Openlane (KAR 15.41%), a leading digital marketplace operator for wholesale used vehicles, reported its second quarter 2025 earnings on August 6, 2025. The most notable news from the release was a significant beat on both the top and bottom line: GAAP revenue reached $482 million, handily outpacing the consensus estimate of $454.5 million.
Revenue increased 8.5% year-over-year in the second quarter.
Operating Adjusted earnings per share came in at $0.33, well above the $0.22 expected. The company’s performance reflects ongoing strength in its dealer-driven marketplace and digital transformation. Management raised its full-year 2025 guidance, citing ongoing gains in digital transaction volume and strong financial results. Overall, this quarter showed clear momentum in both growth and profitability for Openlane.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Revenue (GAAP) | $482 million | $454.5 million | $443.8 million | 8.6% |
| Operating Adjusted EPS (Non-GAAP) | $0.33 | $0.22 | $0.19 | 73.7% |
| Adjusted EBITDA | $86.7 million | $71.4 million | 21.5% | |
| Adjusted Free Cash Flow | $86.5 million | $64.6 million | 33.9% | |
| Income from Continuing Operations (GAAP) | $33.4 million | $10.7 million | 212.1% |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategic Priorities
Openlane operates digital marketplaces that connect wholesale vehicle buyers and sellers across North America and Europe. The company’s core platform enables dealers and commercial customers to buy and sell used vehicles, with additional services ranging from vehicle logistics to reconditioning and financing. As the auto industry continues to digitize, Openlane’s model centers on providing a fully integrated, asset-light digital marketplace.
Recently, the focus has been on accelerating the shift from physical to digital transactions. Openlane aims to lead in digital platform adoption, supported by investments in its technology stack, data analytics, and dealer network expansion. The success of these efforts is closely tied to marketplace volume growth, technology innovation, dealer participation, and customer experience. A key pillar is AFC, its floorplan financing business, which provides short-term loans to independent dealers and supports additional marketplace engagement.
Quarter Highlights: Growth Drivers, Financial Shifts, and Product Updates
Openlane delivered notable gains across most financial measures in Q2 2025.
Revenue (GAAP) exceeded estimates by more than $27 million in Q2 2025.
Auction fee revenue (GAAP) rose 24.1% year-over-year in Q2 2025.
This increase was driven by higher marketplace volumes and ongoing fee price increases, notably in the United States (initiated in Q4 2024) and Canada (implemented in Q1 2025). Marketplace dealer volume rose 21% year-over-year in Q2 2025, reflecting strong engagement from both new and existing dealers. Gross merchandise value traded on the platforms rose 10% year-over-year to $7.5 billion in Q2 2025.
Adjusted EBITDA rose to $86.7 million in Q2 2025—up 21.5% from Q2 2024.
Income from continuing operations (GAAP) more than tripled year-over-year in Q2 2025. These results highlight scalability benefits from operating an asset-light, technology-driven model.
Adjusted Free Cash Flow reached $87 million in Q2 2025, reflecting 34% year-over-year growth.
Not all segments saw growth.
Service revenue declined 6.6% year-over-year in Q1 2025, primarily due to the prior divestiture of Openlane’s Automotive Keys business, a lower-margin operation.
The company also noted continued softness in commercial volumes, specifically fewer off-lease vehicle inspections and related services. Dealer-related service activity partially offset this dip. Purchased vehicle sales grew 23% year-over-year in Q2 2025, while finance revenue remained stable at $106.2 million in Q2 2025.
The AFC finance arm remains a major contributor. It provides floorplan financing, which helps independent dealers buy inventory on short-term loans.
This segment delivered $42.2 million in adjusted EBITDA in Q2 2025, with credit loss provisions lower than in Q2 2024.
Management recorded a $7 million one-time loss on property sales.
The company saw a roughly 5% increase in operating expenses in Q2 2025, attributed to ongoing investment in sales and technology, though it flagged possible inflationary cost pressures.
The company took several product and service steps in the period. Its new “One App” technology in the United States sped up dealer onboarding from days to minutes. In Canada, its “OPENLANE Pro” subscriptions, which offer enhanced data analytics and exclusive digital tools for dealers, gained new adopters. Openlane emphasized further investments in customer support and logistics to drive long-term engagement.
Looking Ahead: Guidance and Investor Watchpoints
Management raised guidance for FY2025 following the quarter’s outperformance and increased confidence in the company’s digital model. Full-year income from continuing operations (GAAP) is now forecast at $132 million to $140 million for FY2025, up from the prior $100 million to $114 million range. Adjusted EBITDA guidance is now $310 million to $320 million for 2025, up from the previous $290 million to $310 million estimate. Diluted earnings per share (GAAP) guidance for FY2025 was raised to $0.61–$0.66, and Operating Adjusted EPS to $1.12–$1.17 for 2025. These upgrades are meaningful both in absolute level and growth rate, showing belief in increased dealer volumes and operational efficiency. Management highlighted plans to maintain technology and market investments despite possible macro uncertainty, including the impact of tariffs and competitive responses from major auction providers.
Investors should monitor two issues in coming quarters. First, whether softness in commercial service revenues continues or deepens, as this would affect revenue mix. Second, how costs develop as ongoing investments in technology and sales efforts play out. Analysts are also tracking potential one-off events, such as additional asset sales or revisions to guidance if used vehicle market dynamics shift sharply. Management also emphasized its expectation of a pickup in off-lease vehicle supply beginning in 2026, flagged as a likely future growth spur.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
