Q1 2026 OPENLANE Inc Earnings Call

May 5, 2026

Speaker #1: Should you need assistance, please signal and operator by pressing the STAR key followed by 0. After today's presentation, there will be an opportunity to ask questions.

Operator: Should you need assistance, please signal an operator by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then 1 on your touch tone phone. To withdraw your question, please press star and then 2. Please note that this event is being recorded. I would now like to turn the conference over to Bill Wright. Please go ahead, sir.

Operator: Should you need assistance, please signal an operator by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch tone phone. To withdraw your question, please press star and then two. Please note that this event is being recorded. I would now like to turn the conference over to Bill Wright. Please go ahead, sir.

Speaker #1: To ask a question, you may press STAR and then 1 on your touch-tone phone. To withdraw your question, please press STAR and then 2.

Speaker #1: Please note that this event is being recorded. I would now like to turn the conference over to Bill Wright. Please go ahead, sir.

Speaker #2: Thank you, operator. Good morning, everyone. Welcome to OPENLANE's first quarter 2026 earnings call. With me today are Peter Kelly, CEO of OPENLANE, and Brad Herring, EVP and CFO of OPENLANE.

Bill Wright: Thank you, operator. Good morning, everyone. Welcome to OPENLANE's first quarter 2026 earnings call. With me today are Peter Kelly, CEO of OPENLANE, and Brad Herring, EVP and CFO of OPENLANE. Our remarks today include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties that may cause our actual results or performance to differ materially from such statements. Factors that may cause such differences include those discussed in our press release issued today and in our SEC filings. Certain non-GAAP financial measures, as defined under SEC rules, will be discussed on this call. Reconciliations of GAAP to non-GAAP measures are provided in our earnings materials and are available in the investor relations section of our website.

Speaker #2: Our remarks today include forward-looking statements within the meaning of the private securities litigation reform act of 1995, such forward-looking statements involve risks and uncertainties that may cause our actual results or performance to differ materially from such statements.

Speaker #2: Factors that may cause such differences include those discussed in our press release issued today and in our SEC filings. Certain non-GAAP financial measures, as defined under SEC rules, will be discussed on this call.

Speaker #2: Reconciliations of GAAP to non-GAAP measures are provided in our earnings materials and are available in the investor relations section of our website. Please note that all financial and operational metrics presented during this call are on a year-over-year basis unless otherwise specifically noted.

Bill Wright: Please note that all financial and operational metrics presented during this call are on a year-over-year basis unless otherwise specifically noted. With that, I'll turn the call over to Peter.

Speaker #2: With that, I'll turn the call over to Peter.

Operator: Good morning, welcome to the OPENLANE, Inc. Q1 2026 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal an operator by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then 1 on your touch tone phone. To withdraw your question, please press star and then 2. Please note that this event is being recorded. I would now like to turn the conference over to Bill Wright. Please go ahead, sir.

Speaker #3: Thank you, Bill. And thank you, everyone, for joining the call today. I'm very pleased to report on OPENLANE's strong first quarter results and to provide you with an update on our strategy and our outlook.

Peter Kelly: Thank you, Bill, and thank you everyone for joining the call today. I'm very pleased to report on OPENLANE's strong Q1 results and to provide you with an update on our strategy and our outlook. I'll begin with a few opening remarks. Brad will walk you through our financial and operational performance and our increased guidance for 2026. Before I turn to our results, I'd like to highlight that this week marks the 3-year anniversary of our rebrand to OPENLANE. As I stated at our March investor event, the rebrand was never about a new name or logo. It was about forging an entirely new company founded on a single purpose, which is to make wholesale easy so our customers can be more successful.

Speaker #3: I'll begin with a few opening remarks and then Brad will walk you through our financial and operational performance and our increased guidance for 2026.

Speaker #3: But before I turn to our results, I'd like to highlight that this week marks the three-year anniversary of our rebrand to OPENLANE. As I stated at our March investor event, the rebrand was never about a new name or logo.

Speaker #3: It was about forging an entirely new company founded on a single purpose which is to make wholesale easy so our customers can be more successful.

Bill Wright: Thank you, operator. Good morning, everyone. Welcome to OPENLANE's Q1 2026 earnings call. With me today are Peter Kelly, CEO of OPENLANE, and Brad Herring, EVP and CFO of OPENLANE. Our remarks today include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties that may cause our actual results or performance to differ materially from such statements. Factors that may cause such differences include those discussed in our press release issued today and in our SEC filings. Certain non-GAAP financial measures as defined under SEC rules will be discussed on this call. Reconciliations of GAAP to non-GAAP measures are provided in our earnings materials and are available in the Investor Relations section of our website.

Speaker #3: Over the past three years, our investments, strategy, and execution have delivered on that commitment. And reinforced several key pillars of differentiation for OPENLANE, including the leading commercial off-lease solution that connects thousands of franchise dealers into our marketplace.

Peter Kelly: Over the past 3 years, our investments, strategy, and execution have delivered on that commitment and reinforced several key pillars of differentiation for OPENLANE, including the leading commercial off-lease solution that connects thousands of franchise dealers into our marketplace. A dealer business that is outpacing the industry and capturing meaningful market share. A high-performing finance business that is synergistic with our marketplace. An accelerating network effect of new buyers, sellers, listings, and transactions. A winning culture and team that I consider to be the very best in the industry. The performance and outcomes OPENLANE is delivering are the direct result of the strategy we began executing 3 years ago, I believe our Q1 results are further evidence to OPENLANE's strength and differentiation in the market.

Peter Kelly: Over the past three years, our investments, strategy, and execution have delivered on that commitment and reinforced several key pillars of differentiation for OPENLANE, including the leading commercial off-lease solution that connects thousands of franchise dealers into our marketplace. A dealer business that is outpacing the industry and capturing meaningful market share. A high-performing finance business that is synergistic with our marketplace. An accelerating network effect of new buyers, sellers, listings, and transactions. A winning culture and team that I consider to be the very best in the industry. The performance and outcomes OPENLANE is delivering are the direct result of the strategy we began executing three years ago, I believe our Q1 results are further evidence to OPENLANE's strength and differentiation in the market.

Speaker #3: A dealer business that is outpacing the industry and capturing meaningful market share. A high-performing finance business that is synergistic with our marketplace. An accelerating network effect of new buyers, sellers, listings, and transactions.

Speaker #3: And a winning culture and team that I consider to be the very best in the industry. The performance and outcomes OPENLANE is delivering are the direct results of the strategy we began executing three years ago.

Speaker #3: And I believe our first quarter results are further evidence to OPENLANE's strength and differentiation in the market. During the first quarter, we continued to build on OPENLANE's positive momentum.

Peter Kelly: During Q1, we continued to build on OPENLANE's positive momentum, growing consolidated revenue by 15% and delivering adjusted EBITDA of $97 million, a 17% increase. We also generated $160 million in cash flow from operations. These results were led by strong performance in the marketplace business with both commercial and dealer customers, and solid contributions from our finance business. In the Marketplace segment, we grew overall vehicles sold by 19%, increased gross merchandise value by 32% to $9.1 billion, and delivered $52 million in adjusted EBITDA, representing a 39% increase. In our dealer-to-dealer business, we grew vehicles sold by 13% with similar geographic dynamics to those experienced in Q4 of 2025. In the United States, OPENLANE's dealer-to-dealer transactions continue to accelerate with growth in the upper 20% range.

Speaker #3: Growing consolidated revenue by 15% and delivering adjusted EBITDA of $97 million. A 17% increase. We also generated $160 million in cash flow from operations.

Peter Kelly: Thank you, Bill, thank you everyone for joining the call today. I'm very pleased to report on OPENLANE's strong Q1 results and to provide you with an update on our strategy and our outlook. I'll begin with a few opening remarks, then Brad will walk you through our financial and operational performance and our increased guidance for 2026. Before I turn to our results, I'd like to highlight that this week marks the three-year anniversary of our rebrand to OPENLANE. As I stated at our March investor event, the rebrand was never about a new name or logo. It was about forging an entirely new company founded on a single purpose, which is to make wholesale easy so our customers can be more successful.

Speaker #3: These results were led by strong performance in the marketplace business with both commercial and dealer customers. And solid contributions from our finance business. In the marketplace segment, we grew overall vehicles sold by 19%.

Speaker #3: Increased gross merchandise value by 32% to $9.1 billion. And delivered $52 million in adjusted EBITDA, representing a 39% increase. In our dealer-to-dealer business, we grew vehicles sold by 13%.

Speaker #3: With similar geographic dynamics to those experienced in Q4 of 2025. In the United States, OPENLANE's dealer-to-dealer transactions continue to accelerate. With growth in the upper 20% range.

Peter Kelly: Over the past three years, our investments, strategy, and execution have delivered on that commitment and reinforced several key pillars of differentiation for OPENLANE, including the leading commercial off-lease solution that connects thousands of franchise dealers into our marketplace. A dealer business that is outpacing the industry and capturing meaningful market share. A high-performing finance business that is synergistic with our marketplace. An accelerating network effect of new buyers, sellers, listings, and transactions. A winning culture and team that I consider to be the very best in the industry. The performance and outcomes OPENLANE is delivering are the direct result of the strategy we began executing three years ago. I believe our Q1 results are further evidence to OPENLANE's strength and differentiation in the market.

Speaker #3: This represents a significant outperformance of the industry and a meaningful gain in market share. Our go-to-market strategy in the US is working and OPENLANE's unique inventory, technology advantage, and superior customer experience are expanding our dealer network and compounding our growth in transactions.

Peter Kelly: This represents a significant outperformance of the industry and a meaningful gain in market share. Our go-to-market strategy in the US is working, and OPENLANE's unique inventory, technology advantage, and superior customer experience are expanding our dealer network and compounding our growth in transactions. In Canada, we were pleased to see some improvement in the macroeconomic and automotive retail environment. While Canadian dealer unit sales declined versus a strong prior year comp, we did see sequential improvement over Q4 of 2025. On the commercial vehicle side, the 25% increase in vehicles sold was driven in large part by the onboarding of our latest private label customer. Even excluding that step function increase, however, commercial vehicle sales grew by 6% during the quarter.

Speaker #3: In Canada, we were pleased to see some improvement in the macroeconomic and automotive retail environment. And while Canadian dealer unit sales declined versus a strong prior year comp, we did see sequential improvement over Q4 of 2025.

Speaker #3: On the commercial vehicle side, the 25% increase in vehicles sold was driven in large part by the onboarding of our latest private-label customer. Even excluding that step function increase, however, commercial vehicle sales grew by 6% during the quarter.

Peter Kelly: During the first quarter, we continued to build on OPENLANE's positive momentum, growing consolidated revenue by 15% and delivering adjusted EBITDA of $97 million, a 17% increase. We also generated $160 million in cash flow from operations. These results were led by strong performance in the marketplace business with both commercial and dealer customers, and solid contributions from our finance business. In the marketplace segment, we grew overall vehicles sold by 19%, increased gross merchandise value by 32% to $9.1 billion, and delivered $52 million in adjusted EBITDA, representing a 39% increase. In our dealer-to-dealer business, we grew vehicles sold by 13% with similar geographic dynamics to those experienced in Q4 of 2025. In the United States, OPENLANE's dealer-to-dealer transactions continue to accelerate with growth in the upper 20% range.

Speaker #3: This reinforces that the inflection of off-lease supply has officially begun and we expect to see year-on-year growth in off-lease volumes throughout the remainder of 2026 and beyond.

Peter Kelly: This reinforces that the inflection of off-lease supply has officially begun, and we expect to see year-on-year growth in off-lease volumes throughout the remainder of 2026 and beyond. Moving to our finance segment, AFC also had a good quarter, growing average receivables managed, holding the loan loss rate to 1.6%, and generating $45 million in adjusted EBITDA. Now, we do believe the industry experienced a strong spring market driven by higher than normal tax refunds and constrained supply paired with high consumer demand, which led to high conversion rates and appreciating asset values. That said, there is no question that OPENLANE's digital operating model is resonating in the market, and I am highly encouraged by the output of our investments and our focused execution. Now let me turn to our strategy and outlook.

Speaker #3: Moving to our finance segment, AFC also had a good quarter, growing average receivables managed, holding the loan loss rate to 1.6%, and generating $45 million in adjusted EBITDA.

Speaker #3: Now, we do believe the industry experienced a strong spring market driven by higher-than-normal tax refunds, and constrained supply paired with high consumer demand which led to high conversion rates and appreciating asset values.

Speaker #3: That said, there is no question that OPENLANE's digital operating model is resonating in the market. And I am highly encouraged by the output of our investments and our focused execution.

Speaker #3: So now let me turn to our strategy and outlook. As I mentioned at the start of the call, our strategy is delivering results and we remain committed to advancing our three strategic priorities.

Peter Kelly: This represents a significant outperformance of the industry and a meaningful gain in market share. Our go-to-market strategy in the US is working, and OPENLANE's unique inventory, technology advantage, and superior customer experience are expanding our dealer network and compounding our growth in transactions. While Canadian dealer unit sales declined versus a strong prior year comp, we did see sequential improvement over Q4 of 2025. On the commercial vehicle side, the 25% increase in vehicles sold was driven in large part by the onboarding of our latest private label customer. Even excluding that step function increase, however, commercial vehicle sales grew by 6% during the quarter.

with growth in the upper 20% range.

Peter Kelly: As I mentioned at the start of the call, our strategy is delivering results, and we remain committed to advancing our three strategic priorities. First, delivering the best marketplace, expanding our depth and breadth with more buyers, more sellers, and offering the most diverse commercial and dealer inventory available. Second, delivering the best technology, innovative products and services that help our customers make informed decisions and achieve better outcomes. Third, delivering the best customer experience, keeping our marketplace fast, fair, and transparent, making it easy for customers to transact, and making OPENLANE the most preferred marketplace. I'll touch on each of these in a little more detail. First, in terms of offering the best marketplace, we continue to make significant gains and drove another quarter of double-digit increases in new buyers, sellers, and unique vehicles listed, each of which were up over 20% in the United States.

This represents a significant outperformance of the industry and a meaningful gain in market share.

Speaker #3: First, delivering the best marketplace. Expanding our depth and breadth with more buyers and more sellers and offering the most diverse commercial and dealer inventory available.

Technology advantage and Superior. Customer experience are expanding our dealer Network and compounding our growth and transactions.

Speaker #3: Second, delivering the best technology. Innovative products and services that help our customers make informed decisions and achieve better outcomes. And third, delivering the best customer experience.

In Canada, we are pleased to see some improvement in the macroeconomic and automotive retail environment.

And while Canadian dealer unit sales declined versus a strong prior year comp, we did see sequential improvement over Q4 of 2025.

Speaker #3: Keeping our marketplace fast, fair, and transparent. Making it easy for customers to transact. And making OPENLANE the most preferred marketplace. And I'll touch on each of these in a little more detail.

On the commercial vehicle side, the 25% increase in vehicles sold was driven in large part by the onboarding of our latest private label. Customers

Speaker #3: First, in terms of offering the best marketplace, we continue to make significant gains and drove another quarter of double-digit increases in new buyers, sellers, and unique vehicles listed.

Peter Kelly: This reinforces that the inflection of off-lease supply has officially begun, and we expect to see year-on-year growth in off-lease volumes throughout the remainder of 2026 and beyond. Moving to our finance segment, AFC also had a good quarter, growing average receivables managed, holding the loan loss rate to 1.6% and generating $45 million in adjusted EBITDA. We do believe the industry experienced a strong spring market driven by higher than normal tax refunds and constrained supply paired with high consumer demand, which led to high conversion rates and appreciating asset values. That said, there is no question that OPENLANE's digital operating model is resonating in the market, and I am highly encouraged by the output of our investments and our focused execution. Now let me turn to our strategy and outlook.

Even excluding that step function, increase, however, commercial vehicle sales grew by 6% during the quarter.

Speaker #3: Each of which were up over 20% in the United States. Customer anticipation for the off-lease recovery is also driving more franchise dealers from our private label programs into OPENLANE's open sale.

This reinforces that the inflection of awfully supply has officially begun. And we expect to see year-on-year growth in Off Lease volume throughout the remainder of 2026 and Beyond.

Peter Kelly: Customer anticipation for the off-lease recovery is also driving more franchise dealers from our private label programs into OPENLANE's open sale. During the quarter, we nearly doubled the number of commercial vehicles sold in this higher-margin channel versus the prior year. On the independent dealer side, AFC new dealer registrations also increased during the quarter, each of which also presents a new dealer opportunity for OPENLANE. At the end of Q1, approximately 54% of all AFC dealers were registered with OPENLANE. From a best technology perspective, we extended our technology advantage in Q1 with our public release of OPENLANE Intelligence. OPENLANE Intelligence unifies our human and AI-enhanced capabilities to deliver actionable insights that improve customer decision-making.

Speaker #3: During the quarter, we nearly doubled the number of commercial vehicles sold in this higher-margin channel versus the prior year. And on the independent dealer side, AFC new dealer registrations also increased during the quarter.

Moving to our finance segment. AFC also had a good quarter growing average receivables managed holding the loan loss rate to 1.6% and generating 45 million in adjusted debt.

Speaker #3: Each of which also presents a new dealer opportunity for OPENLANE. At the end of Q1, approximately 54% of all AFC dealers were registered with OPENLANE.

Now, we do believe the industry experienced a strong spring Market driven by higher than normal tax refunds, and constrained Supply period, with high consumer demand, which led to high conversion rates and appreciating asset values.

That said there is no question that open lanes. Digital operating model is resonating in the market.

Speaker #3: From a best technology perspective, we extended our technology advantage in the first quarter with our public release of OPENLANE Intelligence. OPENLANE Intelligence unifies our human and AI-enhanced capabilities to deliver actionable insights that improve customer decision-making.

And I am highly encouraged by the output of our investments and are focused execution.

Peter Kelly: As I mentioned at the start of the call, our strategy is delivering results, and we remain committed to advancing our three strategic priorities. First, delivering the best marketplace, expanding our depth and breadth with more buyers and more sellers, and offering the most diverse commercial and dealer inventory available. Second, delivering the best technology, innovative products and services that help our customers make informed decisions and achieve better outcomes. Third, delivering the best customer experience, keeping our marketplace fast, fair, and transparent, making it easy for customers to transact, and making OPENLANE the most preferred marketplace. I'll touch on each of these in a little more detail.

So now let me turn to our strategy and outlook.

As I mentioned at the start of the call, our strategy is delivering results. And we remain committed to advancing our three strategic priorities.

Speaker #3: We see AI as a true enabler and accelerator of our digital solutions. And during the quarter, we released several new offerings and features that leverage our AI expertise and deep data resources.

Peter Kelly: We see AI as a true enabler and accelerator of our digital solutions. During the quarter, we released several new offerings and features that leverage our AI expertise and deep data resources. In Canada, we launched our new MyLot inventory management solution. Initial interest has exceeded our expectations with hundreds of early signups. We are optimistic about the potential of this subscription-based SaaS offering. Across the US and Canada, we also released our new predictive pricing feature, the only technology in the industry that provides dealers with a forward-looking 30, 60, 90-day view into the anticipated value of every dealer vehicle offered on OPENLANE.

First, delivering the best Marketplace.

Expanding our depth and breadth with more buyers and more. So Sellers and offering the most diverse commercial and dealer inventory available.

Speaker #3: In Canada, we launched our new My Lot inventory management solution. Initial interest has exceeded our expectations with hundreds of early sign-ups. And we are optimistic about the potential of this subscription-based SaaS offering.

Second, delivering, the best technology, Innovative products and services that help our customers make informed decisions and Achieve better outcomes.

Speaker #3: Across the US and Canada, we also released our new predictive pricing feature. The only technology in the industry that provides dealers with a forward-looking 30, 60, 90-day view into the anticipated value of every dealer vehicle offered on OPENLANE.

And third, delivering the best customer experience, keeping our Marketplace fast, fair, and transparent. Making it easy for customers to transact and making OPENLANE the most preferred Marketplace.

Peter Kelly: First, in terms of offering the best marketplace, we continue to make significant gains and drove another quarter of double-digit increases in new buyers, sellers, and unique vehicles listed, each of which were up over 20% in the United States. Customer anticipation for the off-lease recovery is also driving more franchise dealers from our private label programs into OPENLANE's open sale. During the quarter, we nearly doubled the number of commercial vehicles sold in this higher margin channel versus the prior year. On the independent dealer side, AFC new dealer registrations also increased during the quarter, each of which also presents a new dealer opportunity for OPENLANE. At the end of Q1, approximately 54% of all AFC dealers were registered with OPENLANE. From a best technology perspective, we extended our technology advantage in the first quarter with our public release of OPENLANE Intelligence.

And I'll touch on each of these in a little more detail.

Speaker #3: And finally, in terms of providing the best customer experience, we are also leveraging our human and AI capabilities to streamline and enhance the customer experience.

Peter Kelly: Finally, in terms of providing the best customer experience, we are also leveraging our human and AI capabilities to streamline and enhance the customer experience, improve the consistency, accuracy, and speed of arbitrations, and to help address dealer inquiries as quickly as possible. At the end of Q1, our transactional NPS scores across all geographies sit squarely in the excellent range, with our US seller NPS achieving the highest scores, indicating exceptional customer loyalty and brand satisfaction. As we look into the remainder of 2026, while we cannot count on an industry environment as strong as Q1, there is still a lot of opportunity for OPENLANE. We are continuing to build momentum, and I'm very optimistic about our ability to execute our strategy with precision.

First, in terms of offering the best marketplace, we continue to make significant gains and drove another quarter of double-digit increases in new buyers, sellers, and unique vehicles listed.

Each of which were up over 20% in the United States.

Speaker #3: Improve the consistency, accuracy, and speed of arbitrations. And to help address dealer inquiries as quickly as possible. At the end of Q1, our transactional NPS scores across all geographies sit squarely in the excellent range.

Customer anticipation for the off-lease recovery is also driving more franchise dealers from our private label programs into open lanes. Open sale.

During the quarter, we nearly doubled the number of commercial vehicles sold in this higher margin Channel versus the prior year.

Speaker #3: With our US seller NPS achieving the highest scores. Indicating exceptional customer loyalty and brand satisfaction. So as we look into the remainder of 2026, while we cannot count on an industry environment as strong as Q1, there is still a lot of opportunity for OPENLANE.

And on the independent dealer side, AFC new dealer registrations also increased during the quarter.

Each of which also presents a new dealer opportunity for OPENLANE.

At the end of q1, approximately 54% of all AFC dealers were were registered with open Lane.

Speaker #3: We are continuing to build momentum and I'm very optimistic about our ability to execute our strategy with precision. As our 2025 go-to-market investments in dealer-to-dealer continue to ramp up towards full productivity, we remain focused on increasing market share and wallet share.

Peter Kelly: OPENLANE Intelligence unifies our human and AI-enhanced capabilities to deliver actionable insights that improve customer decision-making. We see AI as a true enabler and accelerator of our digital solutions. During the quarter, we released several new offerings and features that leverage our AI expertise and deep data resources. In Canada, we launched our new MyLot inventory management solution. Initial interest has exceeded our expectations with hundreds of early signups, and we are optimistic about the potential of this subscription-based SaaS offering. Across the US and Canada, we also released our new predictive pricing feature, the only technology in the industry that provides dealers with a forward-looking 30, 60, 90-day view into the anticipated value of every dealer vehicle offered on OPENLANE.

From our best technology perspective, we extended our technology advantage in the first quarter with our public release of Open Lane Intelligence.

Peter Kelly: As our 2025 go-to-market investments in dealer-to-dealer continue to ramp up towards full productivity, we remain focused on increasing market share and wallet share. As stated earlier, we expect off-lease supply to scale up throughout the year, and OPENLANE will be a primary beneficiary of this cyclical recovery. Our Canadian business is leveraging its strong market position to introduce new revenue-generating products and services. Used vehicle values significantly appreciated in Q1 and remain strong. This is a positive for the marketplace and for AFC, though any sharp decline in used vehicle values could lead to a higher-risk environment for floorplan financers. While no industry is immune to geopolitical or macroeconomic events, we have not seen a material industry impact from fuel prices, new and used vehicle affordability, chip production, or any other external factors that we monitor.

Open Lane intelligence. Unifies our human and AI, enhanced capabilities to deliver actionable insights, that improve customer decision-making.

Speaker #3: As stated earlier, we expect off-lease supply to scale up throughout the year. And OPENLANE will be a primary beneficiary of this cyclical recovery. Our Canadian business is leveraging its strong market position to introduce new revenue-generating products and services.

We see AI as a true enabler and accelerator of our digital Solutions. And during the quarter, we release several new offerings and features that leverage our our AI expertise and deep data resources.

Speaker #3: Used vehicle values significantly appreciated in Q1 and remain strong. This is a positive for the marketplace and for AFC, though any sharp decline in used vehicle values could lead to a higher risk environment for floor plans and answers.

In Canada, we launched our new Milo Inventory management solution.

Initial interest has exceeded our expectations, with hundreds of early signups.

And we are optimistic about the potential of this subscription-based SAS offering.

Speaker #3: And while no industry is immune to geopolitical or macroeconomic events, we have not seen a material industry impact from fuel prices, new and used vehicle affordability, chip production, or any other external factors that we monitor.

Across the US and Canada. We also released our new predictive pricing feature.

The only technology in the industry that provides dealers with a forward-looking 30-60-90 day view.

Into the anticipated value of every dealer vehicle offered on OPENLANE.

Speaker #3: So just to summarize, OPENLANE remains well-positioned to capture the opportunities ahead. And we are executing a strategy that is delivering results. Winning customers and outpacing the industry.

Peter Kelly: Just to summarize, OPENLANE remains well-positioned to capture the opportunities ahead, and we're executing a strategy that is delivering results, winning customers, and outpacing the industry. Because of that, I believe the key elements of our value proposition for investors remain very compelling. OPENLANE is a highly scalable digital marketplace leader focused on making wholesale easy for automotive dealers, manufacturers, and commercial sellers. There is a large addressable market for our services, and OPENLANE is uniquely well-positioned with commercial customers and franchise and independent dealers. Our customer surveys and third-party research indicate we are the most preferred pure-play digital marketplace in the industry. Our technology advantage is a competitive differentiator. Our floorplan finance business, AFC, is a high-performing business that is synergistic with the marketplace. We generate significant cash flow and have a strong balance sheet.

Speaker #3: Because of that, I believe the key elements of our value proposition for investors remain very compelling. OPENLANE is a highly scalable digital marketplace leader focused on making wholesale easy for automotive dealers, manufacturers, and commercial sellers.

And finally, in terms of providing the best customer experience, we are also leveraging our human and AI capabilities to streamline, and enhance the customer experience, improve the consistency, accuracy and speed of arbitrations and to help address deer inquiries as quickly as possible.

Speaker #3: There is a large addressable market for our services and OPENLANE is uniquely well-positioned with commercial customers and franchise and independent dealers. Our customer surveys and third-party research indicate we are the most preferred pure-play digital marketplace in the industry.

At the end of q1, our transactional NPS scores across all geographies, that squarely in the excellent range, with our us seller and PS, a highest scores, indicating exceptional customer loyalty and brand satisfaction.

So as we look into the remainder of 2026, while we cannot count on an industry environment as strong as q1, there is still a lot of opportunity for open Lane.

Speaker #3: Our technology advantage is a competitive differentiator. Our floor plan finance business, AFC, is a high-performing business that is synergistic with the marketplace. We generate significant cash flow and have a strong balance sheet.

We are continuing to build momentum, and I'm very optimistic about our ability to execute our strategy with precision.

Peter Kelly: As our 2025 go-to-market investments in dealer-to-dealer continue to ramp up towards full productivity, we remain focused on increasing market share and wallet share. As stated earlier, we expect off lease supply to scale up throughout the year, and OPENLANE will be a primary beneficiary of this cyclical recovery. Our Canadian business is leveraging its strong market position to introduce new revenue-generating products and services. Used vehicle values significantly appreciated in Q1 and remain strong. This is a positive for the marketplace and for AFC, though any sharp decline in used vehicle values could lead to a higher risk environment for floor plan financers. While no industry is immune to geopolitical or macroeconomic events, we have not seen a material industry impact from fuel prices, new and used vehicle affordability, chip production, or any other external factors that we monitor.

25 go to market investments in dealer to dealer continue to ramp up towards full productivity. We remain focused on increasing market, share and wallet. Share.

Speaker #3: And we believe our business has the capability to deliver meaningful growth, profitability, and cash generation over the next several years. So with that, I will now turn the call over to Brad.

Peter Kelly: We believe our business has the capability to deliver meaningful growth, profitability, and cash generation over the next several years. With that, I will now turn the call over to Brad.

As stated earlier, we expect all fleet supply to scale up throughout the year. OPENLANE will be a primary beneficiary of this cyclical recovery.

Speaker #2: Thanks, Peter. Good morning to everyone for joining us today. On behalf of our management team and all of our employees, we are very proud to report a record quarter for OPENLANE.

Bradley Herring: Thanks, Peter. Good morning to everyone for joining us today. On behalf of our management team and all of our employees, we are very proud to report a record quarter for OPENLANE. For the quarter, we transacted more GMV, sold more vehicles, generated more revenue, and produced more adjusted EBITDA than any quarter in our company's history as a digital marketplace. These results would not be possible without the tireless commitment and stellar execution of our nearly 5,000 employees that work every day to make wholesale easy for our customers. Before we dive into the financial results, I'd like to thank all of our investors and sell-side analysts that came to visit us in Fort Lauderdale for our Investor Day on 03 March. During my remarks in Q&A today, I may reference selected slides we reviewed during our presentation.

Our Canadian business is leveraging, its strong Market position to introduce new Revenue, generating products and services.

Used vehicle values significantly appreciated in Q1 and remain strong.

Speaker #2: For the quarter, we transacted more GMV, sold more vehicles, generated more revenue, and produced more adjusted EBITDA than any quarter in our company's history as a digital marketplace.

This is a positive for the marketplace and for AFC, the 1 sharp decline in news vehicle values could lead to a higher risk environment for floor plans and answers.

Speaker #2: These results would not be possible without the tireless commitment and stellar execution of our nearly 5,000 employees that work every day to make wholesale easy for our customers.

Speaker #2: Before we dive into the financial results, I'd like to thank all of our investors and sell-side analysts that came to visit us in Fort Lauderdale for our Investor Day on March 3rd.

And while no industry is immune to geopolitical geopolitical or macroeconomic events, we have not seen a material industry impact from fuel prices, new and used vehicle of affordability. Chip production or any other external factors that we monitor

Peter Kelly: Just to summarize, OPENLANE remains well-positioned to capture the opportunities ahead, and we're executing a strategy that is delivering results, winning customers, and outpacing the industry. Because of that, I believe the key elements of our value proposition for investors remain very compelling. OPENLANE is a highly scalable digital marketplace leader focused on making wholesale easy for automotive dealers, manufacturers, and commercial sellers. There is a large addressable market for our services, and OPENLANE is uniquely well-positioned with commercial customers and franchise and independent dealers. Our customer surveys and third-party research indicate we are the most preferred pure-play digital marketplace in the industry. Our technology advantage is a competitive differentiator. Our floor plan finance business, AFC, is a high-performing business that is synergistic with the marketplace.

Speaker #2: During my remarks in Q&A today, I may reference selective slides we reviewed during our presentation. These slides can be found on the Investor Relations section of our website.

So just to summarize, open Lane remains. Well positioned to capture the opportunities ahead and we're executing a strategy. That is delivering results, winning customers and outpacing the industry.

Bradley Herring: These slides can be found on the investor relations section of our website. Moving on to actual results. We reported total revenues of $528 million, which represents growth of 15%. Revenue growth in the quarter was exclusively driven by the results in the Marketplace segment, which I'll dive into more shortly. Consolidated adjusted EBITDA for the quarter was $97 million, which represents an increase of 17%. I'll talk more about our adjusted EBITDA results within the discussions about each business segment. Consistent with previous quarters, we'll be discussing adjusted free cash flow metrics on a rolling 12-month basis due to the inherent volatility in our quarterly cash flow numbers. For the trailing 12 months, our adjusted free cash flow totaled $259 million, representing an adjusted free cash flow conversion rate of 75%.

Because of that, I believe the key elements of our value proposition for investors remain very compelling.

Speaker #2: Moving on to actual results, we reported total revenues of $528 million which represents growth of 15%. Revenue growth in the quarter was exclusively driven by the results in the marketplace segment, which I'll dive into more shortly.

Open land is a highly scalable digital Marketplace leader focused on making wholesale easy for automotive dealers, manufacturers and Commercial sellers.

There is a large addressable market for our services and open Lane is uniquely well positioned with commercial customers and franchise and independent dealers.

Speaker #2: Consolidated adjusted EBITDA for the quarter was $97 million, which represents an increase of 17%. I'll talk more about our adjusted EBITDA results within the discussions about each business segment.

Our customer surveys and third-party research. Indicate we are the most preferred Pure Play digital Marketplace in the industry.

Our technology advantage is a competitive differentiator.

Speaker #2: Consistent with previous quarters, we will be discussing adjusted free cash flow metrics on a rolling 12-month basis due to the inherent volatility in our quarterly cash flow numbers.

Peter Kelly: We generate significant cash flow and have a strong balance sheet, and we believe our business has the capability to deliver meaningful growth, profitability, and cash generation over the next several years. With that, I will now turn the call over to Brad.

Our floor, plan Finance business is AFC is a high performing business that is synergistic with the marketplace.

We generate significant cash flow and have a strong balance sheet.

Speaker #2: For the trailing 12 months, our adjusted free cash flow totaled $259 million, representing an adjusted free cash flow conversion rate of 75%. A 75% conversion rate is slightly above our expected range of 65 to 70 percent and reflects the strong cash generation of both our marketplace and financing businesses.

And we believe our business has the capability to deliver meaningful growth, profitability and cash generation over the next several years.

Brad Herring: Thanks, Peter. Good morning to everyone for joining us today. On behalf of our management team and all of our employees, we are very proud to report a record quarter for OPENLANE. For the quarter, we transacted more GMV, sold more vehicles, generated more revenue, and produced more adjusted EBITDA than any quarter in our company's history as a digital marketplace. These results would not be possible without the tireless commitment and stellar execution of our nearly 5,000 employees that work every day to make wholesale easy for our customers. Before we dive into the financial results, I'd like to thank all of our investors and sell side analysts that came to visit us in Fort Lauderdale for our Investor Day on 3 March. During my remarks in Q&A today, I may reference selected slides we reviewed during our presentation.

So with that, I will now turn the call over to Brad.

Bradley Herring: A 75% conversion rate is slightly above our expected range of 65% to 70% and reflects the strong cash generation of both our marketplace and financing businesses. As you may have heard, on 26 March, the Canadian Parliament enacted a bill repealing the digital service tax or DST. This action resulted in a $17.3 million reduction to our marketplace cost of services. $15.9 million of the reduction represents prior period expenses that have been removed from our current quarter adjusted EBITDA calculation, while the remaining $1.4 million is reflected as an in-quarter expense savings. Moving to the performance of our business segments, I'll start with the marketplace. In Q1, we transacted GMV totaling $9.1 billion, which represents growth of 32%.

Thanks Peter. Good morning to everyone for joining us today on behalf of our management team and all of our employees, we are very proud to report. A record quarter for open Lane.

Speaker #2: As you may have heard, on March 26th, the Canadian Parliament enacted a bill repealing the Digital Service Tax, or DST. This action resulted in a 17.3 million reduction to our marketplace cost of services.

For the quarter, we transacted more GMV, sold more vehicles, generated more revenue, and produced more adjusted EBITDA than any quarter in our company's history as a digital marketplace.

Speaker #2: 15.9 million of the reduction represents prior-period expenses that have been removed from our current quarter adjusted EBITDA calculation, while the remaining 1.4 million is reflected as an in-quarter expense savings.

These results would not be possible without the tireless commitment and Stellar execution of our nearly 5,000 employees that work every day to make wholesale easy for our customers.

Speaker #2: Moving to the performance of our business segments, I'll start with the marketplace. In Q1, we transacted GMV totaling $9.1 billion, which represents growth of 32%.

Before we dive into the financial results, I'd like to thank all of our investors and sell side analysts that came to visit us in Fort Lauderdale for our investor day on March 3rd.

Brad Herring: These slides can be found on the investor relations section of our website. Moving on to actual results. We reported total revenues of $528 million, which represents growth of 15%. Revenue growth in the quarter was exclusively driven by the results in the Marketplace segment, which I'll dive into more shortly. Consolidated adjusted EBITDA for the quarter was $97 million, which represents an increase of 17%. I'll talk more about our adjusted EBITDA results within the discussions about each business segment. Consistent with previous quarters, we will be discussing adjusted free cash flow metrics on a rolling 12-month basis due to the inherent volatility in our quarterly cash flow numbers. For the trailing 12 months, our adjusted free cash flow totaled $259 million, representing an adjusted free cash flow conversion rate of 75%.

During my remarks in Q&A today, I may reference selected slides we reviewed during our presentation.

These slides can be found on the investor relations section of our website.

Speaker #2: GMV growth in the dealer category was 20%, representing a 13% increase in vehicles sold and a 6% increase in average vehicle values. In the commercial category, the GMV growth was 38%, was made up of a 25% increase in vehicles sold with an 11% increase in average values.

Bradley Herring: GMV growth in the dealer category was 20%, representing a 13% increase in vehicles sold and a 6% increase in average vehicle values. In the commercial category, the GMV growth of 38% was made up of a 25 increase in vehicles sold with an 11% increase in average values. Auction and related revenues were $242 million, which reflects growth of 22%. The primary driver of this growth was in the US dealer category, where we saw a 38% increase in auction and related fees, driven mostly by the strong vehicle sold performance that Peter mentioned earlier. In addition to the growth in vehicles sold, US dealer GMV growth also included a 22% increase in average vehicle values, driven by a higher mix of sales from our large dealer group customers and an overall increase in wholesale auto prices.

Moving on to actual results, we reported total revenues of 528 million which represents growth of 15%.

Revenue growth in the quarter was exclusively driven by the results in the marketplace segment, which I'll dive into more shortly.

Speaker #2: Auction and related revenues were $242 million, which reflects growth of 22%. The primary driver of this growth was in the US dealer category, where we saw a 38% increase in auction and related fees driven mostly by the strong vehicles sold performance that Peter mentioned earlier.

Consolidated, adjusted ebida for the quarter was 97 million, which represents an increase of 17%. I'll talk more about our adjusted, even the results within the discussions about each business segments.

Consistent with previous quarters, we will be discussing adjusted free cash flow metrics on a rolling 12-month basis. Due to the inherent volatility, in our quarterly cash flow numbers.

Speaker #2: In addition to the growth in vehicles sold, US dealer GMV growth also included a 22% increase in average vehicle values driven by a higher mix of sales from our large dealer group customers and an overall increase in wholesale auto prices.

Brad Herring: A 75% conversion rate is slightly above our expected range of 65% to 70% and reflects the strong cash generation of both our marketplace and financing businesses. As you may have heard, on 26 March, the Canadian Parliament enacted a bill repealing the Digital Services Tax or DST. This action resulted in a $17.3 million reduction to our marketplace cost of services. $15.9 million of the reduction represents prior period expenses that have been removed from our current quarter adjusted EBITDA calculation, while the remaining $1.4 million is reflected as an in-quarter expense savings. Moving to the performance of our business segments, I'll start with the marketplace. In Q1, we transacted GMV totaling $9.1 billion, which represents growth of 32%.

For the trailing 12 months, our adjusted free cash flow totaled. 2559. Million representing an adjusted free. Cash flow conversion rate of 75%.

Speaker #2: Exclusively due to the significant increase in average vehicle values, yields for the US dealer business declined approximately 60 basis points, from the 680 to 700 basis point baseline, range that we provided in our Investor Day materials.

Bradley Herring: Exclusively due to the significant increase in average vehicle values, yields for the US dealer business declined approximately 60 basis points from the 680 to 700 basis point baseline range that we provided in our Investor Day materials. On a per-vehicle sold basis, revenue generation in US dealer improved by high single digits. Complementing our performance in the US dealer business, auction and related fees in our US commercial business were up 42%. GMV in the US commercial business was up approximately 46%, due largely to the successful launch of a returning private label customer, as well as improvement in the lease return waterfall. Yields in the US commercial business remain largely consistent with the baseline that we reviewed in Investor Day.

A 75% conversion rate is slightly above our expected range of 65 to 70%, and reflects the strong cash generation of both our Marketplace and financing businesses.

As you may have heard on March 26th, the Canadian Parliament, enacted, a bill repealing, the digital service tax or DST,

Speaker #2: On a per-vehicle sold basis, revenue generation in US dealer improved by a single digit. Complementing our performance in the US dealer business, auction and related fees in our US commercial business were up 42%.

This action, resulted in a 17.3 million reduction to our Marketplace cost to services.

15.9 million of the reduction represents prior period expenses that have been removed from our current quarter adjusted. Ebit the calculation while the remaining 1.4 million is reflected as an Inquirer expense savings.

Speaker #2: GMV in the US commercial business was up approximately 46% due largely to the successful launch of a returning private-label customer as well as improvement in the lease return waterfall.

Moving to the performance of our business segments. I'll start with the marketplace.

Brad Herring: GMV growth in the dealer category was 20%, representing a 13% increase in vehicles sold and a 6% increase in average vehicle values. In the commercial category, the GMV growth of 38% was made up of a 25% increase in vehicles sold, with an 11% increase in average values. Auction and related revenues were $242 million, which reflects growth of 22%. The primary driver of this growth was in the US dealer category, where we saw a 38% increase in auction and related fees, driven mostly by the strong vehicle sold performance that Peter mentioned earlier.

In q1, we transacted GMB totaling 9.1 billion dollars, which represents growth of 32%.

Speaker #2: Yields in the US commercial business remained largely consistent with the baseline that we reviewed in Investor Day. SaaS and other revenues in the quarter were $68 million, which is up 1% due to increases in our subscription-based revenue streams.

Bradley Herring: SaaS and other revenues in the quarter were $68 million, which is up 1%, due to increases in our subscription-based revenue streams. Rounding out the revenues in the marketplace segment, our purchased vehicle sales grew 31% to $112 million. The variance was driven by the increase in US vehicles sold, as well as an increase in the average vehicle values in both US and Europe. Adjusted EBITDA for the marketplace segment was $52 million, which results in an adjusted EBITDA margin of 12%. That represents growth of 39% in adjusted EBITDA and 160 basis points of expansion in adjusted EBITDA margin.

Gmv growth. In the dealer category, was 20% representing a 13%, increase in vehicle, sold and a 6% increase in average vehicle values.

Speaker #2: Rounding out the revenues in the marketplace segment, our purchased vehicle sales grew 31% to $112 million. The variance was driven by the increase in US vehicles sold as well as an increase in the average vehicle values in both US and Europe.

11% increase in average values.

Auction and related revenues were 242 million, which reflects growth of 22%.

Speaker #2: Adjusted EBITDA for the marketplace segment was $52 million, which results in an adjusted EBITDA margin of 12%. That represents growth of 39% in adjusted EBITDA and 160 basis points of expansion in adjusted EBITDA margin.

Brad Herring: In addition to the growth in vehicles sold, US dealer GMV growth also included a 22% increase in average vehicle values, driven by a higher mix of sales from our large dealer group customers and an overall increase in wholesale auto prices. Exclusively due to the significant increase in average vehicle values, yields for the US dealer business declined approximately 60 basis points from the 680 to 700 basis point baseline range that we provided in our Investor Day materials. On a per-vehicle sold basis, revenue generation in US dealer improved by high single digits. Complementing our performance in the US dealer business, auction and related fees in our US commercial business were up 42%.

The primary driver of this growth was in the US dealer category, where we saw a 38% increase in auction and related, fees, driven mostly by the strong Vehicles, sold performance that Peter mentioned earlier.

Speaker #2: The year-over-year expansion and adjusted EBITDA margin was driven by the structural scaling effects of our digital platform and a higher mix of revenues coming from our US commercial business that comes with an accretive variable contribution.

Bradley Herring: The year-over-year expansion in adjusted EBITDA margin was driven by the structural scaling effects of our digital platform and a higher mix of revenues coming from our US commercial business that comes with an accretive variable contribution. In our finance segment, the average outstanding receivables managed in the quarter was $2.4 billion, which is up 3%. Growth here was driven by a 3% increase in the average vehicle values, offset by a 1% decrease in transaction counts. Net yield for the quarter was 13.6%, which is down 30 basis points. The decrease was primarily attributable to a decrease in transaction fee yields, driven by slightly lower transaction counts and increasing loan values.

In addition to the growth in vehicles sold, U.S. dealer GMB grew. Also included was a 22% increase in average vehicle value, driven by a higher mix of sales from our large dealer group customers and an overall increase in wholesale auto prices.

Speaker #2: In our finance segment, the average outstanding receivables managed in the quarter was $2.4 billion, which is up 3%. Growth here was driven by a 3% increase in the average vehicle values, offset by a 1% decrease in transaction counts.

Exclusively to the significant increase in average vehicle values, yields for the US dealer business declined, approximately 60 basis points from the 680 to 700 basis points. Baseline range that we provided in our investor day materials.

Speaker #2: Net yield for the quarter was $13.6%, which is down 30 basis points. The decrease was primarily attributable to a decrease in transaction fee yields driven by slightly lower transaction counts and increasing loan values.

On a per vehicle, sold basis, Revenue generation in US dealer improved by a single digits.

Brad Herring: GMV in the US commercial business was up approximately 46%, due largely to the successful launch of a returning private label customer, as well as improvement in the lease return waterfall. Yields in the US commercial business remain largely consistent with the baseline that we reviewed in Investor Day. SaaS and other revenues in the Q were $68 million, which is up 1% due to increases in our subscription-based revenue streams. Rounding out the revenues in the marketplace segment, our purchased vehicle sales grew 31% to $112 million. The variance was driven by the increase in US vehicles sold, as well as an increase in the average vehicle values in both US and Europe. Adjusted EBITDA for the marketplace segment was $52 million, which results in an adjusted EBITDA margin of 12%.

Complementing our performance in the US dealer business auction of related fees in our us Commercial Business were up 42%.

Speaker #2: The Q1 provision for credit losses was 1.6%, which is consistent with our results from last quarter and 7 basis points higher than the same quarter last year.

Bradley Herring: The Q1 provision for credit losses was 1.6%, which is consistent with our results from last quarter and 7 basis points higher than the same quarter last year. While recent performance has hovered in the mid 1% range, we continue to reiterate our targeted range of 1.5% to 2.0% for credit losses. The culmination of the changes in the portfolio balance, the net yield, and the loss provisions are an adjusted EBITDA for the finance segment of $45 million, which was down 1%. With respect to capital considerations, I'll refer investors to page 75 of the Investor Day deck, where we laid out our objectives for capital deployment. To summarize that message, our first and foremost priority is to fund the organic growth of our business. That will be followed by share repurchases and finally, debt repayment.

Gmv in the US. Commercial Business was up approximately 46% due largely to the successful launch of a returning private label customer as well as Improvement in the lease return waterfall.

Speaker #2: While recent performances hovered in the mid-1% range, we continued to reiterate our targeted range of 1.5 to 2.0% for credit losses. The culmination of the changes in the portfolio balance, the net yield, and the loss provisions are an adjusted EBITDA for the finance segment of $45 million, which was down 1%.

Yields in the US Commercial Business. Remain largely consistent with the Baseline that we reviewed in investor day.

SAS and other revenues in the quarter were $68 million, which is up 1% due to increases in our subscription-based revenue streams.

Rounding out the revenues in the marketplace, segments are purchased vehicle sales, through 31% to 112 million.

Speaker #2: With respect to capital considerations, I'll refer investors to page 75 of the Investor Day deck where we laid out our objectives for capital deployment.

The variance was driven by the increase in U.S. vehicles sold, as well as an increase in the average vehicle values in both the U.S. and Europe.

Speaker #2: To summarize that message, our first and foremost priority is to fund the organic growth of our business. That will be followed by share repurchases and finally debt repayment.

Brad Herring: That represents growth of 39% in adjusted EBITDA and 160 basis points of expansion in adjusted EBITDA margin. The year-over-year expansion in adjusted EBITDA margin was driven by the structural scaling effects of our digital platform and a higher mix of revenues coming from our US commercial business that comes with an accretive variable contribution. In our finance segment, the average outstanding receivables managed in the quarter was $2.4 billion, which is up 3%. Growth here was driven by a 3% increase in the average vehicle values, offset by a 1% decrease in transaction counts. Net yield for the quarter was 13.6%, which is down 30 basis points. The decrease was primarily attributable to a decrease in transaction fee yields, driven by slightly lower transaction counts and increasing loan values.

Adjusted Eva for the marketplace. Segment was 52 million, which results in an adjusted, Eva to margin of 12%.

Speaker #2: In addition to our investments in go-to-market, we repurchased $964,000 shares in the first quarter at an average price of $27.20. This represents the retirement of approximately 0.7% of our fully diluted share count that includes the assumed conversion of the remaining preferred shares.

Bradley Herring: In addition to our investments in go-to-market, we repurchased 964,000 shares in Q1 at an average price of $27.20. This represents the retirement of approximately 0.7% of our fully diluted share count that includes the assumed conversion of the remaining preferred shares. As we also mentioned in our Investor Day, we are considering debt repayment options.

That represents growth of 39% in adjusted, EBA and 160 basis points of expansion in adjusted. Eva to margin.

The year-over-year expansion and adjusted. Even the margin was driven by the structural scaling effects of our digital platform and a higher mix of revenues coming from our us Commercial Business, that comes with an accretive variable contribution.

Speaker #2: As we also mentioned in our Investor Day, we are considering debt repayment options, although investors should not expect to see any material paydowns to start until later in 2026 or early 2027.

Bradley Herring: Although investors should not expect to see any material paydowns to start until later in 2026 or early 2027. From a liquidity perspective, we ended the quarter with an unrestricted cash balance of $180 million and capacity of over $400 million on our existing revolver facilities. Moving along to our guidance, we are raising our full-year expectations for adjusted EBITDA from a range of $350 to 370 million to a range of $365 to 385 million. The entire increase is coming from our marketplace segment and is driven mostly by strong performances in both our US dealer and US commercial businesses. This revision also reflects the full-year impact of the repeal of the Canadian DST that I mentioned earlier.

In our finance segment, the average outstanding receivables. Managed in the quarter was 2.4 billion which is up 3%.

Speaker #2: From a liquidity perspective, we ended the quarter with an unrestricted cash balance of $180 million and capacity of over $400 million on our existing revolver facilities.

Growth year was driven by a 3%. Increase in the average vehicle values, offset by a 1% decrease in transaction counts.

Net yield for the quarter was 13.6%, which is down 30 basis points.

Speaker #2: Moving along to our guidance, we are raising our full-year expectations for adjusted EBITDA from a range of $350 to $370 million to a range of $365 to $385 million.

Brad Herring: The Q1 provision for credit losses was 1.6%, which is consistent with our results from last quarter and 7 basis points higher than the same quarter last year. While recent performance has hovered in the mid 1% range, we continue to reiterate our targeted range of 1.5% to 2.0% for credit losses. The culmination of the changes in the portfolio balance, the net yield, and the loss provisions are an adjusted EBITDA for the finance segment of $45 million, which was down 1%. With respect to capital considerations, I'll refer investors to page 75 of the Investor Day deck, where we laid out our objectives for capital deployment. To summarize that message, our first and foremost priority is to fund the organic growth of our business. That will be followed by share repurchases and finally, debt repayment.

The decrease was primarily attributable to a decrease in transaction fee yields driven by slightly lower transaction counts and increasing loans.

Speaker #2: The entire increase is coming from our marketplace segment and is driven mostly by strong performances in both our US dealer and US commercial businesses.

The q1 provision for credit losses was 1.6% which is consistent with our results from last quarter and 7 basis points, higher than the same quarter last year.

Speaker #2: This revision also reflects the full-year impact of the repeal of the Canadian DST that I mentioned earlier. Countering the strong performance in the marketplace, we remain cautious throughout downstream impact of evolving and volatile macro conditions.

While recent performance has hovered in the mid-1% range, we continue to reiterate our targeted range of 1.5% to 2.0% for credit losses.

Bradley Herring: Countering the strong performance in the Marketplace, we remain cautious around downstream impact of evolving and volatile macro conditions. Sustained increases in fuel prices, the impact of rising auto prices on consumer affordability, subsequent impact on our customers, and the automotive supply chain challenges are all front of mind as we look into H2 2026. With respect to our Finance segment, we maintain our previous guided position as the volatility and macro trends are largely offsetting the decreased likelihood of any rate cuts in 2026. To summarize, we are very pleased with our quarterly results and are proud to increase our full-year 2026 projections. Our revised outlook represents strong momentum in both the dealer and commercial elements of our Marketplace segment, while at the same time reflecting on some potential challenges.

The culmination of the changes in the portfolio, balance, the net yield, and the loss provisions are an adjusted E, but for the finance segment of $45 million, which was down 1%.

Speaker #2: Sustained increases in fuel prices, the impact of rising auto prices on consumer affordability, and subsequent impact on our customers and the automotive supply chain challenges are all front of mind as we look into the back half of 2026.

With respect to Capital considerations, I'll refer investors to page 75 of the investor day deck, where we laid out our objectives for Capital deployment.

Speaker #2: With respect to our finance segment, we maintain our previous guided position as the volatility and macro trends are largely offsetting the decreased likelihood of any rate cuts in 2026.

Brad Herring: In addition to our investments in go-to-market, we repurchased 964,000 shares in the Q1 at an average price of $27.20. This represents the retirement of approximately 0.7% of our fully diluted share count that includes the assumed conversion of the remaining preferred shares. As we also mentioned in our Investor Day, we are considering debt repayment options, although investors should not expect to see any material paydowns to start until later in 2026 or early 2027. From a liquidity perspective, we ended the quarter with an unrestricted cash balance of $180 million and capacity of over $400 million on our existing revolver facilities.

To summarize that message, our first and foremost priority is to fund the organic growth of our business. That will be followed by Sherry purchases, and finally, debt repayment.

Speaker #2: To summarize, we're very pleased with our quarterly results and are proud to increase our full-year 2026 projections. Our revised outlook represents strong momentum in both the dealer and commercial elements of our marketplace segment, while at the same time reflecting on some potential challenges.

In addition to our investments in go to market, we repurchase 964,000 shares in the first quarter at an average price of $7.20.

This represents the retirement of approximately 0.7% of our fully diluted share count. That includes the assumed conversion of the remaining preferred shares.

Speaker #2: We are also proud of our prudent balance between growth and risk management in our finance segment. With that, I'll turn it over to the operator for questions.

Peter Kelly: We are also proud of our prudent balance between growth and risk management in our finance segment. With that, I'll turn it over to the operator for questions.

Bradley Herring: We are also proud of our prudent balance between growth and risk management in our finance segment. With that, I'll turn it over to the operator for questions.

As we also mentioned in our investor day, we are considering debt, repayment options. Although investors should not expect to see any material pay Downs to start until later in 2026 or early 2027.

Operator: Thank you, sir. We will now begin the question and answer session. To ask a question, you may press star and then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. The first question that we have comes from Bob Labick of CJS Securities. Please go ahead.

Speaker #1: Thank you, sir. We will now begin the question and answer session. To ask a question, you may press star and then one on your touchtone phone.

Brad Herring: Moving along to our guidance, we are raising our full-year expectations for adjusted EBITDA from a range of $350 to 370 million to a range of $365 to 385 million. The entire increase is coming from our Marketplace segment and is driven mostly by strong performances in both our US dealer and US commercial businesses. This revision also reflects the full-year impact of the repeal of the Canadian DST that I mentioned earlier. Countering the strong performance in the marketplace, we remain cautious around downstream impact of evolving and volatile macro conditions. Sustained increases in fuel prices, the impact of rising auto prices on consumer affordability and subsequent impact on our customers, and the automotive supply chain challenges are all front of mind as we look into the H2 of 2026.

From a liquidity perspective, we ended the quarter with an unrestricted cash balance of $100 million and capacity of over $400 million on our existing revolver facilities.

Speaker #1: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two.

Moving along to our guidance. We are raising our full year expectations for adjusted Ava from a range of 350 to 370 million to a range of 365 to 385 million.

Speaker #1: The first question that we have comes from Bob Labick of CJS Securities. Please go ahead.

Speaker #3: Good morning. Congratulations on a great start to 2026.

Bob Labick: Good morning. Congratulations on a great start to 2026.

This revision, also reflects the full year impact of the repeal of the Canadian DST that I mentioned earlier.

Speaker #4: Thank you, Bob.

Peter Kelly: Thank you, Bob.

Speaker #3: Sure. So obviously, really strong performance on commercial volumes. And you mentioned the returning off-lease customer there. Can you tell us, was there a full impact from that customer, meaning did you have it for the full quarter, or do you get a little incremental benefit in Q2 as well?

Bob Labick: Sure. Obviously really strong performance on commercial volumes, and you mentioned the returning off-lease customer there. Can you tell us, was there a full impact from that customer? I mean, did you have it for the full quarter, or do you get a, you know, little incremental benefit in Q2 as well? I'm just trying to figure out the kind of, you know, run rate from that and the impact going forward.

Speaker #3: I'm just trying to figure out the kind of run rate from that and the impact kind of going forward.

Brad Herring: With respect to our finance segment, we maintain our previous guided position as the volatility in macro trends are largely offsetting the decreased likelihood of any rate cuts in 2026.

Countering the strong performance in the marketplace. We remain cautious throughout Downstream impact of evolving. And volatile macro, conditions, sustained increases in fuel prices. The impact of rising Auto prices on consumer, affordability, and subsequent impact on our customers. And the automotive supply chain challenges are all front of Mind as we look into the back half of 2026,

Speaker #4: Yeah, Bob. It launched mid-January, so it's pretty much a full quarter. But I guess if you're doing precisely with an extra two weeks, it wasn't live, but it was live for 11 of the 13 weeks.

Peter Kelly: Yeah, Bob, it launched mid-January, it's pretty much a full quarter. I guess, you know, if you're doing precisely, there was an extra 2 weeks it wasn't live, it was live for, you know, 11 of the 13 weeks.

Peter Kelly: Yeah, Bob, it launched mid-January, it's pretty much a full quarter. I guess, you know, if you're doing precisely, there was an extra two weeks it wasn't live, it was live for, you know, 11 of the 13 weeks.

With respect to our finance segment, we maintain our previous guided position as the volatility and macro Trends are largely offsetting the decreased likelihood of any rate Cuts in 2026.

Peter Kelly: To summarize, we're very pleased with our quarterly results and are proud to increase our full year 2026 projections. Our revised outlook represents strong momentum in both the dealer and commercial elements of our marketplace segment, while at the same time reflecting on some potential challenges. We are also proud of our prudent balance between growth and risk management in our finance segment. With that, I'll turn it over to the operator for questions.

Speaker #3: Okay, great. And then kind of sticking with commercial, lots of EVs coming off-lease, and there's pretty significant negative equity on that side. How are they behaving in the open lane auctions?

Bob Labick: Okay, great. You know, kind of sticking with commercial, you know, lots of EVs coming off lease and there's, you know, pretty significant negative equity on that side. How are they behaving in the, you know, OPENLANE auctions, you know, EVs in general? Similarly, how are, you know, the ICE vehicles that may still have a little bit of equity, you know, behaving? Just give us a sense, you know, as we see this divergence of off-lease, you know, coming on more, you know, EVs probably this year and more ICE next year.

To summarize we're very pleased with our quarterly results and are proud to increase our full year 2026 projections.

our revised Outlook represents strong momentum in both the dealer and Commercial elements of our Marketplace segment, while at the same time, reflecting on some potential challenges,

Speaker #3: EVs in general, and then similarly, how are the ICE vehicles that may still have a little bit of equity behaving? Just give us a sense.

We are also proud of our prudent balance between growth and risk management in our finance segment.

With that, I'll turn it over to the operator for questions.

Speaker #3: As we see this divergence of off-lease coming on more EVs probably this year and more ICE next year.

Operator: Thank you, sir. We will now begin the question and answer session. The first question that we have comes from Bob Labick of CJS Securities. Please go ahead.

Speaker #4: Yeah. Thanks, Bob. Let me tackle that. I'll start with just the commercial overall, and then I'll go into the EV piece of it if that's okay.

Peter Kelly: Yeah. Thanks, Bob. Let me tackle that. I'll start with just the commercial overall, then I'll go into the EV piece of it, if that's okay.

Thank you so much. We will now begin the question-and-answer session. To ask a question, you may press star and then 1 on your touchtone phone.

If you're using a speaker-phone, please pick up your handset before pressing the keys.

Bob Labick: Great.

Speaker #4: So listen, really good quarter. Really good quarter from commercial. As I said, 25% growth. A lot of growth in GMV as well. It was a strong spring market.

Peter Kelly: Listen, really good quarter, really good quarter from commercial. You know, as I said, 25% growth. A lot of growth in GMV as well. You know, it was a strong spring market. Used vehicle values did go up about 7%, you know, by the end of the quarter relative to 1 January. GMV was strong. The new customer also had a premium vehicle portfolio that contributed to EV. In addition to the sort of volume increase, we also saw an improved mix relative to a year ago. You know, relatively fewer payoffs, you know, across the portfolio, although payoffs remain abnormally high, they've come down a little bit in percentage terms. You know, corresponding to that, an increase in sort of non-grounding and open sales, which are higher revenue, higher margin transactions for us.

If at any time your question has been addressed and you would like to withdraw your question. Please press star and then 2

Speaker #4: Used vehicle values did go up about 7% by the end of the quarter relative to January 1. So GMV was strong. The new customer also had a premium vehicle portfolio that contributed to EV.

The first question that we have comes from Bob Labucq of CG CJs Securities. Please go ahead.

Bob Labick: Good morning. Congratulations on a great start to 2026.

Peter Kelly: Thank you, Bob.

Good morning. Congratulations on a, a great start to 2026.

Bob Labick: Sure. obviously really strong performance on commercial volumes, and you mentioned the returning off-lease customer there. Can you tell us, was there a full impact from that customer? Meaning, did you have it for the full quarter or do you get a, you know, little incremental benefit in Q2 as well? I'm just trying to figure out the kind of, you know, run rate from that and the impact kind of going forward.

Thank you, Bob.

Speaker #4: But in addition to the sort of volume increase, we also saw an improved mix relative to a year ago. So relatively fewer payoffs across the portfolio, although payoffs remain abnormally high, but they've come down a little bit in percentage terms.

Speaker #4: And corresponding to that, an increase in sort of non-grounding and open sales, which are higher revenue, higher margin transactions for us. So we saw an improved mix through the commercial funnel.

All right. Um, so obviously really strong performance on, uh, commercial volumes and you mentioned the, uh, returning Off Lease customer. There, can you tell us, was there a full impact from that customer? I mean, did you have it for the full quarter or do you get a, you know, a little incremental benefit in Q2 as well. I'm just trying to figure out the kind of, you know, run rate from that and the impact kind of going forward.

Peter Kelly: Yeah, Bob, it launched mid-January, so it's pretty much a full quarter. I guess, you know, if you're doing precisely, there was an extra 2 weeks it wasn't live, but it was live for, you know, 11 of the 13 weeks.

Peter Kelly: You know, we saw an improved mix through the commercial funnel. I'm talking generally here, EV and ICE combined. Okay. Listen, a lot, you know, a lot of encouraging signs there, and again, feel really good about the setup for commercial vehicles through the balance of this year and into next year and beyond. Going specifically into EVs, yeah, we certainly saw an increase in EV volumes in Q1. The good news is they're performing very well. You know, conversion rate for EVs is comparable to that for ICE vehicles. It varies a little bit by portfolio, which indicates, you know, certain sellers are adopting, you know, different strategies in terms of how to remarket them. Overall, conversion rates on EVs in our marketplace is very strong.

Yeah, Bob it. Launched mid January so it's pretty much a full quarter.

Speaker #4: I'm talking generally here EV and ICE combined. Okay? So listen, a lot of encouraging signs there. And again, feel really good about the setup for commercial vehicles through the balance of this year.

Um, but I guess, you know, if you're doing precisely there was an extra 2 2 weeks, it wasn't live, but it was live for, you know, 11 of the 13 weeks.

Speaker #4: And into next year and beyond. Going specifically into EVs, yeah, we certainly saw an increase in EV volumes in the first quarter. The good news is they're performing very well.

Speaker #4: Conversion rate for EVs is comparable to that for ICE vehicles. It varies a little bit by portfolio, which indicates certain sellers are adopting different strategies in terms of how to remarket them.

Okay, great. And then, you know, kind of sticking with commercial, um, you know, the lots of EVS coming off lease and there's, you know, pretty significant negative negative equity on that side. Um, how are they behaving in in the, you know, open Lane Auctions that, you know, EVS in general? And then similarly, how we're, you know, the ice vehicles that may still have a little bit of equity, you know, behaving. Just give us a sense.

Speaker #4: But overall, conversion rates on EVs in our marketplace are very strong. If anything, we're seeing because of the equity situation on EVs, which is more negative, as you know, we're seeing even fewer payoffs.

Peter Kelly: Yeah. Thanks, Bob. Let me tackle that. I'll start with just the commercial overall, then I'll go into the EV piece of it, if that's okay.

You know, as we see this, uh, Divergence of Off Lease, you know, coming on more, you know, EVS probably this year and more ice next year.

Peter Kelly: If anything, we're seeing, you know, because of the equity situation on EVs, which is more negative, as you know, we're seeing even fewer payoffs, so almost no payoffs. Those cars are flowing deeper in the funnel. Relatively higher conversion of EVs in the, you know, the non-grounding and open channels, which, you know, from a margin perspective is very good for us. We're seeing good performance with EVs. Obviously, in the quarter as well, we saw the stuff in the Persian Gulf, and oil prices, that has probably boosted EV demand at the retail level a bit. If anything, I would say that demand, you know, has strengthened, you know, late in March and into April as well. You know, good positive momentum on EVs.

Bob Labick: Great.

Peter Kelly: Listen, really good quarter, really good quarter from commercial. You know, as I said, 25% growth. A lot of growth in GMV as well. You know, it was a strong spring market. Used vehicle values did go up about 7%, you know, by the end of the quarter relative to 1 January. GMV was strong. The new customer also had a premium vehicle portfolio that contributed to EV. In addition to the sort of, volume increase, we also saw an improved mix relative to a year ago. You know, relatively fewer payoffs, you know, across the portfolio. Although payoffs remain abnormally high, but they've come down a little bit in percentage terms. You know, corresponding to that, an increase in sort of non-grounding and open sales, which are higher revenue, higher margin transactions for us.

Yeah, thanks Bob. Let me let me take a look. I'll start with just the the commercial overall, and then, I'll go into the EV piece of it, if that's okay.

Speaker #4: So almost no payoffs. So those cars are flowing deeper in the funnel. So relatively higher conversion of EVs in the non-grounding and open channels from a margin perspective is very good for us.

Um, so listen, really good quarter, really good, quarter from commercial. Uh, you know, as I said, 25% growth a lot of growth in gmv as well, you know, it was a strong spring Market used. Vehicle values did go up about 7%, you know, by the end of the quarter, relative to January 1,

Speaker #4: So we're seeing good performance with EVs. Obviously, in the quarter as well, we saw the stuff, the Persian Gulf and oil prices. That has probably boosted EV demand at the retail level a bit.

Um, so GMV was strong. The new customer also had a premium vehicle portfolio that contributed to the EV.

um,

but in addition to the sort of, uh, volume increase, we also saw an improved mix relative to a year ago.

Speaker #4: So if anything, I would say that demand has strengthened. Late in March and into April as well. So good positive momentum on EVs. And I think the real question is the seller has to be prepared to sort of acknowledge what the value of the car is in the marketplace as opposed to what is the residual value that they might have written on a contract two or three years ago.

You know, so, um, relatively fewer payoffs.

You know, across the portfolio, all the payoffs remain, abnormally high, but they've come down a little bit in percentage terms.

Peter Kelly: I think the real question is the seller has to be prepared to sort of acknowledge, you know, what the value of the car is in the marketplace, as opposed to what is the residual value that they might have written on a contract, you know, two or three years ago. Absent that, feel really good about it. You know, as we're looking to the future, and again, I'll say this comment is more general, as commercial volumes are generally picking up, our commercial sellers are getting more and more interested in, okay, how what techniques and plans can we put in place to maximize conversion and improve outcomes in the digital channel? It is, you know, such a fast channel, it's a low expense channel, but also a high price realization channel.

Peter Kelly: You know, we saw an improved mix through the commercial funnel. I'm talking generally here EV and ICE combined. Okay? Listen, you know, a lot of encouraging signs there and again, feel really good about the setup for commercial vehicles through the balance of this year and into next year and beyond. Going specifically into EVs, yeah, we certainly saw an increase in EV volumes in Q1. The good news is they're performing very well. You know, conversion rate for EVs is comparable to that for ICE vehicles. It varies a little bit by portfolio, which indicates, you know, certain sellers are adopting, you know, different strategies in terms of how to remarket them. Overall, conversion rates on EVs in our marketplace is very strong.

Speaker #4: But absent that, feel really good about it. And as we're looking to the future, and again, this comment is more general, as commercial volumes are generally picking up, our commercial sellers are getting more and more interested in, "Okay, what techniques and plans can we put in place to maximize conversion and improve outcomes in the digital channel?" Because it is such a fast channel.

And, uh, you know, corresponding to that an increase in sort of non grounding, and open sales which are higher Revenue, higher margin transactions for us. So, you know, we saw an improved mix through the commercial funnel and I'm talking generally here Evie and Ice combined, okay? Um, so listen a lot, you know, a lot of encourage encouraging signs there. And again, feel really good about the setup for commercial vehicles through the balance of this year and into next year and Beyond.

um,

going specifically into EVS.

Speaker #4: It's a low-expense channel, but also a high-price realization channel. So we're having very constructive discussions with many of our customers running pilots and various programs to drive adoption and drive conversion of the vehicles.

Peter Kelly: We're having very, you know, constructive discussions with many of our customers running, you know, pilots and, you know, various programs to drive adoption and drive conversion of their vehicles.

Uh, yeah, we certainly saw an increase in EV volumes in the first quarter. Um, the good news is they're performing very well, you know, conversion rate for EVS is comparable.

Speaker #3: Okay. That sounds great. Congratulations. I'll jump back in queue, but great quarter and great outlook. Thanks.

Bob Labick: Okay. That sounds great. Congratulations. I'll jump back in queue, but great quarter and great outlook. Thanks.

Peter Kelly: If anything, we're seeing, you know, because of the equity situation on EVs, which is more negative, as you know, we're seeing even fewer payoffs, so almost no payoffs. Those cars are flowing deeper in the funnel. Relatively higher conversion of EVs in the, you know, the non-grounding and open channels, which, you know, from a margin perspective is very good for us. We're seeing good performance with EVs. Obviously, in the quarter as well, we saw the stuff in the Persian Gulf and oil prices. That has probably boosted EV demand at the retail level a bit. If anything, I would say that demand, you know, has strengthened, you know, late in March and into April as well. You know, good positive momentum on EVs.

To that for ice vehicles. Um, it varies a little bit by portfolio, which indicates you know, certain sellers are adopting, you know, different strategies in terms of how to how to remarket them. But uh overall conversion rates on EVS in our in our Marketplace is very strong.

Speaker #4: Thank you, Bob.

Peter Kelly: Thank you, Bob.

Speaker #1: The next question we have comes from Craig Kennison of BARD. Please go ahead.

Operator: The next question we have comes from Craig Kennison of Baird. Please go ahead.

Speaker #5: Yeah. Hey, thanks for taking my question. I wanted to go to slide 11 if I could and just ask you, Brad, if you could just help us understand the yield dynamic in Q1, why it dropped, and what the mix issues are that impacted that.

Craig Kennison: Yeah. Hey, thanks for taking my question. I wanted to go to slide 11 if I could, and just ask you, Brad, if you could just help us understand the yield dynamic in Q1, why it dropped, and what the mix issues are that impacted that.

So those cars are flowing deeper in the funnel. So, relatively higher conversion of EVs in the—

You know, the non-grounding and open channels which, you know, from a margin perspective, is very good for us.

So, um, we're seeing good good, uh, good performance with EVS.

Speaker #3: Yeah. Perfect. It was Brad. I'll take that. So yeah, if you look at the yield, I'm assuming you're talking about the commercial side, where the yield drops.

Bradley Herring: Yeah, perfect. This is Brad. I'll take that. Yeah, if you look at the yield, I'm assuming you're talking about on the commercial side, where the yield dropped. It's a mix issue.

Speaker #3: So it's a mixed issue. If you think about when we talked about an investor day, we talked about the different yield setup for commercial across the different geographies.

Craig Kennison: Yeah.

Bradley Herring: If you think about when we talked about at Investor Day, we talked about the different yield set up for commercial across the different geographies, and we mentioned that the US range was certainly lower than Canada and Europe. If you look at the mix in the commercial space, last year, Q1, US made up about 71-ish% of the GMV that flew through the commercial space. Q1 of this year, with the ramp-up of that new customer we talked about, as well as kind of the increase just from the lease returns, now that number's north of 75%, 76%. That's a mix issue that drove that yield down from a 1.59 to a 1.43. The yields across the different categories are relatively stable, that means it's purely mix across the geographies that's driving that.

Peter Kelly: I think the real question is the seller has to be prepared to sort of acknowledge, you know, what the value of the car is in the marketplace, as opposed to what is the residual value that they might have written on a contract, you know, two or three years ago. Absent that, feel really good about it. You know, as we're looking to the future, and again, I'll say this comment is more general. As commercial volumes are generally picking up, our commercial sellers are getting more and more interested in, okay, what techniques and plans can we put in place to maximize conversion and improve outcomes in the digital channel? It is, you know, such a fast channel. It's a low expense channel, but also a high price realization channel.

Speaker #3: And we mentioned that the US range was certainly lower than Canada and Europe. So if you look at the mix in the commercial space, last year, first quarter, US made up about 71-ish percent of the GMV that flew through the commercial space.

Obviously, in the quarter as well, we saw the stuff, uh, the in the Persian Gulf and oil prices that has probably boosted EV demand at the retail level a bit. So if anything I would say that demand, um, you know, has strengthened, you know, late in March and in April, as well. So, you know, good positive, momentum on EVs. And I think that the real question is the seller has to be prepared to sort of acknowledge

Speaker #3: Q1 of this year with the ramp-up of that new customer we talked about as well as kind of the increased just from the lease returns, now that number is north of 75, 76 percent.

You know what the what the value of the car is in the marketplace as opposed to what is the residual value that they might have written on a contract, you know, 2 or 3 years ago. But but after that, I feel really good about it. And um,

you know, as we're looking to the Future and again, I'll say this comment is more General as

Speaker #3: So that's a mixed issue that drove that yield down from a 159 to a 143. The yields across the different categories are relatively stable.

As commercial volumes are generally picking up. Um, our commercial sellers, are getting more and more interested in. Okay. How what techniques and

Speaker #3: So that means it's purely mixed across the geographies that's driving that.

Speaker #5: Thanks. And while I have you, Brad, could you just help us understand the full year implications of the repeal of the digital service tax?

Craig Kennison: Thanks. While I have you, Brad, could you just help us understand the full year implications of the repeal of the digital service tax?

Speaker #3: Yeah. The full year impact on an annual basis is 5.5 to 6 million dollars. It's about a million four in the first quarter is what I disclosed.

Bradley Herring: Yeah. The full year impact on an annual basis is five and a half to six million dollars. It's about $1.4 million in Q1, is what I disclosed. That's a relatively steady run rate across the different quarters. It'll kind of vary a bit with volumes. If you use a five and a half to six million dollar impact number for the full year, you'll be in line.

Bradley Herring: Yeah. The full-year impact on an annual basis is five and a half to six million dollars. It's about $1.4 million in Q1, is what I disclosed. That's a relatively steady run rate across the different quarters. It'll kind of vary a bit with volumes. If you use a five and a half to six million dollar impact number for the full year, you'll be in line.

Uh, plans—can we put in place to maximize conversion and improve outcomes in the digital channel? Because it is, you know, such a fast channel. It's a low-expense channel, but also a high price realization channel. So we're having very, you know, constructive discussions with many of our customers, running, uh, you know, pilots and, and, and, you know, various programs to drive adoption and drive conversion in other vehicles.

Bob Labick: Okay, that sounds great. Congratulations. I'll jump back in queue, but great quarter and great outlook. Thanks.

Speaker #3: That's a relatively steady run rate. Across the different quarters, it'll kind of vary a bit with volumes. But if you use a 5.5 to 6 million dollar impact number for the full year, you'll be in line.

Peter Kelly: Thank you, Bob.

Okay, that sounds great. Congratulations. I'll jump back in the queue, but great quarter and great outlook, thanks.

Operator: The next question we have comes from Craig Kennison of Baird. Please go ahead.

Thank you, Bob.

The next question we have comes from Craig Kennison of Baird. Please go ahead.

Craig Kennison: Yeah. Hey, thanks for taking my question. I wanted to go to slide 11, if I could, and just ask you, Brad, if you could just help us understand the yield dynamic in Q1, why it dropped and what the mix issues are that impacted that.

Speaker #5: And are there any offsets to that? Charges or fees you may have charged to offset that that would also go away?

Craig Kennison: Now, are there any offsets to that, like charges or fees you may have charged, to offset that would also go away?

Speaker #3: No, that'll just be only that'll be the only impacting item.

Bradley Herring: No, that'll just be the only impacting item.

Speaker #5: Thank you.

Craig Kennison: Thank you.

Yeah. Hey thanks for taking my question. I wanted to go to slide 11. If I could and just uh ask you Brad, if you could just help us understand the the yield dynamic in q1. Why? It it dropped and and what the mix issues are that impacted that

Brad Herring: Yeah, perfect. This is Brad, I'll take that. Yeah, if you look at the yield, obviously you're talking about on the commercial side, where the yield dropped. It's a mix issue.

Speaker #3: All right.

Speaker #4: Thanks, Craig.

Bradley Herring: All right.

Peter Kelly: Thanks, Craig.

Speaker #1: Thank you. The next question we have comes from Jeff Lick of Stevens, Inc. Please go ahead.

Operator: Thank you. The next question we have comes from Jeff Lick of Stephens Inc. Please go ahead.

Yeah, perfect. This is Brad. I'll take that. So yeah, if you look at the yield, we were talking about a little commercial side. Uh, where the yield drop.

Craig Kennison: Yeah.

Brad Herring: If you think about when we talked about at Investor Day, we talked about the different yield setup for commercial across the different geographies, and we mentioned that the US range was certainly lower than Canada and Europe. If you look at the mix in the commercial space, last year, Q1, US made up about 71-ish% of the GMV that flew through the commercial space. Q1 of this year, with the ramp-up of that new customer we talked about, as well as kind of the increase, just from the lease returns, now that number's north of 75%, 76%. That's a mix issue that drove that yield down from a 159 to a 143. The yields across the different categories are relatively stable, that means it's purely mix across the geographies that's driving that.

So it's a mix issue.

Speaker #4: Good morning. Thanks for taking my question and congrats on a great quarter. Peter, I was wondering as it relates to the US dealer-to-dealer you said it was in the upper 20 range, which implies a little bit of a sequential improvement from Q4, which was in the 20-ish, up 20.

Jeff Lick: Good morning. Thanks for taking my question, and congrats on a great quarter.

Peter Kelly: Thanks, Jeff.

Jeff Lick: I was wondering, as it relates to the US dealer to dealer, you said it was in the upper 20 range, which implies a bit of a sequential improvement from Q4, which was in the 20-ish, up 20. The market was actually down a little more in Q1 than Q4, which kind of implies your spread to market is widening. I was wondering if maybe you could elaborate on any of that. Then, you know, does the lease return business kinda have a halo effect, like some kinda symbiotic effect, you know, synergistic effect that's helping drive that? If you could elaborate, that'd be great.

If you think about when we talked about Investor Day, we talked about the different yields set up for commercial across the different geographies. And we mentioned that the U.S.

Speaker #4: The market was actually down a little more in Q1 than Q4, which kind of implies your spread to market is widening. I was wondering if maybe you could elaborate on any of that and then does the lease return business kind of have a halo effect, like some kind of symbiotic effect, synergistic effect that's helping drive that?

Range was certainly lower than Canada and Europe. So, if you look at the mix in the commercial space last year, first quarter U.S. made up about 71% of the GMB that flowed through the commercial space. Q1 of this year, with the ramp up of that new customer we talked about, as well as kind of the increase,

Speaker #4: If you could elaborate, that'd be great. Yeah. Thanks, Jeff. I appreciate that. Listen, we were very pleased with the dealer performance in Q1. In aggregate, dealer volumes grew year on year by a higher number than in Q4.

Peter Kelly: Yeah. Thanks, Jeff. I appreciate that. Listen, we were very pleased with the dealer performance in Q1. You know, in aggregate, you know, dealer volumes grew year on year by a higher number than in Q4, and that was driven by the US, where year on year growth, as I said, increased to the upper twenties. As you pointed out, that was an acceleration. We feel really good about that. You know, we don't have a full industry picture yet, but we do know that dealer volumes of physical declined a little in Q1. You know, definitely looks like OPENLANE had a strong performance in terms of market share and share gains based on those results. We feel pleased about that.

Um just from the lease returns. Now that number is north of 7576 percent. So that's a mix issue that drove that yield down from a 159 to a 143, the yields across the different categories. Are relatively stable. So that means it's purely mixed across the geographies. That's driving that

Craig Kennison: Thanks. While I have you, Brad, could you just help us understand the full year implications of the repeal of the Digital Services Tax?

Brad Herring: Yeah. The full year impact on an annual basis is five and a half to six million dollars. It's about $1.4 million in Q1, is what I disclosed. That's a relatively steady run rate across the different quarters. It'll kind of vary a bit with volumes. If you use a five and a half to six million dollar impact number for the full year, you'll be in line.

Speaker #4: And that was driven by the US, where year on year growth, as I said, increased the upper 20s and, as you pointed out, that was an acceleration.

Thanks. And while I have you, Brad, could you just help us understand the full year? Implications of the repeal of the digital service tax.

Speaker #4: So we feel really good about that. We don't have a full industry picture yet, but we do know that dealer volumes are physical declined.

Speaker #4: A little in the first quarter. So definitely looks like OpenLANE had a strong performance in terms of market share and sure gains based on those results.

Craig Kennison: Now, are there any offsets to that, like charges or fees you may have charged, to offset that would also go away?

Yeah, the the full year impact on an annual basis is 5 and a half to 6 million dollars. Um it's about a million 4. In the first quarter is what I disclosed. That's a relatively steady run rate across the different quarters. It'll kind of vary a bit with volumes. But if you use a 5 and a half to 6 million dollar impact number for the full year, you'll be, you'll be in line.

Speaker #4: So we feel pleased about that. It also looks like an increased portion of the industry volumes moved towards digital. Largely driven by our volume increase.

Brad Herring: No, that'll just be the only impacting item.

And are there any offsets to that like charges or fees? You may have charged, um, to offset that that would also go away.

Peter Kelly: It also looks like, you know, an increased portion of the industry volumes moved towards digital, largely driven by our volume increase, right, based on the data we have, at least right now. Listen, feel really good about that, I think it's driven in large part by the things I've talked about on many calls, you know, our focus on the value proposition that digital offers our customers. The speed, the ease, the access to a broader network of buyers, and ultimately better outcomes for sellers. For buyers, the convenience, the peace of mind, the ability to, you know, search for vehicles and purchase vehicles without leaving your dealership, and all those types of benefits. We're very focused on that. Obviously, we've made go-to-market investments as well, Jeff, that continue to help drive those results.

No, that’ll just be the only impact to the item.

Craig Kennison: Thank you.

Thank you.

Brad Herring: All right. Thanks, Craig.

Operator: Thank you. The next question we have comes from Jeff Lick of Stephens Inc. Please go ahead.

All right. Thanks Craig.

Speaker #4: Right? Based on the data we have, at least right now. So listen, feel really good about that. I think it's driven in large part by the things I've talked about on many calls, our focus on the value proposition that digital offers our customers, the speed, the ease, the access to a broader network of buyers, ultimately better outcomes for sellers.

Thank you. The next question we have comes from Jeff Lech of Stevens, Inc. Please go ahead.

Jeff Lick: Good morning. Thanks for taking my question, and congrats on a great quarter.

Uh, good morning. Thanks for taking my question and congrats on a great quarter.

Brad Herring: Thanks, Jeff.

Jeff Lick: I was wondering, as it relates to the US dealer to dealer, you said it was in the upper 20 range, which implies a little bit of a sequential improvement from Q4, which was in the 20-ish, up 20. The market was actually down a little more in Q1 than Q4, which kind of implies your spread to market is widening. I was wondering if maybe you could elaborate on any of that. You know, does the lease return business kind of have a halo effect, like some kind of symbiotic effect, you know, synergistic effect that's helping drive that? If you could elaborate, that'd be great.

Speaker #4: And for buyers, the convenience, the peace of mind, the ability to search for vehicles and purchase vehicles without leaving your dealership and all those types of benefits.

Speaker #4: So we're very focused on that. Obviously, we've made go-to-market investments as well, Jeff, that continue to help drive those results. To the specific question on lease, does improving commercial volumes create a halo effect?

Peter Kelly: To the specific question on lease, you know, does improving commercial volumes create a halo effect? You know, I think it probably does, you know. I think dealers are aware that lease volumes are going up, and OPENLANE is, you know, well-positioned to benefit from that. If dealers want to get access to those units, then, you know, doing business with OPENLANE would be a wise choice. I think we're seeing franchise dealer registrations have improved. Our ability to convert dealers from private label buyers across into our open sale have improved. I think there is some of that for sure. I think the other thing, Jeff, is there's just a network effect, right? There's a network effect in any marketplace, as that you add more buyers, your marketplace becomes more valuable for every seller on the marketplace.

Speaker #4: I think it probably does. I think dealers are aware that lease volumes are going up, and OpenLANE is well-positioned to benefit from that. And if dealers want to get access to those units, then doing business with OpenLANE would be a wise choice.

Um, Peter. I was wondering as it relates to, um, the US dealer, the dealer. You said it was in the upper 20 range, which implies a little bit of a sequential improvement from, um, Q4 which was in the 20-ish up 20. Um, the market was actually down a little more in q1 than Q4, which kind of implies your spread to Market is widening. I was wondering if maybe you could elaborate on any of that. And then, you know, does the least return business kind of have a halo effect like some kind of symbiotic effect you know, synergistic effect that's helping drive that. Uh if you could elaborate, that'd be great.

Peter Kelly: Thanks, Jeff. I appreciate that. Listen, we were very pleased with the dealer performance in Q1. You know, in aggregate, you know, dealer volumes grew year on year by a higher number than in Q4, and that was driven by the US, where year on year growth, as I said, increased to the upper twenties. As you pointed out, that was an acceleration. We feel really good about that. You know, we don't have a full industry picture yet, but we do know that dealer volumes of physical declined a little in Q1. You know, definitely looks like OpenLane had a strong performance in terms of market share and share gains based on those results. We feel pleased about that.

Yeah, thanks, Jeff, I appreciate that. Um, listen, we were very pleased with the dealer performance in Q1. Um,

Speaker #4: So I think we're seeing franchise dealer registrations have improved. Our ability to convert dealers from private label buyers across into our open sale have improved.

You know, in aggregate of all, you know, dealer bonds, grew year-on-year by a higher number than in Q4 and that was driven by the US where year-on-year growth, as I said, increased to the upper 20s. And as you pointed out, that was an acceleration.

Speaker #4: So I think there is some of that for sure. I think the other thing, Jeff, is there's just a network effect, right? There's a network effect in any marketplace, as you add more buyers, your marketplace becomes more valuable, more valuable for every seller on the marketplace.

So we feel really good about that. You know, we don't have a full industry picture yet, but we do know that dealer volume is a physical declined.

A little in the first quarter. So um,

Speaker #4: And as you add more sellers and more inventory, it becomes more valuable to every buyer on the marketplace. So I think there's a compounding benefit that takes place over the longer term.

Peter Kelly: As you add more sellers, more inventory, it becomes more valuable to every buyer on the marketplace. I think there's a compounding benefit that takes place over the longer term, you know, on that dimension as well. I think we're benefiting from that. Listen, very pleased with the results. You know, I did also say in my remarks it was a strong spring market, you know. You know, tax refunds were relatively high. Inventory remained relatively scarce. You know, there was a lot of demand. Conversion rates were up. I would not forecast an upper 20s growth rate for the full year in the US, candidly. Obviously we're gonna drive, you know, our traction in the marketplace as strongly and aggressively as we can.

You know, definitely looks like OPENLANE had a strong performance in terms of market share and, and, uh, and share gains based on those results. So,

Peter Kelly: It also looks like an increased portion of the industry volumes moved towards digital, largely driven by our volume increase, right? Based on the data we have, at least right now. Listen, feel really good about that. I think it's driven in large part by the things I've talked about on many calls, our focus on the value proposition that digital offers our customers. The speed, the ease, the access to a broader network of buyers, ultimately better outcomes for sellers. For buyers, the convenience, the peace of mind, the ability to search for vehicles and purchase vehicles without leaving your dealership and all those types of benefits. We're very focused on that. Obviously, we've made go-to-market investments as well, Jeff, that continue to help drive those results.

Speaker #4: On that dimension as well. And I think we're benefiting from that. So listen, very pleased with the result. I did also say in my remarks, it was a strong spring market.

Speaker #4: Tax refunds were relatively high. Inventory remained relatively scarce. So there was a lot of demand. Conversion rates were up. I would not forecast an upper 20s growth rate for the full year.

Um, we feel pleased about that. It also looks like, you know, an increased portion of the industry volumes move towards digital uh largely driven by our volume increase, right? Um, based on the data we have at least right now. So, um, listen feel really good about that. Um, I think it's driven in large part by the things I've talked about, on on many calls. You know, our focus on the value proposition that digital offers our customers, the speed, the ease, the access to a, a broader network of buyers, um, ultimately better outcomes for sellers.

Speaker #4: In the US, candidly. But obviously, we're going to drive we're going to drive our traction in the marketplace as strongly and aggressively as we can.

and for buyers, the convenience, the peace of mind uh the ability to, you know,

search for vehicles and purchase vehicles without leaving your dealership, and all those

Speaker #3: And then just a quick follow-up on commercial. Did you say in your prepared remarks commercial is up 24.6, call it 25, that X, the new customer commercial, would have been up 6, implying that the new customer was 19?

Jeff Lick: Just a quick follow-up on commercial. Did you say in your prepared remarks that your commercial was up 24.6, call it 25, that ex the new customer commercial would have been up 6, implying that the new customer was 19?

Peter Kelly: To the specific question on lease, you know, does improving commercial volumes create a halo effect? You know, I think it probably does, you know. I think dealers are aware that lease volumes are going up, and OPENLANE is, you know, well-positioned to benefit from that. If dealers want to get access to those units, then, you know, doing business with OPENLANE would be a wise choice. I think we're seeing franchise dealer registrations have improved. Our ability to convert dealers from private label buyers across into our open sale have improved. I think there is some of that, for sure. I think the other thing, Jeff, is there's just a network effect, right?

All those types of benefits. So we're very focused on that. Obviously, we've made go to market Investments as well Jeff that that continue to help drive those results.

to the specific question on lease, you know, does improving commercial volumes, create a halo effect

Speaker #4: Yeah. Well, yeah. That's what I said. Commercial is up 25-ish. Excluding new customer, up 6. So the new customer was a pretty significant step function.

Peter Kelly: Well, that's what I said. Commercial was up 25-ish, excluding new customer of 6. The new customer was a, you know, a pretty significant step function. Maybe 1 comment on that. With this new customer, we're essentially handling all of their transactions, including all payoffs. That's not always the case. In fact, I would say the majority of our customers, that's not the case. We do it for a number of others, but we do it for this 1. This customer, you know, we're kind of indifferent to, we're not indifferent from an economic standpoint because the economics are different, but from a transaction count standpoint, you know, all those transactions get processed through our platform.

Peter Kelly: Well, that's what I said. Commercial was up 25-ish, excluding new customer of six. The new customer was a, you know, a pretty significant step function. Maybe one comment on that. With this new customer, we're essentially handling all of their transactions, including all payoffs. That's not always the case. In fact, I would say the majority of our customers, that's not the case. We do it for a number of others, but we do it for this one. This customer, you know, we're kind of indifferent to, we're not indifferent from an economic standpoint because the economics are different, but from a transaction count standpoint, you know, all those transactions get processed through our platform.

You know, I think it probably does, you know. Um I think dealers are aware that lease volumes are going up and open Lane is, you know, well, positioned to to benefit from that. And if dealers want to get access to those units, then, you know, doing business with open Lane would be a wise.

Speaker #4: And maybe one comment on that. With this new customer, we're essentially handling all of their transactions, including all payoffs. And that's not always the case.

A wise choice. So I think we're seeing franchise dealer. Registrations have improved, our ability to convert dealers from private label buyers across into our open sale have improved.

um,

Speaker #4: In fact, I would say the majority of our customers, that's not the case. We do it for a number of others, but we do it for this one.

So I think there is some of that for sure. Um,

Peter Kelly: There's a network effect in any marketplace, as that you add more buyers, your marketplace becomes more valuable for every seller on the marketplace. As you add more sellers, more inventory, it becomes more valuable to every buyer on the marketplace. I think there's a compounding benefit that takes place over the longer term, you know, on that dimension as well, and I think we're benefiting from that. Listen, very pleased with the results. You know, I did also say in my remarks it was a strong spring market, you know. You know, tax refunds were relatively high. Inventory remained relatively scarce, you know, there was a lot of demand. Conversion rates were up. I would not forecast an upper 20s growth rate for the full year in the US, candidly.

Speaker #4: So this customer we're kind of indifferent to well, we're not indifferent from an economic standpoint because the economics are different, standpoint, all those transactions get processed through our platform.

Speaker #4: So it was a pretty significant volume impact, but it had some as Brad alluded to, some mixed impacts because we got a bunch of payoffs and lower revenue transactions.

Peter Kelly: It was a pretty significant volume impact, but it had some, you know, as Brad alluded to, some mix, you know, some mix impacts because, you know, we got a, you know, a bunch of payoffs and lower revenue transactions as part of that.

Speaker #4: That's part of that. But still, it's very good business. And by the way, all of those transactions, whether it's a payoff or not, it brings a dealer to our platform to do a transaction.

I think the other thing Jeff is there's just a network effect, right? There's a network effect in any Marketplace. As that you add more buyers, your Marketplace becomes more valuable more valuable for every seller on the marketplace. And as you add more sellers, more inventory, it becomes more valuable to every buyer on the marketplace. So I think there's a compounding benefit that takes place over the over the longer term, you know, on that Dimension as well. And I think we're benefiting from that. So listen, um, very pleased with the result, you know? I did also send my remarks, it was a strong spring Market, you know. Um,

Jeff Lick: And was-

Peter Kelly: It's very good business. By the way, all of those transactions, whether it's a payoff or not, it brings a dealer to our platform to do a transaction. That's always gonna be a good thing because that's sort of at a touch point where they then can, you know, launch into other parts of our services.

Speaker #4: And that's always going to be a good thing because that's sort of a touchpoint where they then can launch into other parts of our services.

you know, uh, tax refunds were relatively high inventory, remained relatively scarce. So, you know, there was a lot of demand conversion rates were up.

Peter Kelly: Obviously, we're going to drive, you know, our traction in the marketplace as strongly and aggressively as we can.

Jeff Lick: Was Q1 disproportionately high because maybe there was some, you know, bottleneck units from Q4 that flow into Q1? Or will this type of similar impact flow through for the next 3 quarters?

Jeff Lick: Was Q1 disproportionately high because maybe there was some, you know, bottleneck units from Q4 that flow into Q1? Or will this type of similar impact flow through for the next Q3?

Um, I would not forecast an upper 20s growth rate for the full year in the US candidly. But obviously, we're going to drive. Uh, we're going to drive

Speaker #3: will this type of similar impact flow through for the next three quarters?

Jeff Lick: Just a quick follow-up on commercial, did you say in your prepared remarks that your commercial was up 24.6, call it 25, that X the new customer commercial would have been up 6, implying that the new customer was 19?

Uh, you know, our our, our Traction in the marketplace as strongly as aggressively as we can.

Speaker #4: It's hard to say. I don't think there was a bottlenecking Jeff. But every customer has different quarterly profiles of their maturities based on the lease programs that they ran two, three years ago.

Peter Kelly: It's hard to say. I don't think there was a bottlenecking, Jeff, you know. You know, every customer has, you know, different quarterly profiles of their maturities based on, you know, the lease programs that they ran two, three years ago, the incentives that they ran two, three years ago. You know, it'll ebb and flow, but I don't think there was a bottlenecking. I would expect a solid positive volume impact from this customer through the rest of this year.

And then just a quick follow-up on. Um, commercial. Did you say in your prepared? Remarks, you know, commercial is up 24.6, call the 25.

At X, the new customer commercial would have been up 6.

Peter Kelly: Yeah, that's Well, yeah, that's what I said. Commercial was up 25-ish, excluding new customer, up 6. The new customer was a, you know, a pretty significant step function. Maybe one comment on that. With this new customer, we're essentially handling all of their transactions, including all payoffs. That's not always the case. In fact, I would say the majority of our customers, that's not the case. We do it for a number of others, but we do it for this one. This customer, you know, we're kind of indifferent to we're not indifferent from an economic standpoint because the economics are different, but from a transaction count standpoint, you know, all those transactions get processed through our platform.

Speaker #4: The incentives that they ran two, three years ago. So it'll ebb and flow, but I don't think there was a bottlenecking. So I would customer through the rest of this year.

Yeah, that's well, um, yeah, that's what I said commercial is up 25-. Uh, excluding new customer up 6.

So the new customer was a, you know, a pretty significant step function and maybe 1 1 comment on that. Um,

Speaker #3: And I would assume, given that this is a luxury customer, most greater portion of could be even bigger.

Jeff Lick: I would assume, given that this is a luxury customer, most like a greater portion of luxury leases happen in Q4, so Q4 could be even bigger.

with this new customer, we're essentially handling all of their transactions, including all payoffs, and that's not

Speaker #4: I hadn't thought of that. It's possible. I wouldn't know. I don't know at this moment.

Peter Kelly: I hadn't thought of that. It's possible. I wouldn't know. I don't know at this moment.

Always the case. In fact, I would say the majority of our customers. That's not the case. We do it for a number of others, but we do it for this 1. So,

Speaker #3: Okay. Awesome. Well, thanks very much. And best of luck to you too.

Jeff Lick: Okay.

Peter Kelly: Yeah.

Jeff Lick: Awesome. Well, thanks very much, and best of luck in Q2.

Speaker #4: Thank you, Jeff. Appreciate the questions.

Peter Kelly: Thank you, Jeff. Appreciate the questions.

So this customer, you know, we're kind of indifferent to, so we're not indifferent from an economic standpoint because the economics are different. But from a transaction count standpoint,

Speaker #1: Thank you. The next question we have comes from John Babcock of Barclays. Please go ahead.

Operator: Thank you. The next question we have comes from John Babcock of Barclays. Please go ahead.

Speaker #5: Hey, Morgan. Thanks for taking my questions. I guess just to quickly follow up on that last one. So it sounds like that mixed impact is going to continue through the year just because of this new customer.

John Babcock: Hey, good morning, and thanks for taking my questions. I guess just to quickly follow up on that last one. It sounds like that mix impact is gonna continue through the year just because of this new customer. Is that fair to say?

Brad Herring: It was-

Speaker #5: Is that fair to say?

Speaker #4: there's a whole bunch of different things going on in the mix. And Brad touched on them. If I could kind of summarize, I'd say luxury leases happen in Q4, so Q4 we're seeing because of the new customer, obviously, a volume impact and that customer we're handling a lot of payoffs there.

Peter Kelly: I'd say there's a whole bunch of different things going on in the mix, and Brad touched on them. If I could kind of summarize, I'd say we're seeing, because of the new customer, you know, obviously a volume impact and, you know, that customer, we're handling a lot of payoffs there. That tends to sort of have a sort of, I'll say, a somewhat negative impact on yields. Offsetting that, you know, we're seeing cars flow deeper in the funnel, more into the non-grounding dealer and open. That has a positive impact on mix. We're seeing our US private label volumes increase relative to all of our other commercial volumes. There's a lot of puts and takes in there that are driving that, John. Brad, do you wanna comment?

You know, all those transactions, get processed through our platform. So it was a pretty significant volume impact, but it had some, you know, as Brad alluded to some mix, you know, some mixed impacts because, you know, we got a, you know, a bunch of payoffs and and lower lower Revenue transactions as part of that. But still, it's a very good business. And by the way, all of those transactions where there's a payoff or not, it brings a dealer to our platform to do a transaction and that's always going to be a good thing because that's

Jeff Lick: Was Q1 disproportionately high because maybe there was some, you know, bottleneck units from Q4 that flow into Q1, or will this type of similar impact flow through for the next 3 quarters?

that that sort of is a touch point where they then can, you know, launch into other parts of our services.

Speaker #4: So that tends to sort of have sort of, I'll say, a somewhat negative impact on yield. Offsetting that, we're seeing cars flow deeper in the funnel, more into the non-grounding dealer and open.

and with q1 disproportionately high because maybe there was some, you know, bottleneck units from Q4 that flow into q1, or will this this type of similar impact flow through for the next 3 quarters,

Peter Kelly: It's hard to say. I don't think there was a bottlenecking, Jeff, you know. You know, every customer has, you know, different quarterly profiles of their maturities based on, you know, the lease programs that they ran 2, 3 years ago, the incentives that they ran 2, 3 years ago. You know, it'll ebb and flow, but, I don't think there was a bottlenecking. I would expect, I would expect a solid positive volume impact from this customer through the rest of this year.

Speaker #4: That has a positive impact on mix. And then we're seeing our US private label volumes increase relative to all of our other commercial volumes.

It's hard to see. I don't think there was a bottlenecking. Uh, Jeff, you know. Um,

Speaker #4: So there's a lot of puts and takes in there. That are driving that, John. Brad, do you want to comment?

But, you know, every customer has

Speaker #3: Yeah, John, just to add on to that, I mentioned in my comments that the yields in the US commercial were flat. But to kind of peel back Peter's comment a little bit, this new customer certainly was deluded to that.

Bradley Herring: Yeah, John, just to add on to that. I mentioned in my comments that the yields in the US commercial were flat. To kind of peel back Peter's comment a little bit, this new customer certainly was dilutive to that. It's a higher end, higher GMV per sale transaction at a lower yield because of that mix, a little bit more concentrated at the top of the funnel related to those payoffs that we're processing. On the other side of that, you actually saw some pretty substantial yield improvement on the non-new customers as those transactions have now flowed deeper into the waterfall. What that netted out to was a yield that was essentially around flat from what we talked about at Investor Day, but it does have those two moving components embedded in it.

Speaker #3: It's a higher-end, higher GMV per sale transaction. At a lower yield because of that mixed, a little bit more concentrated at the top of the funnel related to those payoffs that were processing.

So, I would expect, I would expect a solid positive volume impact from this customer to the rest of this year.

Jeff Lick: I would assume, given that this is a luxury customer, a greater portion of luxury leases happen in Q4. Q4 could be even bigger.

And I would assume given that this is a luxury customer.

Speaker #3: On the other side of that, you actually saw some pretty substantial yield improvement on the non-new customers. As those transactions have now flowed deeper into the waterfall.

Most like a greater portion of luxury leases happen in Q4. So Q4 could be even bigger.

Peter Kelly: Yeah, I hadn't thought of that. It's possible. I, I wouldn't know. I don't know at this moment.

Jeff Lick: Okay. Awesome. Well, thanks very much, and best of luck in Q2.

I hadn't thought of that. It's possible. I I I wouldn't know. I don't know at this moment, okay?

Speaker #3: So what that netted out to was a yield that was essentially around flat from what we talked about at Investor Day. But it does have those two moving components embedded in it.

Peter Kelly: Thank you, Jeff. Appreciate the questions.

Yeah, awesome. Well, thanks very much, and uh, that's all I need you to do.

Thank you, Jeff, appreciate the questions.

Operator: Thank you. The next question we have comes from John Babcock of Barclays. Please go ahead.

Speaker #5: Okay. That's very helpful. And now as we think about the off-lease volumes for the year, I was just kind of curious because it seems like demand is probably going to be pretty strong for those, especially with affordability challenges.

John Babcock: Okay. That's very helpful. Now as we think about the off-lease volumes for the year, I was just kinda curious because it seems like demand is probably gonna be pretty strong for those, especially with affordability challenges, and it seems like people are more willing now to take on used vehicles than pay the higher prices for new. Are there any concerns that those off-lease volumes will stay more with the grounding dealer? Is there any reason to think that that will happen? Is that not necessarily a fair assumption?

Thank you. The next question we have comes from John Babcock of Barclays. Please go ahead.

Speaker #5: And it seems like people are more willing now to take on used vehicles than pay the higher prices for new. Are there any concerns that those off-lease volumes will stay more with the grounding dealer?

Hey, good morning and thanks for taking my questions. Um, I guess just to quickly follow up on that last 1. Um, so it sounds like that mix impact is going to continue through the year just because of this new customer. Is that fair to say?

Peter Kelly: I'd say there's a whole bunch of different things going on in the mix, and Brad touched on them. If I could kind of summarize, I'd say we're seeing, because of the new customer, you know, obviously a volume impact and, you know, that customer, we're handling a lot of payoffs there. That tends to sort of have a sort of, I'll say, a somewhat negative impact on yields. Offsetting that, you know, we're seeing cars flow deeper in the funnel, more into the non-grounding dealer and OPENLANE. That has a positive impact on mix. We're seeing our US private label volumes increase relative to all of our other commercial volumes. There's a lot of puts and takes in there that are driving that, John. Brad, do you want to comment?

Speaker #5: Or is there any reason to think that that will happen? Or is that not necessarily a fair assumption?

Peter Kelly: You know, it's a good question, John. I think, you know, one thing we saw in Q1 was used vehicle values went up in value. Used vehicles went up in value, right? Because of the supply-demand situation you talked about. What that does is that essentially increases the equity that consumers have in their off-lease volume. To some extent, that could delay a little bit, you know, or could impact the sort of consumer payoff percentage, and that's something we've talked about in the past. There's a lot of sort of give and take here, but I think fundamentally, you know, what do we know is true? Maturities coming off lease, those are going up, okay? They're going up in Q2 and accelerating into Q3 and Q4. You know, we have seen consumer payoffs come down a little bit.

Speaker #4: It's a good question, John. I think one thing we saw in Q1 was used vehicle values went up in value. Used vehicles went up in value, right?

I'd say there's a whole bunch of different things going on in the mix and Brad touched on them. If I if I could kind of summarize, I'd say we're seeing because of the new customer, you know, obviously a volume impact and you know that customer were handling a lot of payoffs there so that tends to sort of

Have sort of, I'll say, a somewhat negative impact on yields offsetting that.

Speaker #4: Because of the supply-demand situation you talked about. What that does is that essentially increases the equity that consumers have in their off-lease volumes. So to some extent, that could delay a little bit or could impact the sort of consumer payoff percentage.

Brad Herring: Yeah, John, just to add on to that. I mentioned in my comments that the yields in the US commercial were flat, but to kind of peel back Peter's comment a little bit, this new customer certainly was diluted to that. It's a higher end, higher GMV per sale transaction at a lower yield because of that mix, a little bit more concentrated at the top of the funnel related to those payoffs that we're processing. On the other side of that, you actually saw some pretty substantial yield improvement on the non-new customers as those transactions have now flowed deeper into the, into the waterfall. What that netted out to was a yield that was essentially around flat from what we talked about at Investor Day, but it does have those two moving components embedded in it.

Speaker #4: And that's something we've talked about in the past. So there's a lot of sort of give-and-take here. But I think fundamentally, what do we know is true?

Speaker #4: Maturities coming off-lease, those are going up, okay? They're going up in the second quarter and accelerating into the third and fourth. We have seen consumer payoffs come down a little bit.

You know, we're seeing cars flow deeper in the funnel, more into the non-growing dealer, and open, and that has a positive impact on mix. And then we're seeing our U.S. private label volumes increase relative to all of our other commercial volumes. So there's a lot of puts and takes in there, um, that are driving that. John Brad, do you want to comment? Yeah. John, just to add on to that—if I… I mentioned in my comments that the yields in the U.S. commercial were flat, but to kind of peel back Peter's comment a little bit. This new customer certainly was dilutive, too, that it's a higher-end, higher GMV-per-sale transaction.

Speaker #4: They were down a little bit Q1 versus Q1 of last year. So there's more cars flowing our way. And then those cars are flowing deeper in the funnel.

Peter Kelly: They were down a little bit Q1 versus Q1 of last year. There's more cars flowing our way, and then those cars are flowing deeper in the funnel. Market conditions do drive those things, John, and, you know, I don't know if I can predict with precision all of the puts and takes on that. I think fundamentally, I feel very optimistic and very positive about the setup for commercial, both for the balance of this year, but also looking further out into 2027 and 2028.

At a lower yield because of that mix a little bit more concentrated at the top of the funnel related to those payoffs. That were processing,

Speaker #4: But market conditions do drive those things. John, and I don't know if I can predict with precision all of the puts and takes on that.

Speaker #4: But I think fundamentally, I feel very optimistic and very positive about the setup for commercial, both for the balance of this year but also looking further out into 27 and 28.

On the other side of that, you actually saw some pretty substantial yield Improvement on the non new customers as those transactions have now flowed deeper into the into the waterfall. So what that netted out to was a yield that was essentially around flat, from what we talked about at investor day, but it does have those 2 moving components embedded in it.

John Babcock: Okay. That's very helpful. Now as we think about the off-lease volumes for the year, I was just kinda curious because it seems like demand is probably gonna be pretty strong for those, especially with affordability challenges, and it seems like people are more willing now to take on used vehicles than pay the higher prices for new. Are there any concerns that those off-lease volumes will stay more with the grounding dealer, or is there any reason to think that that will happen, or is that not necessarily a fair assumption?

Speaker #5: Okay. Very helpful. Thanks. And then just last question, if you don't mind. I was just kind of curious. I mean, dealer volumes were quite strong in the first quarter.

John Babcock: Okay. Very helpful. Thanks. Then just last question, if you don't mind. I was just kinda curious, I mean, dealer volumes were quite strong in Q1. Are you able to provide any sort of sense or do you have any sense as to how those volumes have done so far in Q2? It seems like Q1 was generally a pretty good quarter overall, at least for the used market. Seems like that market was pretty tight, but just curious to what you're seeing.

Speaker #5: Are you able to provide any sort of sense or do you have any sense as to how those volumes have done so far in 2Q?

Speaker #5: It seemed like 1Q was generally a pretty good quarter overall, at least for the used market. It seems like that market was pretty tight.

Speaker #5: But just curious to see what you're seeing.

Okay, that's very helpful. Um, and now, as we think about the Off Lease volumes for the year, I I was just kind of curious because it seems like demand is probably going to be pretty strong for those, especially with affordability challenges. And it seems like people are more willing now to take on used vehicles than than pay the higher prices for new are, are, are there any concerns that those awfully volumes will stay more with the grounding dealer? Or is any is there any reason to think that that will happen or is that

Not necessarily a fair, assumption.

Speaker #4: Yeah. Well, listen, in our industry, there's normally a spring market. We'll call it that's what we call a spring market driven by the tax refund season.

Peter Kelly: You know, it's a good question, John. I think, you know, one thing we saw in Q1 was used vehicle values went up in value. Used vehicles went up in value, right? Because of the supply-demand situation you talked about. What that does is that essentially increases the equity that consumers have in their off-lease volumes. To some extent, that could delay a little bit, you know, or could impact the sort of consumer payoff percentage, and that's something we've talked about in the past. There's a lot of sort of give and take here, but I think fundamentally, you know, what do we know is true? Maturities coming off lease, those are going up. Okay. They're going up in Q2 and accelerating into Q3 and Q4. You know, we have seen consumer payoffs come down a little bit.

Peter Kelly: Well, listen, in our industry there's normally, you know, a spring market. We call it, you know, that's what we call a spring market driven by the tax refund season. The spring market usually kind of loses a bit of steam around mid-April, you know, and there tends to be a little bit of a fallback, but not a massive one. You could look at previous years' results to see how the quarters trend. I would say this year kind of is exhibiting sort of a similar pattern to the normal seasonal pattern, nothing abnormal. That I'd say, you know, it's still in my views, continues to be a pretty robust market, you know, in terms of used car demand versus supply.

Um, you know, it's a good question, John I think.

Speaker #4: The spring market usually kind of loses a bit of steam around mid-April. And there tends to be a little bit of a fallback. But not a massive one.

Speaker #4: You could look at previous years' results to see how the quarter's trend. I would say this year, kind of is exhibiting sort of a similar pattern to the normal seasonal pattern.

You know, one thing we saw in Q1 was used vehicle values. Went up in value—used vehicles went up in value, right? Because of the supply-demand, uh, situation. You talked about what that does is that essentially increases the equity that consumers have in their off-lease volumes. So to some extent, that could delay a little bit.

Speaker #4: Nothing abnormal. And that I'd say it's still, in my view, continues to be a pretty robust market in terms of used car demand versus supply.

You know, or could could impact the sort of consumer payoff percentage, and that's something we've talked about in the past. So there's a lot of sort of give and take here, but I think fundamentally, you know what what do we know is true maturities?

Speaker #5: Okay. Thanks for all the color.

John Babcock: Okay. Thanks for all the color.

Speaker #3: You're welcome.

Peter Kelly: You're welcome.

Speaker #1: Thank you. Ladies and gentlemen, just a final reminder. If you would like to ask a question, please press star and then one. Now. The next question we have comes from Gary Prestopino of Barrington Research.

Operator: Thank you. Ladies and gentlemen, just a final reminder, if you would like to ask a question, please press star and then one now. The next question we have comes from Gary Prestopino of Barrington Research. Please go ahead.

Coming off at least, those are going up, okay? They're going up in the second quarter and accelerating into the third and fourth, you know, we have seen consumer, payoffs come down a little bit, they were down a little bit, q1 versus q1 of last year.

Speaker #1: Please go ahead.

Speaker #6: Good morning, Peter and Brad. Hey, Peter, I just got a question. You said you're open sales and commercial doubled in the quarter, which means things are flowing down the funnel.

Gary Prestopino: Good morning, Peter and Brad. Hey, Peter, I just got a question. You said your open sales and commercial doubled in the quarter, which means things are flowing down the funnel. But, you know, given that we've just seen this turn in lease returns, were you surprised at that magnitude of what's coming, you know, outside of the franchise dealers buying these cars? What does that indicate? Does that indicate that the franchise dealers have solid used vehicle inventory and, you know, more of this is gonna flow down to the independent dealers?

Uh, so there's more cars, slowing our way and then those cars are flowing deeper in the funnel. But but market conditions, do drive those things. Um, John and, and, you know, I don't know if I can predict with Precision, all of all, of the puts and takes on that, but I think

Speaker #6: But given that we've just seen this turn in lease returns, were you surprised that that magnitude of what's coming outside of the franchise dealers buying these cars?

John Babcock: Okay. Very helpful. Thanks. Just last question, if you don't mind. I was just kinda curious. I mean, dealer volumes were quite strong in Q1. Are you able to provide any sort of sense, or do you have any sense as to how those volumes have done so far in Q2? It seems like Q1 was generally a pretty good quarter overall, at least for the used market. Seems like that market was pretty tight, but, just curious to what you're seeing.

Fundamentally. I feel very optimistic and very positive about the setup for commercial both for the balance of this year. But also looking further out into 27 and 28,

Speaker #6: And what does that indicate? Does that indicate that the franchise dealers have solid used vehicle inventory and more of this is going to flow down to the independent dealers?

Speaker #3: Yeah. Good question, Gary. I wasn't massively surprised by the doubling. I was expecting high growth. 50% to 100% somewhere in that range. It's growing off a fairly small number.

Peter Kelly: Yeah, a good question, Gary. You know, I wasn't massively surprised by the doubling. I was expecting high growth, you know. 50% to 100%, somewhere in that range. It's growing off a fairly small number, so there's that impact as well, you know.

Peter Kelly: Yeah. Well, listen, in our industry there's normally, you know, a spring market, we call it, you know, that's what we call a spring market, driven by the tax refund season. The spring market usually kind of loses a bit of steam around mid-April, you know, and there tends to be a little bit of a fallback, but not a massive one. You could look at previous years' results to see how the quarters trend. I would say this year kind of is exhibiting sort of a similar pattern to the normal seasonal pattern, nothing abnormal. That I'd say, you know, it's still in my views, continues to be a pretty robust market, you know, in terms of used car demand versus supply.

Okay, very helpful. Thanks. And then just last question if you don't mind, I was just kind of curious. I mean dealer volumes were quite strong in the first quarter. Um, are you able to provide any sort of sense or do you, do you have any any sense as to how those volumes have done so far? In 2q, it seemed like 1 Q. Was generally a pretty good quarter overall, at least for for the used Market seems like that market was pretty tight but um, just curious to see what you're seeing.

Speaker #3: So there's that impact as well. But nonetheless, it was a strong year-on-year increase as we have seen for at least a few quarters in that commercial open transaction piece.

Gary Prestopino: Okay.

Peter Kelly: Nonetheless, it was a strong, you know, year-on-year increase, as we have seen for, you know, at least a few quarters in that commercial OPENLANE transaction piece. Just because they sell in OPENLANE doesn't mean they sell to an independent dealer. I wanna be clear about that.

Yeah. Well, listen in our industry. There's normally, you know, a spring Market, we call it, you know. That's that's what we call a Spring Market driven by the tax refund season. Um, the spring market usually kind of loses a bit of steam around mid April, you know. And there tends to be a little bit of a fall back but but not a massive 1, you could look at previous year's results to see how the quarter's Trend, um,

Speaker #3: Just because they sell in open doesn't mean they sell to an independent dealer. I want to be clear about that. If there's a, let's say, for example, a Ford vehicle coming through the Ford private label, well, a Honda dealer can't buy that on the Ford private label.

Abnormal.

Gary Prestopino: Right

Peter Kelly: let's say for example, a Ford vehicle coming through the Ford private label, well, a Honda dealer can't buy that on the Ford private label. If a Honda dealer wants to buy it, they've got to wait till it gets to the open sale 'cause they don't have access to the private label. Even though they're selling in the open, there's still a high percentage of franchise dealers buying them in that channel. They're just buying them across brand. You have the, you know, the large used car retail operations buying them there too, as well as independent dealers. It's a mix of all three customer groups that represent the buyers there. No, I think generally, listen, pleased with how it's going.

Um and that I'd say, you know, it's still in my views continues to be a pretty robust Market. You know, in terms of used car Demand versus Supply.

John Babcock: Okay. Thanks for all the color.

Speaker #3: If a Honda dealer wants to buy it, they've got to wait till it gets to the open sale because they don't have access to the private label.

Okay, thanks to all the callers.

Peter Kelly: You're welcome.

You're welcome.

Operator: Thank you. Ladies and gentlemen, just a final reminder. If you would like to ask a question, please press star and then one now. The next question we have comes from Gary Prestopino of Barrington Research. Please go ahead.

Speaker #3: So even though they're selling in the open, there's still a high percentage of franchise dealers buying them in that channel. They're just buying them across brand.

Thank you, ladies and Gentlemen, Just a final reminder, if you would like to ask a question, please press star and then 1 now.

Speaker #3: You have the large used car retail operations buying them there too, as well as independent dealers. So it's a mix of all three customer groups that represent the buyers there.

Gary Prestopino: Good morning, Peter and Brad. Hey, Peter, I just got a question. You said your open sales and commercial doubled in the quarter, which means things are flowing down the funnel. You know, given that we've just seen this turn in lease returns, were you surprised at that magnitude of what's coming, you know, outside of the franchise dealers buying these cars? What does that indicate? Does that indicate that the franchise dealers have solid used vehicle inventory and, you know, more of this is gonna flow down to the independent dealers?

The next question we have comes from Gary prestipino of barington, research. Please go ahead.

Speaker #3: So no, I think generally, listen, pleased with how it's going. We're working with many of our commercial sellers to improve their performance and drive further conversion in that open sale channel because sellers increasingly see it as a very strategic to them.

Peter Kelly: We're working with many of our commercial sellers to improve their performance and drive further conversion in that open sale channel because sellers increasingly see it as very strategic to them. It's kind of their last chance to sell the car before they start incurring significant downstream expenses for moving the vehicle, you know, waiting, you know, a number of extra weeks before they sell the car, all that sort of stuff. We're having very productive discussions and strategies that are helping drive that performance, and we're gonna be doing more and more of that, you know, in the quarters to come.

Speaker #3: It's kind of their last chance to sell the car before they start incurring significant downstream expenses for moving the vehicle waiting a number of extra weeks before they sell the car, all that sort of stuff.

Good morning. Uh, Peter and Brad. Hey, um, Peter, I just got a question. You said you're open sales and Commercial gobbled in the quarter, which means things are slowing down the funnel. But, you know, given that we've just seen this turn in, in lease returns were you surprised that that magnitude of what what's coming? You know, outside of the franchise dealers, buying these cars and and and what does that indicate? Does that indicate that the the franchise dealers have solid uh used vehicle inventory? And you know more this is going to flow down to the uh independent dealers.

Speaker #3: So we're having very productive discussions. And strategies are helping drive that performance. And we're going to be doing more and more of that in the quarters to come.

Peter Kelly: Yeah, a good question, Gary. You know, I wasn't massively surprised by the doubling. I was expecting high growth, you know. You know, 50% to 100%, somewhere in that range. It's growing off a fairly small number, so there's that impact as well, you know.

Speaker #4: Okay. Thank you very much.

Gary Prestopino: Okay. Thank you very much.

Speaker #3: Thanks, Gary.

Yeah, a good question, Gary. You know, I I wasn't massively surprised by the the the doubling I was expecting high growth, you know? Um

Peter Kelly: Thanks, Gary.

Speaker #1: Thank you. The next question we have comes from Rajat Gupta of JPMorgan. Please go ahead.

Operator: Thank you. The next question we have comes from Rajat Gupta of JPMorgan. Please go ahead.

Gary Prestopino: Okay.

Peter Kelly: Nonetheless, it was a strong year-on-year increase, as we have seen for at least a few quarters in that commercial open transaction piece. Just because they sell in open doesn't mean they sell to an independent dealer. I wanna be clear about that. Like, if there's a let's say, for example, a Ford vehicle coming through the Ford private label. Well, a Honda dealer can't buy that on the Ford private label. If a Honda dealer wants to buy it, they've got to wait till it gets to the open sale, because they don't have access to the private label. Even though they're selling in the open, there's still a high percentage of franchise dealers buying them in that channel. They're just buying them across brand.

Speaker #5: Great. Thanks for taking the question. Just to follow up, a couple of clarifications after that. Could you quantify the open sale units that you're seeing in commercial?

Rajat Gupta: Great. Thanks for taking the question. Just to follow up, a couple clarifications after that. Could you quantify the OPENLANE, you know, sale units that you're seeing in commercial? You know, any unit number or percentage number you could throw out for the quarter?

50 50, you know, 50% to 100% somewhere in that range. It's it's growing off a fairly small number. So there's that impact as well, you know? Um, but but nonetheless, it was a strong.

You know, year-on-year increase. Uh,

As we have seen for, you know, at least a few quarters in that commercial, uh, open—

Speaker #5: Any unit number or percentage number you could throw out for the quarter?

Speaker #4: Yeah. We don't comment on we don't comment on that number. Rajat, I would say our open sale in the US skews heavily towards dealer.

Peter Kelly: Yeah. We don't comment on that number, Rajat. Yeah, I would say our OPENLANE in the US skews heavily towards dealer, but commercial is, you know, an increasing percentage over time. If I look at our year-on-year growth in the OPENLANE in the US, again, we said dealer grew, you know, high twenties. Commercial grew, you know, approximately double. From that we can determine commercial obviously, you know, was a bigger percentage in Q1 this year than a year ago. We don't release that exact, that exact number.

Uh transaction piece um just because they sell in open doesn't mean they sell to an independent dealer. I want to be clear about that. Like if there's a let's say for example, a 4 vehicle coming through the Ford private label,

Speaker #4: But commercial is an increasing percentage. Over time. And if I look at our year-on-year growth in the open sale, in the US, again, we said dealer grew high 20s.

Peter Kelly: You have the, you know, the large used car retail operations, buying them there too, as well as independent dealers. It's a mix of all three customer groups that represent the buyers there. No, I think generally, listen, pleased with how it's going. We're working with many of our commercial sellers to improve their performance and drive further conversion in that open sale channel because sellers increasingly see it as very strategic to them. It's kind of their last chance to sell the car before they start incurring significant downstream expenses for moving the vehicle, you know, waiting, you know, a number of extra weeks before they sell the car, all that sort of stuff.

Um well a Honda dealer, can't buy that on the Ford private label if a Honda dealer wants to buy it, they've got to wait till it gets to the open sale because they don't have access to the private label. So even though they're selling in the open, there's still a high percentage of franchise dealers buying them in that channel. They're just buying them across brands.

Speaker #4: Commercial grew approximately double. So from that, we can determine commercial, obviously, was a bigger percentage in Q1 this year than a year ago. But we don't release that exact number.

You have the, you know, the large, uh, used car retail operations buying them there too, as well as independent dealers. So it's a mix of all three customer groups that represent the buyers there.

Um, so no, I think generally uh, listen pleased with how it's going. Um,

Speaker #5: Understood. And just on the guidance, given the strong first quarter, just as you have normal seasonality, it would imply somewhere above the upper end.

Rajat Gupta: Understood. Just on the guidance, you know, given, you know, the strong Q1, if you just assume normal seasonality, you know, it would imply somewhere above the upper end of the new range. I'm curious if especially in light of, you know, you know, the off-lease picking up, you know, later this year, I'm curious, is there any conservatism baked in, you know, in the H2, you know, with regard to new car sales or anything around the macro? Is it not right to assume normal seasonality? Just making sure we're looking at this correctly. Any color would be helpful. Thanks.

Speaker #5: The new range I'm curious, especially in light of the awfully spicking up later this year, I'm curious, is there any conservatism baked in in the second half with regard to new car sales or anything around the macro?

Peter Kelly: We're having very productive discussions and strategies that are helping drive that performance, and we're gonna be doing more and more of that, you know, in the quarters to come.

We're working with many of our commercial sellers to improve their performance and drive further conversion in that Opal Open Sale channel, because sellers increasingly see it as very strategic to them. It's kind of their last chance to sell the car before they start incurring significant downstream expenses for moving the vehicle, you know, waiting a number of extra weeks before they sell the car, all that sort of stuff.

Gary Prestopino: Okay. Thank you very much.

So we're having a very productive discussions and strategies that are helping drive that performance. And we're going to be doing more and more of that, you know, in the quarters to come.

Okay, thank you very much.

Peter Kelly: Thanks, Gary.

Thanks Gary.

Operator: Thank you. The next question we have comes from Rajat Gupta of JPMorgan. Please go ahead.

Speaker #5: Is it not right to assume normal seasonality? Just making sure we're looking at this correctly. Any color would be helpful. Thanks.

Thank you. The next question we have comes from Urgot Gupta of JP Morgan. Please go ahead.

Rajat Gupta: Great. Thanks for taking the question. Just to follow, a couple clarifications after that. Could you quantify the OPENLANE, you know, sale units that you're seeing in commercial? You know, any unit number or percentage number you could throw out for the quarter?

Speaker #4: Yeah. Rajat, let me comment sort of high level than Brad can comment on maybe specifics and numbers. Again, listen, very pleased with Q1. Strong quarter with traction kind of across the board.

Peter Kelly: Yeah. Let me, let me comment sort of high level, and Brad can comment on maybe specifics and then the numbers. Again, listen, very pleased with Q1. You know, a strong quarter with traction kind of across the board. As I mentioned in our marks, you know, there was a strong spring market in Q1. I would say a stronger spring market this Q1 than in, you know, any of the last 2 or 3 years for sure. That was reflected, you know, that was driven, I'd say, by high tax refunds and generally inventory being somewhat constrained. It was reflected in used vehicle price appreciation and high conversion rates. You know, one judgment is how are those gonna trend going forward? Is there gonna be a above average correction from that? Haven't seen it yet, right?

Peter Kelly: Yeah. Let me, let me comment sort of high level, and Brad can comment on maybe specifics and then the numbers. Again, listen, very pleased with Q1. You know, a strong quarter with traction kind of across the board. As I mentioned in our marks, you know, there was a strong spring market in Q1. I would say a stronger spring market this Q1 than in, you know, any of the last two or three years for sure. That was reflected, you know, that was driven, I'd say, by high tax refunds and generally inventory being somewhat constrained. It was reflected in used vehicle price appreciation and high conversion rates. You know, one judgment is how are those gonna trend going forward? Is there gonna be a above average correction from that? Haven't seen it yet, right?

Uh, great thanks for taking the question just to follow.

Speaker #4: But as I mentioned in our remarks, there was a strong spring market in Q1. I would say a stronger spring market this Q1 than in any of the last two or three years, for sure.

A couple clarifications after that. Um, uh, could you quantify the open? Uh, you know, sales unit that you're seeing, uh, in commercial, um, you know, any unit number or percentage number, you could throw out for the quarter.

Peter Kelly: Yeah. We don't comment on that number, Rajat. Yeah, I would say our OPENLANE in the US skews heavily towards dealer, but commercial is, you know, an increasing percentage over time. If I look at our year-on-year growth in the OPENLANE in the US, again, we said dealer grew, you know, high twenties, commercial grew, you know, approximately double. From that we can determine commercial obviously, you know, was a bigger percentage in Q1 this year than a year ago. We don't release that exact number.

Yeah, we— we don't comment on— we don't comment on that number. Um, Raad.

Speaker #4: And that was reflected that was driven, I'd say, by high tax refunds and generally inventory being somewhat constrained. It was reflected in used vehicle price appreciation and high conversion rates.

I would say our open sale in the US.

Speaker #4: So one judgment is, how are those going to trend going forward? Is there going to be a above-average correction from that? Haven't seen it yet, right?

Skews heavily towards dealer, but commercial is, you know, an increasing percentage over time. And if I look at our, our year-on-year growth in the open sale, in the US again, we said dealer grew, you know, high 20s.

Speaker #4: But that possibility would exist. And then the other thing we're mindful of is just the geopolitical and macroeconomic impacts out there: high oil prices, potential impacts from those.

Peter Kelly: You know, that possibility would exist. Then the other thing we're mindful of is just, you know, the geopolitical and macroeconomic impacts out there, high oil prices, you know, potential impacts from those in the markets in which we operate. Again, I can't say we've seen any material impact from that yet, except we're seeing increased interest in EVs. You know, we're 1 quarter in, 3 quarters left. Didn't wanna get too far out in front of our skis on what the remaining quarters could be. I'd also say, particularly in US dealers, we get into the H2 of this year, we do see tougher comps on the B2B side. You know, we're gonna be lapping some bigger quarters that we had in the H2 of last year.

Rajat Gupta: Understood. Just on the guidance, you know, given, you know, the strong first quarter, if just assume normal seasonality, you know, it would imply somewhere above the upper end of the new range. I'm curious if especially in light of, you know, you know, the off lease picking up, you know, later this year, I'm curious, is there any conservatism baked in, you know, in the second half, you know, with regard to new car sales or anything around the macro? Is it not right to assume normal seasonality? Just making sure we're looking at this correctly. Any color would be helpful. Thanks.

Commercial grew, you know, approximately double. So from that we can determine commercial obviously, you know, was a bigger percentage in q1 this year than, than a year ago, but we don't, we don't release that exact, uh, that exact number.

Speaker #4: In the markets in which we operate, again, I can't say we've seen any material impact from that yet. Except we're seeing increased interest in EVs.

Understood. Um, uh, and just under guidance, you know, given, you know, the strong first quarter,

Speaker #4: But we're one quarter in, three quarters left. Didn't want to get too far out in front of our skis on what the remaining quarters could be.

Um, just as you normal seasonality. Um, you know, it would imply somewhere above the upper end um of the new Range. Uh, I'm curious

Speaker #4: I'd also say, particularly in US dealers, we get into the second half of this year. We do see tougher comps on the B2B side.

If and especially in light of, you know, you know the Off Lease picking up, you know, later this year.

Speaker #4: We're going to be lapping some bigger quarters that we had in the second half of last year. So again, I would expect some deceleration in our dealer-to-dealer growth rate in those quarters.

Um, I'm curious. Is there any conservatism baked in, you know, in the second half, you know, with regard to new car sales or anything around the macro

Peter Kelly: Again, I would expect some deceleration in our dealer to dealer growth rate in those quarters, you know. Anyway, we've kind of reflected all of those to the best of our judgment. I would say, you know, notwithstanding any of that, I think there's a ton of opportunity out there for OPENLANE. I'm very pleased with how our customers are responding to our offering and the feedback we're getting and the growth in the customer base. I really feel good about the strategy we're executing, and the opportunities that offers, not just for the next three quarters, but for the long term. Brad, do you wanna comment?

Speaker #4: So anyway, we've kind of reflected all of those to the best of our judgment. I would say, notwithstanding any of that, I think there's a ton of opportunity out there for open lane.

Peter Kelly: Yeah. Rajat, let me comment sort of high level, and Brad can comment on maybe specifics and numbers. Again, listen, very pleased with Q1. You know, a strong quarter with traction kind of across the board. As I mentioned in our remarks, you know, there was a strong spring market in Q1. I would say a stronger spring market this Q1 than in, you know, any of the last 2 or 3 years for sure. That was reflected, you know, that was driven, I'd say, by high tax refunds and generally inventory being somewhat constrained. It was reflected in used vehicle price appreciation and high conversion rates. You know, one judgment is how are those gonna trend going forward? Is there gonna be Above average correction from that. Haven't seen it yet, right?

Um, is it not right to assume normal seasonality? Just making sure we're looking at this correctly. Um, you know, any color would be helpful. Thanks.

Speaker #4: I'm very pleased with how our customers are responding to our offering. And the feedback we're getting. And the growth in the customer base. So I really feel good about the strategy we're executing.

Speaker #4: And the opportunities that offers, not just for the next three quarters, but for the long term. Brad, do you want to comment?

Maybe specifics and then the numbers. Um, again, listen, very pleased with Q1, you know, uh, strong quarter with traction kind of across the board. Um, but as I mentioned in our remarks, you know, there was a strong spring market in Q1. I would say a stronger spring market this Q1 than in— in

Speaker #3: Yeah. No, I think that's a really good summary, Peter. I think the only thing I would add, look, as the quarters play out, if things change and our view of the remaining quarters of the year changes, we'll certainly be updating that in our next quarterly discussion.

Bradley Herring: Yeah, no, I think that's a really good summary, Peter. I think the only thing I would add, look, if as the quarters play out, if things change and our view of the remaining quarters of the year changes, we'll certainly be updating that in our next quarterly discussion.

You know, any of the last 2 or 3 years for sure. And that was reflected, you know, that was driven. I'd say bye. Hi, tax refunds and generally inventory. Being somewhat constrained. It was reflected in used vehicle price appreciation and high conversion rates.

Speaker #5: Understood. Thanks for that color. I'll jump back in queue.

Rajat Gupta: Understood. Thanks for all that color. I'll jump back in queue.

Um so you know, 1 judge is, how are those going to Trend going forward? Is there going to be a

Speaker #4: Thanks, Rajat.

Peter Kelly: Thanks, Rajat.

Speaker #1: Thank you. The next question we have comes from John Healy of North Coast Research. Please go ahead.

Peter Kelly: You know, that possibility would exist. Then the other thing we're mindful of is just, you know, the geopolitical and macroeconomic impacts out there, high oil prices, you know, potential impacts from those in the markets in which we operate. Again, I can't say we've seen any material impact from that yet, except that we're seeing increased interest in EVs. You know, we're 1 quarter in, 3 quarters left. Didn't wanna get too far out in front of our skis on what the remaining quarters could be. I'd also say, particularly in US dealers, we get into the H2 of this year, we do see tougher comps on the B2B side. You know, we're gonna be laughing at some bigger quarters that we had in the H2 of last year.

Operator: Thank you. The next question we have comes from John Healy of Northcoast Research. Please go ahead.

Speaker #6: Thanks. Thanks for taking my question. Peter, just wanted to ask just about the relationship between the lease returns and wholesale sellout. So if we're thinking about this, I think we've all kind of penciled in a growth rate based on lease returns.

John Healy: Thanks. Thanks for taking my question. Peter, just wanted to ask just about the relationship between lease returns and wholesale sellout. If we're thinking about this, you know, I think we've all kind of penciled in a growth rate based on lease returns, but how should that lease return number impact the timing through your P&L? Let's just say, hypothetically, in a quarter off-lease grows 25% or something like that, in terms of returns, is that gonna be spread out over multiple quarters? Perhaps the volume that you guys move through your platform might be elongated.

Speaker #6: But how should that lease return number impact the timing through your P&L? And let's just say hypothetically, in a quarter, awful lease grows 25% or something like that.

Above average correction from that. Haven't seen it yet. Right. But but but but you know that possibility would exist. And then the other thing we're mindful of is just, you know, the geopolitical and macroeconomic impacts out their high oil prices, you know, potential impacts from those in, in the markets in which we operate again, I can't say we've seen any material impact from that yet except that we're seeing increased interest in EVS. Um but you know we're 1 we're 1 quarter in

3 quarters left.

Speaker #6: In terms of returns, is that going to be spread out over multiple quarters? So perhaps the volume that you guys move through your platform might be elongated.

Peter Kelly: Again, I would expect some deceleration in our dealer-to-dealer growth rate in those quarters, you know. Anyway, we've kinda reflected all of those to the best of our judgment. I would say, you know, notwithstanding any of that, I think there's a ton of opportunity out there for OPENLANE. I'm very pleased with how our customers are responding to our offering and the feedback we're getting and the growth in the customer base. I really feel good about the strategy we're executing, and the opportunities that offers not just for the next three quarters, but for the long term. Brad, do you wanna comment?

Speaker #6: I'm just trying to think about the how we should kind of think about the returns to market and to dealers. And then the actual flow through to your business in terms of a processing standpoint to make sure you get the most value for your remarketing partners.

Didn't want to get too far out in front of her, skis on on, uh, what what? The remaining quarters could be. Um, I'd also say, particularly in US dealers, we get into the second half of this year. We do see tougher comps on the B2B side. You know, we're going to be lapping, some bigger quarters that we had in the second half of last year. So again, I would expect some deceleration in our dealer to dealer growth rate in those quarters.

John Healy: I'm just trying to think about the how we should kind of think about the returns to market and to dealers and then the actual flow through to your business in terms of a processing standpoint to make sure you get the most value for your remarketing partners.

You know, um, so anyway, we've kind of reflected all of those to the best of our judgment, I would say, you know. Notwithstanding any of that, I think there's a ton of opportunity out there for OPENLANE. I'm very pleased with how our customers are responding to our offering.

Speaker #4: Yeah. Thanks, John. I guess, first of all, I'll say the equation to sort of determine what volume we actually get is very, very complex.

Peter Kelly: Yeah. Thanks, John. You know, I guess first of all, I'll say the equation to sort of determine, you know, what volume we actually get is it's very, very complex. You know, I don't know that it really exists, you know. Because there's obviously different customers in there. They have different portfolios. Sometimes a customer will execute what's called a pull ahead. You know, I've got these leases coming off, you know, 6 months from now, but my retail market share looks a bit weaker. I'm gonna try and pull these leases ahead and get those customers to buy a new in-brand vehicle now to get my market share up on the new car side. We see that. We also see the opposite of that, lease extensions. I've got too many cars coming back. I don't want that many.

And the feedback we're getting and the growth in the customer base. Uh, so I really feel good about the strategy we're executing.

um, and, and the opportunities that offer is not just for the next 3 quarters, but for the long term,

Brad Herring: Yeah, no, I think that's a really good summary, Peter. I think the only thing I would add, look, if, as the quarters play out, if things change and our view of the remaining quarters of the year changes, we'll certainly be updating that in our next quarterly discussion.

Speaker #4: I don't know that it's I don't know that it really exists because there's obviously different customers in there. They have different portfolios. Sometimes a customer will execute what's called a pull ahead.

Speaker #4: I've got these leases coming off. Six ix months from now, but my retail market share looks a bit weaker. I'm going to try and pull these leases ahead.

Brad. Do you want to come? Yeah, I don't think that's a really good summary, Peter. I think the only thing I would add look if, if as the quarters play out, if, uh, if things change and our, our view of the remaining, uh, quarters of the year changes will certainly be updating that in our next uh, quarterly discussion

Rajat Gupta: Understood. Thanks for all that color. I'll jump back in queue.

I understood, thanks for all that color. I'll jump back in, you.

Peter Kelly: Thanks, Rajat.

Thanks for John.

Operator: Thank you. The next question we have comes from John Healy of Northcoast Research. Please go ahead.

Speaker #4: And get those customers to buy a new in-brand vehicle now to get my market share up on the new car side. So we see that.

Thank you. The next question we have comes from John Healey of North Coast research. Please go ahead.

John Healy: Thanks. Thanks for taking my question. Peter, just wanted to ask just about the relationship between lease returns and wholesale sellout. If we're thinking about this, you know, I think we've all kind of penciled in a growth rate based on lease returns, but how should that lease return number impact the timing through your P&L? Let's just say hypothetically in a quarter, off-lease grows 25% or something like that, in terms of returns. Is that gonna be spread out over multiple quarters? Perhaps the volume that you guys move through your platform might be elongated.

Speaker #4: We also see the opposite of that. Lease extensions. I've got too many cars coming back. I don't want that many. I'm going to try and push some of these out and extend those leases.

Thanks. Thanks my question.

Peter Kelly: I'm gonna try and push some of these out and extend those leases. There's all these things that can happen. I guess the net-net is I do look at the maturity forecast in aggregate, how many leases were written 3 years ago. That's the best barometer I actually have of how many leases will be returned. Generally, John, I'd say, you know, if anything, they tend to come back 1 month or 2 early. Leases that you expect to come in Q3 can sometimes come in, you know, 1 month or 2 or maybe 3 months ahead of that.

Peter Kelly: I'm gonna try and push some of these out and extend those leases. There's all these things that can happen. I guess the net-net is I do look at the maturity forecast in aggregate, how many leases were written three years ago. That's the best barometer I actually have of how many leases will be returned. Generally, John, I'd say, you know, if anything, they tend to come back one month or two early. Leases that you expect to come in Q3 can sometimes come in, you know, one month or two or maybe three months ahead of that.

Speaker #4: So there's all these things that can happen. But I guess the net-net is, I do look at the maturity forecast in aggregate. How many leases were written three years ago?

Peter, just wanted to ask about the relationship between lease returns and, um, wholesale sellout. Um, so, so if we're thinking about this, um,

Speaker #4: That's the best barometer I actually have of how many leases will be returned. And generally, John, I'd say, if anything, they tend to come back a month or two early.

Speaker #4: So leases that you expect to come in Q3 can sometimes come in a month or two or maybe three months ahead of that. And I generally assess that the consumer that's kind of said, "Okay, I know my lease is up, but I've made a decision on what the new car is that I want, and I just want to pull the trigger and get that done now." So I guess take quite a little at mean.

Peter Kelly: I generally assess that's a consumer that's kinda said, Okay, I know my lease is up, but I've made a decision about the new car is that I want, and I just wanna pull the trigger and get that done now, you know. I guess what does all that mean? I expect, you know, if we look at that maturity curve, I believe off-lease volumes in the H2 of this year are up around 20% to 25%. I'm expecting that kind of volume growth, you know, in our off-lease volumes, now, you know, without the addition of the new customer. Okay. That's the kind of math I'm looking at, and it's, you know, it's obviously fairly robust. I guess we'll see what happens.

John Healy: I'm just trying to think about how we should kind of think about the returns to market and to dealers and then the actual flow through to your business in terms of a processing standpoint to make sure you get the most value for your remarketing partners.

Speaker #4: I expect if we look at that maturity curve, I believe awful lease volumes in the back half of this year are up around 20 to 25 percent.

Speaker #4: So I'm expecting that kind of volume growth in our awful lease volumes, not without the addition of the new customer. Okay? So that's the kind of math I'm looking at.

You know, I think we've all kind of penciled in a growth rate based on lease returns, but how should that lease return number impact, the time in your p&l, and let's just say hypothetically in a quarter, awfully gross, 25%, or, or, or something like that. Um, in terms of returns is that going to be spread out over, multiple quarters. So perhaps the, the volume that you guys move through your, um, platform might be elongated. I'm just trying to think about the, the how we should kind of, uh, think about the returns to Market and to dealers. And then they the actual flow through to your business, in terms of a processing, uh, standpoint to make sure you get the most value, uh, for your remarketing partners.

Peter Kelly: Yeah. Thanks, John. You know, I guess first of all, I'll say the equation to sort of determine, you know, what volume we actually get is it's very, very complex. You know, I don't know that it really exists, you know, because there's obviously different customers in there. They have different portfolios. Sometimes a customer will execute what's called a pull ahead. You know, I've got these leases coming off, you know, 6 months from now, my retail market share looks a bit weaker. I'm gonna try and pull these leases ahead and get those customers to buy a new in-brand vehicle now to get my market share up on the new car side. We see that. We also see the opposite of that, lease extensions. I've got too many cars coming back. I don't want that many.

Speaker #4: And it's obviously fairly robust. But I guess we'll see what happens.

Speaker #6: Great. That's helpful. And just wanted to ask about the AFC business. Obviously, you guys are seeing a nice bounce in the auction business. But AFC loans kind of originated in a quarter.

John Healy: Great. That's helpful. Just wanted to ask about the AFC business. You know, obviously you guys are seeing a nice, a nice bounce in the in the auction business. You know, AFC loans kind of originated in the quarter, you know, pretty anemic growth the last few quarters. Curious if you think that gets better, and is there a desire to really grow that business, or are you just kinda happy keeping it about the same size that it is right now? I would just think with the, you know, activity and the attractiveness and the network effect in your business that you talked about on the dealer car side, I'm kind of perplexed why it wouldn't also take place on the AFC side.

Yeah, thanks John. You know, I guess first of all, I'll say the equation to sort of determine you know, what volume we actually get. It's it's very, very complex, you know, I I I don't know that it's, I don't know that it really exists, you know, um, because there's obviously different customers in there. They have different portfolios.

Um, sometimes a customer will execute what's called a pull ahead. You know, I've got these leases coming off.

Speaker #6: Pretty anemic growth the last few quarters. Curious if you think that gets better? And is there a desire to really grow that business? Or are you just kind of happy keeping it about the same size that it is right now?

You know, 6 months from now but my retail market share looks a bit weaker. I'm going to try and pull these leases ahead.

Speaker #6: Because it would just think with the activity and the attractiveness and the network effect in your business that you talked about on the dealer car side, I'm kind of perplexed to why it wouldn't also take place on the AFC side.

Speaker #4: Yeah. Well, thanks, John. Listen, I think, first of all, AFC is a great, great business. It's a category leader in the space. An industry leader in terms of its risk management and loan loss rate.

And get those customers to buy a new in brand vehicle. Now, to get my market share up on the new car side. So, we see that. We also see the opposite of that lease extensions. I've got too many cars coming back. I don't want that many, I'm going to put try and push some of these out and extend those leases. So there's all these things that can happen, but I guess the net net is, I do look at the maturity forecast in aggregate. How many leases were written 3 years ago?

Peter Kelly: Well, thanks, John. You know, listen, I think first of all, AFC is a great business. You know, it's a category leader in its space, an industry leader in terms of its risk management and loan loss rate. Strong, you know, return on assets, return on equity, and strong, you know, EBITDA and cash flow generation for a company. It really is a great business. It's also synergistic with the marketplace, and it is helping us drive, you know, some of the marketplace results that we've talked about on multiple calls and we talked about on our Investor Day. I feel really pleased about AFC and the performance that it's delivering and the AFC team. I'll also say, you know, we don't chase growth for growth sake. We have a somewhat conservative view.

That's the best barometer. I actually have of how many leases will be returned.

Speaker #4: Strong return on assets, return on equity. And strong EBITDA on cash flow generation for a company. So it really is a great business. It's also synergistic with the marketplace.

And generally I John I'd say you know if anything they tend to come back a month or 2 early so leases that you expect to come in queue 3.

Peter Kelly: I generally assess that's a consumer that's kinda said, Okay, I know my lease is up, but I've made a decision of what the new car is that I want, and I just wanna pull the trigger and get that done now. You know. I guess what does all that mean? I expect, you know, if we look at that maturity curve, I believe off-lease volumes in the back half of this year are up around 20% to 25%. I'm expecting that kind of volume growth, you know, in our off-lease volumes, not, you know, without the addition of a new customer. Okay. That's the kind of math I'm looking at, and it's, you know, it's obviously fairly robust. I guess we'll see what happens.

Speaker #4: And it is helping us drive some of the marketplace results that we've talked about on multiple calls and we talked about our investor day.

Speaker #4: So I feel really, really pleased about AFC and the performance that it's delivering and the AFC team. I'll also say we don't chase growth for growth's sake.

You know, so I guess take quite a while. That mean I expect, you know, if we look at that maturity curve, I believe all these volumes in the back. Half of this year are up around 20 to 25%.

So, I'm expecting that kind of volume growth.

Speaker #4: We have a somewhat conservative view we like managing. Within a risk band that we've talked about, one and a half to two percent. There's obviously a lot of customers we could take that are outside of that band.

you know, in our, in our Off, Lease volumes not, you know,

Peter Kelly: We like managing within a risk band that we've talked about, 1.5% to 2%. There's obviously a lot of customers we could take that are outside of that band, but we generally try to avoid that. We like to manage it more conservatively. That said, it is growing. We are growing the customer base on AFC, and we're seeing something interesting start to play out now. It started in Q1, and I think we'll see it through the balance of the year. It's not maybe yet showing up in the results, but, you know, we've been driving, you know, can we get more of these AFC dealers to register on OPENLANE? Well, that's been successful. Now we're also seeing there's a whole bunch of independent dealers on OPENLANE that aren't registered on AFC.

Speaker #4: But we generally try to avoid that. We like to manage this more conservatively. But that said, it is growing. We are growing the customer base on AFC.

John Healy: Great. That's helpful. Just wanted to ask about the AFC business. You know, obviously you guys are seeing a nice bounce in the auction business. You know, AFC loans, kind of originated in a quarter of, you know, pretty anemic growth the last few quarters. Curious if you think that gets better. Is there a desire to really grow that business, or are you just kinda happy keeping it about the same size that it is right now? I would just think with the, you know, activity and the attractiveness and the network effect in your business that you talked about on the dealer car side, I'm kinda perplexed why it wouldn't also take place on the AFC side.

Without the addition of the new customer. Okay, so that's the kind of math I'm looking at and it's, you know, it's obviously fairly robust. Um, but I guess we'll see what happens.

Speaker #4: And we're seeing something interesting start to play out now. Started in the first quarter. I think we'll see it through the balance of the year.

Speaker #4: It's not maybe yet showing up in the results. But we've been driving can we get more of these AFC dealers to register on OpenLANE?

Speaker #4: Well, so that's been successful. But now we're also seeing there's a whole bunch of independent dealers on OpenLANE that aren't registered in AFC. But they see on OpenLANE, there's an AFC floor plan that they could potentially utilize if they go register.

Peter Kelly: What they see on OPENLANE, there's an AFC floor plan that they could potentially utilize if they go register. We're seeing that sort of cross-pollination flow back the other way. Again, I think there's growth opportunity there. It absolutely is gonna be more modest. We're gonna manage that business for risk, but it is a great business, and it's very synergistic in helping drive our overall results. Brad, do you want to comment?

Speaker #4: So we're seeing that sort of cross-pollination flow back the other way. So again, I think there's growth opportunity there. It absolutely is going to be more modest.

Great, that's helpful. And and, and just wanted to ask about the AFC business, you know, obviously you guys are seeing, um, a nice, a nice bounce in the, um, in the auction business. But, you know, AFC loans, um, kind of originated in a quarter, um, you know, pretty anemic growth of the last few quarters. Um, curious if you think that gets better, um, and is there a desire to to really grow that business? Or are you just kind of a happy? Keeping it about the same size that it is right now because um it would just think with the, you know activity and the attractiveness and the network effect in your business that you talked about on a dealer car side, I'm kind of perplexed a lot when it also take place on the AFC side.

Peter Kelly: Well, thanks, John. You know, listen, I think first of all, AFC is a great business. You know? It's a category leader in its space, an industry leader in terms of its risk management and loan loss rate. Strong, you know, return on assets, return on equity, and strong, you know, EBITDA and cash flow generation for our company. It really is a great business. It's also synergistic with the marketplace, and it is helping us drive, you know, some of the marketplace results that we've talked about on multiple calls and we talked about on our Investor Day. I feel really pleased about AFC and the performance that it's delivering and the AFC team. I'll also say, you know, we don't chase growth for growth's sake. We have a somewhat conservative view.

Speaker #4: We're going to manage that business for risk. But it is a great business. And it's very synergistic in helping drive our overall results. Brad, do you want to comment?

Speaker #5: Yeah. I'll just add to that, John. We talked about it. I think at investor day, we've always kind of seen AFC as a really a low single-digit grower for those reasons.

Bradley Herring: Yeah, I'll just add to that, John. We've talked about it, I think, at Investor Day. We've always kind of seen AFC as a really a low single-digit grower for those reasons. It's about staying in that risk band that we're very comfortable with, and extracting the value that AFC provides, some within the AFC vertical of a segment report, but also, you know, the value that manifests itself in the marketplace. I think that's the part when we think about the growth at AFC, we combine those two as opposed to just looking at the segment results of AFC independently.

Yeah, well thanks John, you know, listen, I think first of all, AFC is a great great business. You know it's a category leader in the space. Um an industry leader in terms of its risk management and Loan loss rate

Speaker #5: It's about staying in that risk band that we're very comfortable with. And extracting the value that AFC provides some within the AFC vertical of a segment report, but also the value that manifests itself in the marketplace.

Strong, you know, return on assets, return on Equity, um, and strong, you know, ibaon cash flow generation for a company. So it really is a great business. It's also synergistic with the marketplace and it is

helping us drive.

Speaker #5: And I think that's the part when we think about the growth in AFC, we combine those two as opposed to just looking at the segment results of AFC independently.

You know, some of the marketplace results that that we've talked about on multiple calls and we talked about our investor day. So,

Speaker #6: Understood. Thank you, guys.

John Healy: Understood. Thank you, guys.

Peter Kelly: We like managing within a risk band that we've talked about, 1.5% to 2%. There's obviously a lot of customers we could take that are outside of that band, we generally try to avoid that. We like to manage this more conservatively. That said, it is growing. We are growing the customer base on AFC, we're seeing something interesting start to play out now. Started in Q1, I think we'll see it through the balance of the year. It's not maybe yet showing up in the results, you know, we've been driving, you know, can we get more of these AFC dealers to register on OPENLANE? Well, that's been successful. Now we're also seeing there's a whole bunch of independent dealers on OPENLANE that aren't registered on AFC.

Speaker #1: Thank you. We have a follow-up question from Rajat Gupta. Please go ahead.

Operator: Thank you. We have a follow-up question from Rajat Gupta. Please go ahead.

I’m really, really pleased about AFC and the performance that it's delivering, and the AFC team. Um, I'll also say, you know, we don't chase growth for growth's sake. We have a somewhat conservative view— we like managing.

Within a risk band that we've talked about 1 and a half to 2%.

Rajat Gupta: Question. Just to follow on commercial, you just mentioned on a previous question that, you expect 20% growth in your off-lease plus the new customer. And it looks like the new customer was, you know, 20% units. Analyzing that would be, like, 20% plus. Am I reading that correctly? Is it 25% plus 20% for your commercial-

Speaker #7: Just to pull on commercial. You just mentioned on a previous question that you expect 20% growth in your awful lease. Plus the new customer.

Um, there's obviously a lot of customers you could take that are outside of that band, but we generally try to avoid that. We like to manage this more conservatively.

um,

Speaker #7: And it looks like the new customer was 20% of the units. Analyzing that would be like 20% plus. So am I reading that correctly?

But that said it is growing. We are growing the customer base on AFC and we're seeing something interesting start to play out. Now started in the first quarter and I think we'll see it through the balance of the year. It's not maybe yet showing up in the results, but

Speaker #7: The 25% plus 20% for your commercial unit business this year?

Peter Kelly: Yeah

Rajat Gupta: lease business this year?

Speaker #4: You know, Rajat, I guess what I said is I think the growth and maturities is a good number to take and our underlying customer base.

Peter Kelly: You know, Rajat, I guess what I said is, I think the growth in maturities is a good number to take in our underlying customer base. I believe in the H2 of this year, that is in the 20%-ish level, maybe a bit higher. I would expect that kind of volume in our non-new customer, then we got the new customer in addition to that. I'm not saying that new customer is going to be 20% every, you know, every Q. They have a portfolio that has its own seasonality to it, I don't have that in front of me right now. I will say that our initial results from that new customer in volume terms exceeded our expectations.

You know, we've been driving, you know, can we get more of these AFC dealers to register on Open Line? Well, so that's been successful. But now, we're also seeing there's a whole bunch of independent dealers on open Lane that aren't registered in AFC, but they see on on open Lane, there's an AFC floor plan that they could potentially utilize if they go register. So, we're seeing that sort of cross-pollination flow back the other way. So,

Speaker #4: And I believe in the back half of this year, in the back half of this year, that is in the 20-ish percent level, maybe a bit higher.

Again.

I think there’s growth opportunity there. It absolutely is going to be more modest.

Speaker #4: So I would expect that kind of volume in our non-new customer. And then we got the new customer in addition to that. I'm not saying that new customer is going to be 20% every quarter.

Brad Herring: Yeah, I'll just add to that, John. We've talked about it, I think, at Investor Day. We've always kind of seen AFC as a really a low single-digit grower for those reasons. It's about staying in that risk band that we're very comfortable with, and extracting the value that AFC provides, some within the AFC vertical of a segment report, but also, you know, the value that manifests itself in the marketplace. I think that's the part when we think about the growth at AFC, we combine those two as opposed to just looking at the segment results of AFC independently.

Speaker #4: They have a portfolio that has its own seasonality to it. And I don't have that in front of me right now. I will say that I will say that our initial results from that new customer and volume terms exceeded our expectations.

Um, we're going to manage that business for risk, but it is a, it is a great business and it's very synergistic and helping Drive our overall results Brad. Do you want to comment? Yeah, I'll just add to that. John, we've talked about it. I think an investor that we've always kind of seen ASC is a really, a low single digit grower for those reasons. It's it's about staying in that risk band that we're very comfortable with, um, and and extracting, the value that AFC provides

Speaker #4: I don't know that they'll continue to exceed our expectations every single quarter. But we were surprised by the volume they had in Q1.

Peter Kelly: I don't know that they'll continue to exceed our expectations every single quarter, but we were surprised by the volume they had in Q1.

Speaker #5: And also keep in mind, Rajat, that new customer was a step function in January. So that will not recur. That element of growth will not recur to that same degree in Q1 of 2027.

Bradley Herring: Also keep in mind, Rajat, that new customer was a step function in January, so that will not recur. That element of growth will not recur to that same degree in Q1 of 2027.

some within the AFC vertical of a segment report but also, you know, the value that manifests itself in the marketplace and I think that's the part. When we think about the growth in AFC, we we combine those 2 as opposed to just looking at the segment results and AFC independently

John Healy: Understood. Thank you, guys.

Understood. Thank you, guys.

Operator: Thank you. We have a follow-up question from Rajat Gupta. Please go ahead.

Thank you.

Speaker #5: Yeah. Yeah. No for sure. Yeah. And then just a quick question. We heard from some of your larger public customers that there's some luxury OEMs that have dialed up early lease terminations.

Peter Kelly: Of course.

Rajat Gupta: Yeah. Yeah, no. No, for sure. Yeah.

Peter Kelly: Sure

Rajat Gupta: Then just a quick question. You know, we heard from some of your larger public customers, that there's some luxury OEMs that have dialed up early lease terminations, you know, to manage captive financial losses. I'm curious if that is something you've observed. You know, has that benefited, you know, with just, like, incremental off-lease inventory recently? Just curious to get your thoughts there and how we should think about implications for OPENLANE.

We have our follow-up question. From Urgot Gupta. Please go ahead.

Rajat Gupta: Question that you may have. Just to follow on commercial, you just mentioned on a previous question that you expect 20% growth in your off-lease plus the new customer. It looks like the new customer was, you know, 20% of units. Analyzing that would be, like, 20% plus. Am I reading that correctly? Is it 25% plus 20% for your commercial lease business this year?

This is commercial.

Speaker #5: To manage captive financial losses. I'm curious if that is something you've observed? Has that benefited with just incremental off-lease inventory recently? Just curious to get our thoughts there and how we should think about implications for OpenLANE.

You just mentioned on a previous question that.

Uh, you had spent 20% growth in your off-lease.

Plus the new customer. Um, it looks like the new customer was

You know, 20 units.

Analyzing that would be like 20% plus.

Speaker #4: Yeah. Well, again, that's an example, as I was saying, on just a question a few moments ago. Captive finance companies can put these types of programs in place from time to time.

Peter Kelly: Well, again, that's an example, as I was saying just a question a few moments ago. You know, captive finance companies can put these types of programs in place from time to time. You don't really get a lot of sort of advance warning as to when they might happen. Early, you know, early terms, that's kind of a pull-ahead program. I'm not aware of that having had a specific benefit on our volumes. That said, the new customer we launched does have a premium portfolio, and those volumes were quite strong in the Q1. Maybe there was some aspect of a pull ahead in that or a early term offer within that. It's possible, Rajat.

Peter Kelly: You know, Rajat, I guess what I said is I think the growth in maturities is a good number to take in our underlying customer base. I believe in H2 of this year, that is in the 20%-ish level, maybe a bit higher. I would expect that kind of volume in our non-new customer, and then we got the new customer in addition to that. I'm not saying that new customer is gonna be 20% every, you know, every quarter. They have a portfolio that has its own seasonality to it, and I don't have that in front of me right now. I will say that our initial results from that new customer in volume terms exceeded our expectations.

So am I am I reading that correctly? The 25% plus 20% for your commercial us business this year?

Speaker #4: You don't really get a lot of sort of advance warning as to when they might happen. But early terms, that's kind of a pull-ahead program.

You know, reach out. I I guess what I said is I think the the growth in maturities

is a good number to take and are underlying customer base.

Um,

Speaker #4: I'm not aware of that having had a specific benefit on our volumes. But that said, the new customer we launched does have a premium portfolio on those volumes quite strong in the first quarter.

and I believe in the back half of this year in the back half of this year, that is in the 20-ish percent level, maybe a bit higher.

Speaker #4: So maybe there was some aspect of a pull-ahead in that or an early term offer within that. It's possible, Rajat. Yeah.

So I would expect that kind of volume in our non-new customer, and then we got the new customer in addition to that.

Speaker #5: Understood. Great. Thanks for all the color and congrats on a strong quarter again. Thank you, Rajat.

Rajat Gupta: Understood. Great. Thanks for all the color and congrats on a strong quarter again.

Peter Kelly: Thanks, Rajat.

Speaker #1: Thank you. At this stage, that was our final question. I will now hand back to management for any closing remarks. Please go ahead.

Operator: Thank you. At this stage, that was our final question. I will now hand back to management for any closing remarks. Please go ahead.

Peter Kelly: I don't know that they'll continue to exceed our expectations every single quarter, but we were surprised by the volume they had in Q1.

Speaker #4: Well, thanks again, everybody, for your time this morning. We really appreciate your interest in our company and your questions here this morning. Listen, very pleased with the quarter.

Seasonality to it. And I don't have that in front of me right now. Um, I will say that I will say that our initial results from that new customer in volume terms, exceeded our expectations, I don't know that they'll continue to exceed our expectations, every single quarter

Peter Kelly: Well, thanks again, everybody, for your time this morning. We really appreciate your interest in our company and your questions here this morning. Listen, very pleased with the quarter that we had, and continue to be focused on our strategy and our purpose of making wholesale easier so our customers can be more successful. Looking forward to reconnecting with you all in 90 days, where we can talk about our Q2 results. Thank you all very much.

Brad Herring: Also keep in mind, Rajat, that new customer was a step function in January, so that will not recur. That element of growth will not recur to that same degree in Q1 of 2027.

Speaker #4: That we had. And continue to be focused on our strategy. And our purpose of making wholesale easy for our customers can be more successful.

Peter Kelly: Of course.

Rajat Gupta: Yep. Yeah, no.

But, um, we were surprised by the volume they had in Q1, and also keep in mind, Ra, that new customer was a step function in January, so that will not recur—that element of growth will not recur to that same degree in January, in Q1 of '27.

Brad Herring: Yeah.

Rajat Gupta: No, for sure. Yeah.

Speaker #4: I'm looking forward to reconnecting with you all in 90 days where we can talk about our second quarter results. Thank you all very much.

Brad Herring: Got it.

Rajat Gupta: Quick question. You know, we heard from some of your larger public customers that there's some luxury OEMs that have dialed up early lease terminations, you know, to manage captive finance losses. I'm curious if that is something you've observed. You know, has that benefited, you know, with just, like, incremental off-lease inventory recently? Just curious to get your thoughts there and how we should think about implications for OPENLANE.

Of course, yeah, no for sure. Yeah. Um and then just just a a quick question, you know? We we we heard from some of your larger public customers

Operator: Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.

Uh, that there's some, uh, luxury OEMs that have dialed up early lease termination, you know, to manage captive financial losses.

Uh, I'm curious is, is that something you've observed? Um, you know, has that benefited, you know, with just like, incremental, athletes inventory, recently,

Uh just curious to get our thoughts there and how we should think about implications for open line.

Peter Kelly: Well, again, that's an example, as I was saying on a, just a question a few moments ago. You know, captive finance companies can put these types of programs in place from time to time. You don't really get a lot of sort of advance warning as to when they might happen. But early, you know, early terms, that's kind of a pull-ahead program. I'm not aware of that having had a specific benefit on our volumes. That said, the new customer we launched does have a premium portfolio, and those volumes were quite strong in the first quarter. Maybe there was some aspect of a pull-ahead in that or an early term offer within that. It's possible, Rajat.

Yeah, um, well, again that's an example, as I was saying on a, just a question, a few moments ago, you know, cap to finance. Companies can put these types of programs in place from time to time. You don't really get a lot of sort of advanced warning as to when they might happen. Um, but but early, you know, early terms that's kind of a pull ahead program. Um, I'm not aware of that having had a specific benefit on

Rajat Gupta: Understood. Great. Thanks for all the color and congrats on a strong quarter again.

Peter Kelly: Thanks, Rajat.

On our volumes. Um, but that said the new customer we launched does have a premium portfolio and those volumes are quite strong in the first quarter. So so maybe there was some aspect of a pull ahead in that or a early term offer within that it's possible. Ra ya understood, great. Thanks for all the color, and congrats on the strong quarter. Again,

Brad Herring: Thank you, Rajat.

Thanks, thank you.

Operator: Thank you. At this stage, that was our final question. I will now hand back to management for any closing remarks. Please go ahead.

At this stage, that was our final question. I will now hand back to management for any closing remarks. Please go ahead.

Peter Kelly: Well, thanks again, everybody, for your time this morning. Really appreciate your interest in our company and your questions here this morning. Listen, very pleased with the quarter that we had and continue to be focused on our strategy and our purpose of making wholesale easier so our customers can be more successful. I'm looking forward to reconnecting with you all in 90 days, where we can talk about our Q2 results. Thank you all very much.

Well, thanks again, everybody for your time. This morning, we really appreciate your interest in our company and your questions here this morning. Um, listen, very pleased with the quarter that we had, um, and continue to be focused on our strategy.

And our purpose of making wholesale easy to our customers can be more successful. I'm looking forward to reconnecting with you all in 90 days where we can talk about our our second quarter results. Thank you all very much.

Operator: Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.

Thank you.

Thank you for joining us. You may now disconnect your lines.