continue available through OPENLANE of at the will end during February remain investors As

Now primarily strength strong our well our segment the third quarter. Marketplace another efficiency. ongoing quarter, the delivered as operational as by to turn We let me focus of on driven

As a revenue net usual, related basis, consolidated which and purchased I to comments OPENLANE make vehicle impact the are the certain of segment sales. Marketplace on excludes that

will otherwise. comments year-over-year on my quarter third basis, state I addition, a be In unless

in million quarter. since be made In clean third And net change Our X%, in to during we change and million, auction a by $XXX was of EBITDA Gross Higher of million, change. our as was volumes down and this year, from impact fee million, services fees $XXX mix consolidated was revenue finance in the commercial Adjusted the volume SG&A of last primarily driven revenue impacted cost Marketplace segment $XX $XX revenue. growth unit savings our you'll of mainly was SG&A XXXX. marketplace volume This XX%, initiatives. for compensation-related by XX%. flat lower continue of XXXX our accounting X%, up driven net SG&A. higher Total profit the as by quarter transportation we the X%. primarily offset successful decline by the up fourth X% segment. $XXX down made our the fourth was due reflecting a million, execution $XX we into change comparisons was was decline million, revenue our revenue was quarter realize see The increased to professional of move of in will up impact the and the cost the quarter we Consolidated this expenses. results, the lower

costs consolidation platform technology led in to technology our addition, initiative In a reduction the quarter. during our

company, very As drive established that programs throughout and this consistent growth productivity enables in on our cost drives basis and a remain to investment internal a we've culture we focused culture. innovation, OPENLANE. This on

to levels spend the to investments. and we For our customer-facing XXXX, balance SG&A similar quarters, of at remain remain to we committed expect core recent go-to-market funding

XX% increased Revenue segment. $XXX Marketplace the to to million. Turning

Auction XX%, primarily and fee by increasing X%, respectively. the Our volume were commercial X% increased X% revenue driven total and volumes volumes dealer growth. up with by by

revenue again X%, due primarily accounting earlier. once As transportation change to was down the mentioned reported, services

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are overall As of Peter marketplace performance stated, with pleased we very our the business.

to and over scalable, in capture best and delivering will the is easy making to focused marketplace, the line experience. top these wholesale customer our the priorities deliver technology investments We growth enable profitable and margin enabled ongoing time. best best improvements commitment us Our believe by

for driven notably quarters, the resulting they of disciplined Turning seeing we our vehicles primarily over the income market volumes by amount Finance to flat within and were segment. more are provide values carrying vehicle portfolio. are the dealers couple with of Revenues lower lots. their past quarter down insight, To interest independent on X%, some the from lower

segment discussed. AFC's $XX through deliver While expect profile, persist growth, volume was mentioned said, a was And same also risk trend Finance I by this we coupled the least supports to XXXX. earlier. improved EBITDA X%, with transaction approach to impact just down of not flat I performance. values. of million, part the an reflecting SG&A particularly our factors management lower this factors impacting units competitive broader is X%, the the early challenges of down Finance That adjusted therefore, we From driven revenue we this This processes, but at in impact with risk risk and the in quarter provision analytics, quarter, the loan for reflects despite a third share. the risk close leading customer it and And management vehicle pleased the market believe fundamentals, ability continued also credit very market our relative model. advantages disciplined when challenge X.X%. are with of our pleased credit perspective, to losses of improvement the we're

high-performing strong OPENLANE's customers. business rate loss critical overall X%. generally through only quarter and support long-term we and organic asset thus in for continue including funding characteristics far are both of losses. our services Overall, that to severity of pipeline halfway flow loss allocation, seeing the fourth we AFC quarter. third stickiness the a quarter, capital rate cash improvements strong we reiterate, the of a time, to target expect to loan a X.X% consistent to remains AFC's OPENLANE's with we be While And strong, are initiatives. consistent Therefore, and the to of frequency at drives the fourth this strategic also

our to flow than Xx less Consistent million $XXX flow. and at allocation. adjusted net capital leverage of Year-to-date, stands cash we consolidated with from prior generate and sheet we balance EBITDA. generated strong cash the continue to have operations Moving quarters,

past million excluding Over This of and the assets operating changes level cash $XX liabilities, quarters cash in from flow generated to between $XX and X operations. in when quarterly million we've generation remains demonstrates the the same. the working marketplace Overall, in of combination floor framework finance value allocation our business, core of our our with asset-light plan digitally business. leading focused capital

continue to strategic back QX, of We complementary shares our In funding we part million share as bought opportunities the while prioritize and X.X for flexibility returns. investments ensuring program. shareholder of approximately repurchase organic high-return,

our of also and share through the to $XXX extended increased have XXXX. repurchase We million program end

changed. not has repurchases share on philosophy Our

program. adjusted to guidance We will this guidance today. million updated our are million. opportunistic summarize our we remain EBITDA $XXX EBITDA XX%. release To annual grew $XXX to Other our earlier adjusted with principled have and issued guidance, XXXX up in Wrapping reflected metrics on updated third performance, consolidated quarter earnings

grew EBITDA X%. marketplace XX% adjusted grew and marketplace Our volumes our

credit finance from benefits be and the believe Our strength through proposition million our AFC generated to And a strong of digital for to loss value operations our our asset-light compelling model. contributor reinforces cash strategy, continues of our and performance. to improve, $XXX financial of major our flow finally, X customers, We continues we months. performance our overall the

the the be metrics. for time update the our join executive on investor ensure that, over end operator We'll our AFC operator on the turn also I Tuesday, website. our and I'll questions. XX:XX Q&A. the will senior With the disclosures discuss as webcast. call strategy posted a to XX, be hosting turn at mentioned, virtual for XX:XX and from management join Please call for to questions, you November Peter Time. to Information enhanced live a.m. performance will allocate Eastern Before of we'll OPENLANE's team a.m. Members to

[Operator Instructions].

come Gupta will JPMorgan. question Rajat first with The from

forward next and you just the to And you the speaking months. want look over wish Brad, best, to few I I with all

fashion? I physical. Maybe U.S. that to the continue the that in a us are was quantify in that couple you characterize color in you gains you you versus had little Any U.S. delta? another gain way sense of was I ask more a the did much maybe able Any of granular Just on more much specifically, DXD versus more share the to mentioned to industry? a have versus Maybe terms little Or a open think a Are those to volumes give follow-up. share Canada? you questions in it could how way, marketplace how able still your U.S. here. overall there? of how

I Rajat. that. Thanks, Yes. appreciate

year. what my the see we So say, of substantial I'd We the positive year-on-year was I first guess a I to in mentioned versus dealer trajectory saw versus remarks, I that as volumes case half. And pleased swing first in particularly improve, markets the look Rajat, was half the the net, also, we're the sale we at U.S. that we including improvement transactions marketplace. share vis-a-vis our mentioned remarks, transactions we in believe that. I gaining generally open as in my we're that total the in gaining share auction If believe operate, all we versus dealer in saw I

I obviously Rajat, improving of saw thing the was the over other momentum we The course pleased quarter. about, was

the finished than we So stronger started. we quarter

the some that bear put the of it start takes impact attribute that field start of at I have to we more to while resources and sort go-to-market And a of to fruit. in and quarter, investments for the an

give I'll growth positives with seeing marketplace buyers, both seeing number there, sellers think the number probably from in the sellers, participation, categories. seeing we're traction the increased We both pleased of on split markets. that. participation. growth We sell track we're in than And Canada, in in but we're but so don't leave growth U.S., buy more to we're buyers, both marketplace side the we're and total specific I growth of volumes on side, finally, and So see pleased the

That's And it. the pricing just on Got color. helpful maybe strategy.

increases? providers power difference maybe is more of the the would give sense pricing us prices auction year. there the is the on digital price of much versus Some could timing rate was earlier of yours what peers, up. course like followed in the a I business? price between like earlier you now your later your Or to have through you the increases in them? the move you of year, it's the curious physical How in continued and those has today if their year, especially more the side, and how

Yes.

think quickly, let's say, of car are sale, our fact sell process very the our also digital be we is very that efficient. remarketing it channels, less us that of first Cost fact our our value eyes efficiently. think our price. customers. cost the customer when costs so so purpose And very about about through in I the see I So us put I go a I to I a to attributes the of making speed car than excellent think that our outcomes easy pricing of alternative sale, to in advantage And terms a as all, service statement, through and customers, successful. to put proposition a structural what marketplace that back to cars more and business excellent can our advantage, wholesale a in long-term structural Rajat, obviously, And customers differentiate of can it the model. day,

us alternative that's positioned I So really reward on what's to to our tend the customers, have I I competition. the differentiation, going optimize for and charge, make with channels, we're use business. getting our say, alternatives. would below whether by would physical say, digital Rajat, that is what focused or customer think, we those that, we're other I the help appropriate are say that. Obviously, prices we're customer. I And to with at trying are pricing or And that. What sure think to things we're would well would vis-a-vis and resonate for points we And of our obviously, grow our those matters,

growth. also there, on some we I So but have we're focused think headroom

Canada, quarter, give did of last call. spoke the impact about let some September, that specifics. late the you to tax that of really in digital me we the month our In in and increase third a the services price we earnings reflect on in So was

place, now So for X except really in but it's not in the results, X QX months. our that is evident of

So and future QX, here for a benefit that all we'll get we'll for year. next of quarter full it get of the in

customers change, price in the So this out just And then a even fact made we the think increase that's alternatives I again, third quarter, reflecting the in have in one did of fourth our with we're quarter, in other there. say, in U.S. we some quarter. we modest open recently room. change I'll believe our that we not this say, we but priced mind And alternatives and attractively still the would vis-a-vis marketplace,

is that partially not XXXX. at So have be of the increase again, and price of reflected all in reflected in benefit that will all QX, we'll QX, in

So as on, without for customers us our for obviously, back. was customers year-on-year, I the for we're I'll grew value that and we our again, as dimension. with appropriate and and the that. EBITDA pleased this our getting outcomes marketplace go pricing create we focused And performance. could perhaps then an aggressive feel XX% create reward being we on

steps So good, we're the well at positioned, the and I feel we'll need times. take appropriate we

come Murphy will from The next America. question Bank with John of

you talk dealers, talking in couple of quarters. Just a when having the it to question in this improving been keep of shortage hard a they -- time in the volume ramp But the about vehicles. because seems and actually sort like it's finding past

and I'm may see the industry-wide you comes off. real volume inflection in actual leverage curious, just as think about take inflect already to really this that you're of starting So really when some and

Thanks, growth. level the we of lease volume in look if with I'm originations, lower of period or the dealers. that. but commercial at -- I continuing both of third shadow demonstrate the growth of sort listen, that we're And I the of that The in the sort each our and in spite of we're that's echo third quarter, headwinds, spite pleased volumes one, in that grew period fewer off-lease X growth. guess, I'm able both commercial, quarters consecutive to deliver we've in quarter to in John. volume in been Yes. also of growth volume pleased

course that the the first side, the dealer take a significant as the improvement on over year improving I then and I momentum half versus mentioned, of as a of positive. quarter. So the And

trade-in guess that. them, sort held So trade likely ago, I might that that I good at inventory dealers look car the for side. a years X on on if I out macro that. factors, And lots the makes John, about dealers' whereas they of think I might unit feel of a marginal on new more increased, have to to be certainly has

So I impact consignment. a think will we're And positively I'm seeing trend, that a just longer-term be not hopeful that to dealer starting phenomenon. short-term

I in think or say, what they will these including elevated are of range, remain normal most used to analysts, let's be. levels the that inventory somewhat back predicting yourself,

to mentioned I the the year. my I remarks, the commercial volume, of in continues next for think, quarters, next number challenged As of end remain

we're of in a on X started of I I That ramp-up They started going the come have. current when to beginning in beginning the XXXX, have leases acceleration, we positive to XXXX. from originations. think going coupled that, be real And that to come won't all XXXX. significant back. see years those At leases the going the with John, lease think is we're to happening equity in see

a higher that. within be are There of percentage get returned. them returned. A get So EVs lot of higher going those will of to will a percentage

expectation. of dealer here our coincidentally, kind So this that's And afternoon. office a my at we're having advisory panel

spend a dealer of great our So I frankly, to customers, bunch got customers. time with

car next to scarcer going into little sort -- in inventory the than a is them 'XX So really I'd frame. that topic like, they have few on time they of for side. this the was to particularly over continue conversation. And a used ideal the late changing feedback remain is a they'd the generally, that's 'XX quarters say, of that see inventory

AFC. on what delinquencies mean I the subprime on of doesn't just some on the to side risen financing rumbling a plan and side. of translate have of But that curious of there's then lot of on dealers a floor anything contagion side, about necessarily having consumer well, a question or and incremental any you're any financing and your and defaults there trouble in lot degree. the base content you're doing sort be the It there? I'm to And or mean, or need I financing into the like signs seeing any they not is sort higher of anything real seem everything AFC for provisioning there's there's in managing step-up where just if trouble second

No.

seeing I that. that. We're that little seeing is of risk and improving, John, Brad AFC do the of a I'll forward actually metrics But into the the start me And of of this seeing more kind of we the bit specifics. the nature Let hand into go not some frankly. to think We're business business. we're view get at to opposite

XXth, good quarter, continues It's is and about a adjusted to AFC contributor got strong services products way. and highly on by a quarter we talking a cash strong feel and well, our strong consolidated I forward had valued and customers obviously, strong. this good are of to look was highly results growing to generation. So the perform with differentiated the million in about the more portfolio that. that of And EBITDA $XX and

good feel that. I So about

helps think -- I think XX% of that really that I not in stabilized. anything anything profile. to where used dropped share And values period sort XX they've were want Brad, They're declining improve you risk beyond vehicle they our or like that? do have over to months. But add

on profile that's the values declining, of their independent saw in of lots. around period XXXX. Yes. those number carrying the some were where in disciplined No, risk for different, they're my what John, that when being We said remarks, just more restate dealers dealers the good. are think I I vehicles business the absolute vehicle a earlier I'd was think We and particularly

reduction been think, helpful The dealers. good interest So those independent that discipline, for is positive a rates we thing. recent in has

affordable. forward we I rate further potential that's as look to think their cuts, interest I make to floor plans going think more

directly, of terms from not strong And will local we're you kind we answer that always contagion And seeing out little also the with to dynamic, business, customer. to markets close in subprime kind of so with We're question in branch We're very, that. yes, the retail just locations. management, your more as I disciplined any been risk the emphasize, dynamic very a very of bit these have our underwriting, customer. to this mentioned, very just close

to nicely So individual top of stay at we're really looking accounts. on of things of terms pretty able risk in profile the

business this we is so where And good really at. feel about

question come with Bob Ladick Securities. from will next The CJS

on This for is Will Bob.

all, question. if How off-lease with the lower changing, off-lease one volumes? is mix Just at auctions of

has seeing noticed thank up in to buyers go-to-market let ramped our we're was much that dealers I It franchise changed efforts, participation our is as Yes, thing it as Will, one much. me you. say well, marketplace. we've hasn't open -- more But going by say we've

differentiated off-lease a I think through they're set OPENLANE very flowing and marketplace. finally hey, getting of inventory unique to learn that that, has

off-lease So solid per number we're in revenue channel. that channel waterfall. unit selling that's in open positive in the Will, the highest in in percentage improvements a our seeing, vehicles on because, us ARPU also real a year-on-year basis, off-lease of numbers and absolute And terms. for that's

encouraged So category. small seeing that. We're I'm blended the across in up off-lease ARPU a the tick by

selling take for grounding So the out encouraging of comes. at depend a of difficult of the declined through lot over to it current the kind We're again, factors. vehicles reflecting least. to it vehicles on me that year, to more is modestly. that as flow that those higher has But dealer to We'll quite the will plays is revenue How seeing It channels. have next predict. me, into really percentage trajectory

will next Barrington question The come from Prestopino Research. with Gary

out you -- us talking of would maybe dealer kind you kind help of participation. Peter, about here? You're could increased

vehicles Your consignment the in dealer were year you metrics you can recruitment? quarter. participation, mean, this -- first around any I and some maybe slap Can dealer us for up sold give dealer time

I exact active number the the quarter, obviously, quarter, in of We Yes. disclose marketplace, activity, growth of And the mentioned, numbers each as we activity the course on in track but also the saw sellers, of Gary. side. buyer we then number active and good buyers But particularly the in total. log-in over of of don't total both participants number purchase terms the our

So encouraging. that's

Demand strong. market little been has more a bit robust. the maybe is I think

in of any So buy and X/X a dealers any on as dealers have, both And North given buyer as helps in that bunch buyer But active obviously, thousands the American sellers sell tens well. probably are given and on of the side side. and roughly we probably quarter, with activity basis, buyers on well. of a X/X engagement quarter,

opportunity us, I customers and volume, for over deepen think, to significant share So an significant our those wallet time. with share

OPENLANE and market the robust strong, seems growth commercial in California offering improvement of migrated really -- as migration, X well, to really, some when encountered years ago. without see. this our in That But into all there. X.X and since that is back be is platform, Another particular we seen inventory the the little thing ever we we which in we're really to year, rebranded positive a that and We've good This headwinds. we when and that is to details, did going certainly, seeing lot bit. CARWAVE market going a

you inventory getting be et looks, proactive is word et recruitment? are being cetera, cetera, an dealer mean, generating more Or it's platform hey, with I just that? out that, to the stuff like ease-of-use getting and it's good

Yes. Well, both. Gary, it's

proactive. are being more We absolutely

places. have for is I And that the firsthand differentiated. increased the of quarter. dealers with they're the about heard again, our word our the getting dealers. those made I go-to-market. We value see value investments in and they're get the creating our was course the not other out platform value that from many mentioned idea really And in channel the They I out getting to we're our dealers. They that platform as over see creates through

think true. is, That word second So is out. of we thing the But more is I getting mouth proactive. are being

just a last OPENLANE I year. think actually less than brand slightly ago, -- October transition happened we late the year

creates amount this of XXXX customers marketplace. that readjustment is a and like in started we Whether brand or kind company it we stuff. of certain with So, all the new a and not, that who

that's that I delivering any behind podcast podcast dealer dealers. us. of So out, industry strong. listened really of OPENLANE were was XX by and sales process a lot getting terms getting that word a uniform delivering a last our week. one a it not for creating I the was dealer to and week, his on there in in there last mean, customers group the customer in This had business channel, well-known and for a went think he on And We other a It's of outcomes is he spoke prices sizable franchisees. his about really, now

a was part offer we're obviously our lot customers hear value. So to the dealer But out say, getting feedback. Brad, was I I of can it. that I'm that, delighted -- ahead. is that would go community sorry, of platform unsolicited this in

just there. just that I only bit just force we've we're we're how from assertive are well. out our optimizing our but also that. would to resources little that investments in We're -- resources the And results seeing more sales we we early mean, out No, Peter add, in add early what deploying changes the there had, drive are -- results positive making how that some we're go-to-market some around field, made and as teams we've said. a Not field I to existing

Craig The next from Baird. Kennison question will with come

becoming as Do Gary's I'm that? I of on your the up buyer If customers follow as a could path curious of take about various paths on side. questioning. migrate more line than are dealers start Or the to the a seller? then they one typically sell and

from it's on in varied that Well, I what to with buying their where lot that us a will a good is our acknowledge thank in OEM you. might It's questions. experience is the as dealers, of all, that. they're say And not lot of private case a Craig, It of OPENLANE. are varied. dealers, they that may than label of of hear first more of you. buyer It the marketplace that -- I appreciate is first buyer. franchise one operating. marketplaces be even a branded sort we They more

that side of well. lot solution we through offer this first we how and a efforts, for set So want And them kind of -- as that we that's go-to-market path. the that's the benefit full meet explain ultimately our experience. get can dealers, and them on the a to Obviously, so sell to the

Well, gets inventory. get our to marketplace first be other that to differentiated yes, lands open in to where channels. some allocated in buyer engaged of if in-brand high-quality private that branded it you Should a there's site? particular Well, be should be think of to. Well, the easy access label to say for things OEM yes should That's in sort dealer clearly, marketplace? inventory think I franchise of your yes, there. franchise on sort we before are what a buying you it every dealer

sell. -- on been years, dealers from dealers, I'm these selling in can process. how many from I doing numerous them dealers sort we have getting great there. to of in cars So create solution of we these of sell does that's trial I bit else. their But way integrating and they a We're a at value because a vehicles for get with outcomes like it sort find these bunch say, explain, say, funnel, to price and sometimes front fully process a spoke is well, of feedback the integrated higher mode And of at us how And us based might they use customer go hey, generally I'm XX selling attractively a Craig, talking I more I'm on And pleased then into their are start the with this end It's like for more OPENLANE. priced. seeing really and and -- least on get dealers and a a hurdle into again, can we data, it do as or day. our you? a somebody auction. fairly that's easy for And I've physical I little

mirror or So know they they And start sell of them We maybe then to got this lot. XX%, shot XX%, experience. get them to local XX%. the our want goes They're retail trades. going to We're label is to remains, OPENLANE. off-lease channel. that the kind these shot. going we get don't goes auction on They wholesale the there. what to Maybe And first another the private first

a get to lot going positioning to. We're more. So really like and with the to with trying we're keep to dealers, there we that's of there get

characterize have value what AFC that but take know upcoming, you've the on fair and this I for must high I market really value got a that would a concluded shot properly. Thanks, think Peter. doesn't maybe drives call you level, Brad, I'll AFC. quite you internally, thinking? And how At

Yes. question. think when studied just this No, which more performance price the performance metrics financial of earnings. multiple of return on at the kind appreciate highlighted to of little equity, we the bit business, some Listen, I I look we've Peter Craig, a as the earnings this multiple a and of earlier, recently, on

it's inappropriate leave listen, for comment up or But you. be value And business whether that's fairly opportunity be enhanced believe we be also Craig, that session to well me market, the why an value business to we're providing or better an to folks do its to Listen, investors this our XXth. not. for by understood that going metrics it to and this a that enhanced opportunity the to we on going has on I'm of and and be information, by to appreciation be think like not doing valued got as there'll disclosures there strategic of OPENLANE as more this better the would broadly.

business has say of So I that of become transformation years I 'XX, physical think OPENLANE's U.S. as Craig, where as salvage that a frankly, piece AFC more got out the bigger that's business. kind the ago. we of the at. other like spun thing business OPENLANE couple a And is for pie the of sold we and out quite in business we're the would occurred the We really has of

more to So of it a explain how around more be intentional business and bigger and our OPENLANE. become we community. we're with going it's And and you deliberate we piece therefore, just how position investment this

John from next come Northcoast question Research. Healy with will The

Peter, question. I just wanted to ask kind of a high-level

some the a next be kind twice that fluctuations, kind those it the commercial pencil of side that And XXXX tough mentioned might there's out of will when steep You now think pretty you business declines side. year. for month-to-month I happen that of on year

funnel as be lower funnel, year, guys grow on rates OPENLANE do look those as less at create there'd commercial and you next can you potentially if ARPU absorb Alease year does you volumes cars where So contract the the a top the channel on higher side, of given higher then mean, aggregate? it actually top a secondly, on volume guys cars void year, typically And that leave that next where for the extract said, end pressure those the I you that view sales. with of in down would at

was to that guidance, hoping kind giving us you I a thought coach ready was sure not -- could through that. I bit. do I'm without just So just process you're of

the Yes. future. And Thanks, the John. say. in appreciate certainly question. complex. Obviously, can't maturities I'd know off-lease the do we here's nuanced, predict somewhat lower What what XXXX. We I situation is there's I But know? somewhat

lower funnel, So X years at originations prior. the very because lower top of there's of the lease volume a

this amount also we rate, decline expect paid the also expect of us because they Offsetting So And prem somewhat. and our that that's payoff vehicles expect tell off we customers to a that, fact. this. this, are the

those I this really can of right? we of So that's that that talking able commercial to QX, maturities, period depending know were to we're grow X about, actually offset in lower sort I play. intersect, our going how to how volumes. serve So All on time which is predict in is can't

we're to, but the will how think, to really govern have things those volume amount off So of We're of over going X few we to pretty I it it a see good next start. is the intersection get. that plays quarters, out the

headwinds So I commercial volumes. there side. commercial some conclude don't we kind of our view that grow necessarily there XXXX, I it are on That can't as the

off-lease the lean maturities again, that longer We we're decline to in well to the continued dealer significant will said, improvement expect it part preterm of into payoff actually, a tracks. growing XXXX to in as that and volumes we continuing term. rate. business see We when anticipate a as our sort over looking see. certainly also I've as growing of And see We'll how and

not the my about. might down. this think becomes into to company. our We're these story deepening sustained going we 'XX seller slowing of those We're period XXXX once a positive commercial as some get really through I headwinds. sort relationships, I That's expectation. period, we're talked investing and relationships. in commercial We're down. we obviously, So 'XX, that for not slowing look And have where current story

them where us I the value. they and not how physical because sending Others That's that's them get back that significant cars greatest I a They're more to channel that experimenting, XX%. selling commercial channels. see we differentiated I selling us other a month, one the premium versus value mentioned on customer, XX% are sellers expense. that us incurring XX%. in all Others getting cars go Our as them a mean sending trucks, create partner. we're do value-added and to auctions for the that sell want XX,XXX telling I putting of just because giving because open don't

I So to we're for things the how this relationship. more company. with the can you? in be So commercial doing are deepen do all And the these think very opportunity very, I will positive longer-term

we just I'd a around X what this X overall marketplace financial least into the our in your from business an from even better a And just for and base but at least. it's couple not at and work future add more foreseeable to really strong ARPU, a as say, still us going kind our a And worst. going least to bring maybe dimensions, case listen, would dimensions, volume perspective, difficult a there's maybe through a I like question of base to it scenario. of know look case, We've John, then modeled Yes, performance is kind I'm is significant way challenging a the us these, as headwind a case, be we feel business. and pretty XXXX. this we period modeled case, best of at We've XXXX, I base better into back to things. here. Brad of and worst

would our ahead. go Peter conference turn closing Mr. I like concludes back Kelly any session. to for This the question-and-answer over to remarks. Please

this for you and you everybody, also your the thank joining Well, afternoon. call thank questions, for

our all our results Thank in positioned is a OPENLANE, again to next you year. at capture November evening. As of the investor opportunities the look said and optimistic great call, We appreciate will forward OPENLANE both in and of wish third QX that year-end interest your believe of which be demonstrate for how and you. and very you those the I'm terms lie and very I our we the forward XX look quarter clearly to our company, update power AFC call, I beginning early earnings to I on hosting of ahead.

Thank attending presentation. conference today's The now for concluded. you has

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