OPENLANE, Inc.

Previous wording

•The Marketplace segment serves its customer base through digital marketplaces in the U.S., Canada and Europe and vehicle logistics center locations across Canada. Comprehensive private label remarketing solutions are offered to automobile manufacturers, captive finance companies and other commercial customers to offer vehicles digitally. Vehicles sold on our digital platforms are typically sold by commercial fleet operators, financial institutions, rental car companies, new and used vehicle dealers and vehicle manufacturers and their captive finance companies to dealer customers. We also provide value-added ancillary services including inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services.

Current wording

•The Marketplace segment serves its customer base through digital marketplaces in the U.S., Canada and Europe and vehicle logistics center locations in Canada. Comprehensive private label remarketing solutions are offered to automobile manufacturers, captive finance companies and other commercial customers to offer vehicles digitally. Vehicles sold on our digital platforms are typically sold by commercial fleet operators, financial institutions, rental car companies, new and used vehicle dealers and vehicle manufacturers and their captive finance companies to dealer customers. We also provide value-added ancillary services including inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services.

Previous wording

We believe the U.S. and Canadian wholesale used vehicle industry has a total addressable market of approximately 15 million vehicles, which can fluctuate depending on seasonality and a variety of other macro-economic and industry factors. This wholesale used vehicle industry consists of the commercial market (commercial sellers that sell to franchise and independent dealers) and the dealer-to-dealer market (franchise and independent dealers that both buy and sell vehicles). The Company supports the majority of commercial sellers in North America with our technology and we believe digital applications may provide an opportunity to expand the total addressable market for dealer-to-dealer transactions. The supply chain issues and market conditions facing the automotive industry in recent years, including the disruption of new vehicle production, low new vehicle supply and historically high used vehicle pricing have had a material impact on the wholesale used vehicle industry. More recently, new vehicle supply has begun to recover, and this has resulted in wholesale vehicle supply also starting to increase. New lease originations have increased for the last several quarters. As these leases mature in 2026 and beyond, we expect a higher volume of off-lease vehicles available to the wholesale used vehicle industry, with much of that volume flowing through OPENLANE first as we support the majority of commercial sellers in North America. However, recent tariffs and related trade disputes could impact the number of off-lease vehicles that are available to the wholesale used vehicle industry.

Current wording

We believe the U.S. and Canadian wholesale used vehicle industry has a total addressable market of approximately 15 million vehicles, which can fluctuate depending on seasonality and a variety of other macro-economic and industry factors. This wholesale used vehicle industry consists of the commercial market (commercial sellers that sell to franchise and independent dealers) and the dealer-to-dealer market (franchise and independent dealers that both buy and sell vehicles). The Company supports commercial sellers in North America with our technology and we believe digital applications may provide an opportunity to expand the total addressable market for dealer-to-dealer transactions. The supply chain issues and market conditions facing the automotive industry in recent years, including the disruption of new vehicle production, low new vehicle supply and historically high used vehicle pricing have had a material impact on the wholesale used vehicle industry. More recently, new vehicle supply has begun to recover, and this has resulted in wholesale vehicle supply also starting to increase. New lease originations have increased for the last several quarters. As these leases mature in 2026 and beyond, we expect a higher volume of off-lease vehicles available to the wholesale used vehicle industry, with much of that volume flowing through OPENLANE first as we support the majority of commercial sellers with off-lease vehicle inventory in North America. However, recent tariffs and related trade disputes could impact the number of off-lease vehicles that are available to the wholesale used vehicle industry.

Previous wording

The vehicles sold on our marketplaces generate auction fees from buyers and sellers. The Company generally does not take title to these consigned vehicles and records only its auction fees as revenue ("Auction fees" in the consolidated statement of income (loss)) because it has no influence on the vehicle auction selling price agreed to by the seller and the buyer at the auction. The Company does not record the gross selling price of the consigned vehicles sold at auction as revenue. The Company generally enforces its rights to payment for seller transactions through net settlement provisions following the sale of a vehicle. Marketplace services such as inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, collateral recovery services and technology solutions are generally recognized at the time of service ("Service revenue" in the consolidated statement of income (loss)). The Company also sells vehicles that have been purchased, which represent approximately 2% of the total volume of vehicles sold. For these types of sales, the Company does record the gross selling price of purchased vehicles sold at auction as revenue ("Purchased vehicle sales" in the consolidated statement of income (loss)) and the gross purchase price of the vehicles as "Cost of services." AFC's revenue ("Finance revenue" in the consolidated statement of income (loss)) is comprised of interest revenue and fee and other revenue associated with our finance receivables. AFC's interest revenue is generally determined based on the applicable prime rate plus a margin.

Current wording

The vehicles sold on our marketplaces generate auction fees from buyers and sellers. The Company generally does not take title to these consigned vehicles and records only its auction fees as revenue ("Auction fees" in the consolidated statements of income) because it has no influence on the vehicle auction selling price agreed to by the seller and the buyer at the auction. The Company does not record the gross selling price of the consigned vehicles sold at auction as revenue. The Company generally enforces its rights to payment for seller transactions through net settlement provisions following the sale of a vehicle. Marketplace services such as inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, collateral recovery services and technology solutions are generally recognized at the time of service ("Service revenue" in the consolidated statements of income). The Company also sells vehicles that have been purchased, which represent approximately 2% of the total volume of vehicles sold. For these types of sales, the Company does record the gross selling price of purchased vehicles sold at auction as revenue ("Purchased vehicle sales" in the consolidated statements of income) and the gross purchase price of the vehicles as "Cost of services." AFC's revenue ("Finance revenue" in the consolidated statements of income) is comprised of interest revenue and fee and other revenue associated with our finance receivables. AFC's interest revenue is generally determined based on the applicable prime rate plus a margin.

Previous wording

Our operating expenses consist of cost of services, finance interest expense, provision for credit losses, selling, general and administrative and depreciation and amortization. Cost of services is composed of payroll and related costs, subcontract services, the cost of vehicles purchased, supplies, insurance, property taxes, utilities, service contract claims, maintenance and lease expense related to the auction sites and loan offices. Selling, general and administrative expenses are comprised of payroll and related costs, sales and marketing, information technology services and professional fees.

Current wording

Our operating expenses consist of cost of services, finance interest expense, provision for credit losses, selling, general and administrative and depreciation and amortization. Cost of services is composed of payroll and related costs, subcontract services, the cost of vehicles purchased, supplies, insurance, property taxes, utilities, service contract claims, maintenance and lease expense related to the vehicle logistics centers and AFC branch locations. Selling, general and administrative expenses are comprised of payroll and related costs, sales and marketing, information technology services and professional fees.

Previous wording

For the three months ended March 31, 2025, we had revenue of $460.1 million compared with revenue of $429.9 million for the three months ended March 31, 2024, an increase of 7%. For a further discussion of our operating results, see the segment results discussions below.

Current wording

For the three months ended June 30, 2025, we had revenue of $481.7 million compared with revenue of $443.8 million for the three months ended June 30, 2024, an increase of 9%. For a further discussion of our operating results, see the segment results discussions below.

Previous wording

Depreciation and amortization decreased $1.6 million, or 7%, to $22.7 million for the three months ended March 31, 2025, compared with $24.3 million for the three months ended March 31, 2024. The decrease in depreciation and amortization was primarily the result of assets that have become fully amortized.

Current wording

Depreciation and amortization decreased $1.1 million, or 5%, to $23.0 million for the three months ended June 30, 2025, compared with $24.1 million for the three months ended June 30, 2024. The decrease in depreciation and amortization was primarily the result of assets that have become fully amortized and depreciated.

Previous wording

For the three months ended March 31, 2025, we had other income of $5.0 million compared with other expense of $0.5 million for the three months ended March 31, 2024. The increase in other income was primarily attributable to foreign currency gains on intercompany balances of $3.3 million for the three months ended March 31, 2025, compared with foreign currency losses on intercompany balances of $2.0 million for the three months ended March 31, 2024. The remaining increase was attributable to a net increase in other miscellaneous income aggregating $0.2 million.

Current wording

For the three months ended June 30, 2025, we had other income of $7.4 million compared with other expense of $0.2 million for the three months ended June 30, 2024. The increase in other income was primarily attributable to foreign currency gains on intercompany balances of $5.6 million for the three months ended June 30, 2025, compared with foreign currency losses on intercompany balances of $0.5 million for the three months ended June 30, 2024. The remaining increase was attributable to a net increase in other miscellaneous income aggregating $1.5 million.

Previous wording

We had an effective tax rate of 30.0% for the three months ended March 31, 2025, compared with an effective tax rate of 36.6% for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2025 was unfavorably impacted by an increase in the valuation allowance related to 2025 current year movement of the adjusted U.S. net deferred tax asset. The effective tax rate for the three months ended March 31, 2024 was unfavorably impacted by an increase in the valuation allowance related to 2024 current year movement of the adjusted U.S. net deferred tax asset.

Current wording

We had an effective tax rate of 35.4% for the three months ended June 30, 2025, compared with an effective tax rate of 41.2% for the three months ended June 30, 2024. The effective tax rate for the three months ended June 30, 2025 was unfavorably impacted by an increase in the valuation allowance related to 2025 current year movement of the adjusted U.S. net deferred tax asset. The effective tax rate for the three months ended June 30, 2024 was unfavorably impacted by an increase in the valuation allowance related to 2024 current year movement of the adjusted U.S. net deferred tax asset.

Previous wording

We recorded a $36.7 million and $35.8 million valuation allowance against the U.S. net deferred tax asset at March 31, 2025 and December 31, 2024, respectively. The realization of the net deferred tax assets is dependent on our ability to generate sufficient future taxable income to utilize these assets. Depending on our current and anticipated future earnings, we may release a significant portion of our valuation allowance in a future period if there is sufficient positive evidence which would result in a corresponding decrease to income tax expense in such period. The actual timing and amount of the valuation allowance to be released is uncertain.

Current wording

We recorded a $38.2 million and $35.8 million valuation allowance against the U.S. net deferred tax asset at June 30, 2025 and December 31, 2024, respectively. The realization of the net deferred tax assets is dependent on our ability to generate sufficient future taxable income to utilize these assets. Depending on our current and anticipated future earnings, we may release a significant portion of our valuation allowance in a future period if there is sufficient positive evidence which would result in a corresponding decrease to income tax expense in such period. The actual timing and amount of the valuation allowance to be released is uncertain.

Previous wording

Additionally, the Organization for Economic Cooperation and Development has published a proposal to establish a new global minimum corporate tax rate of 15%, commonly referred to as Pillar Two. While the U.S. has not yet adopted the Pillar Two framework into law, numerous countries in which we operate have enacted tax legislation based on the Pillar Two framework with certain components of the minimum tax rules effective beginning in 2024 and further rules becoming effective beginning in 2025. These rules are not expected to materially impact the Company's consolidated financial statements. The Company will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.

Current wording

Additionally, the Organization for Economic Cooperation and Development has published a proposal to establish a new global minimum corporate tax rate of 15%, commonly referred to as Pillar Two. While the U.S. has not adopted the Pillar Two framework into law, numerous countries in which we operate have enacted tax legislation based on the Pillar Two framework with certain components of the minimum tax rules effective beginning in 2024 and further rules becoming effective beginning in 2025. On June 26, 2025, the U.S. Treasury Department announced an agreement with the G7 that would exclude U.S. parented groups from some taxes imposed by Pillar Two. This agreement allows for the U.S. international tax rules and Pillar Two to operate in parallel. These rules, as well as potential changes due to the agreement, are not expected to materially impact the Company's consolidated financial statements. The Company will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.

Previous wording

For the three months ended March 31, 2025 compared with the three months ended March 31, 2024, the change in the Canadian dollar exchange rate decreased revenue by $6.4 million, operating profit by $1.7 million and net income by $0.7 million. For the three months ended March 31, 2025 compared with the three months ended March 31, 2024, the change in the euro exchange rate decreased revenue by $2.6 million, operating profit by $0.2 million and net income by $0.1 million.

Current wording

For the three months ended June 30, 2025 compared with the three months ended June 30, 2024, the change in the euro exchange rate increased revenue by $4.9 million, operating profit by $0.3 million and net income by $0.2 million. For the three months ended June 30, 2025 compared with the three months ended June 30, 2024, the change in the Canadian dollar exchange rate decreased revenue by $1.3 million, operating profit by $0.3 million and net income by $0.1 million.

Previous wording

Revenue from the Marketplace segment increased $32.9 million, or 10%, to $351.2 million for the three months ended March 31, 2025, compared with $318.3 million for the three months ended March 31, 2024. The increase in revenue was partially attributable to the 15% increase in the number of dealer consignment vehicles sold. For the three months ended March 31, 2025, there was an increase in purchased vehicle sales and an increase in auction fees, partially offset by a decrease in service revenue (discussed below). The change in revenue included the impact of a decrease in revenue of $7.6 million due to fluctuations in the Canadian dollar and euro exchange rates.

Current wording

Revenue from the Marketplace segment increased $39.5 million, or 12%, to $375.5 million for the three months ended June 30, 2025, compared with $336.0 million for the three months ended June 30, 2024. The increase in revenue was partially attributable to the 21% increase in the number of dealer consignment vehicles sold. For the three months ended June 30, 2025, there was an increase in auction fees and an increase in purchased vehicle sales, partially offset by a decrease in service revenue (discussed below). The change in revenue included the impact of a net increase in revenue of $3.9 million due to fluctuations in the euro and Canadian dollar exchange rates.

Previous wording

The 2% decrease in the number of vehicles sold was comprised of a 14% decrease in commercial volumes and a 15% increase in dealer consignment volumes. The gross merchandise value ("GMV") of vehicles sold for the three months ended March 31, 2025 and 2024 was approximately $6.9 billion and $7.0 billion, respectively.

Current wording

The 3% increase in the number of vehicles sold was comprised of a 21% increase in dealer consignment volumes and a 9% decrease in commercial volumes. The GMV of vehicles sold for the three months ended June 30, 2025 and 2024 was approximately $7.5 billion and $6.8 billion, respectively.

Previous wording

Auction fees increased $15.3 million, or 14%, to $125.2 million for the three months ended March 31, 2025, compared with $109.9 million for the three months ended March 31, 2024. Auction fees per vehicle sold for the three months ended March 31, 2025 increased $50, or 17%, to $345, compared with $295 for the three months ended March 31, 2024. The increase in auction fees per vehicle sold reflects the mix of vehicles sold in the first quarter of 2025 and the impact of price increases.

Current wording

Auction fees increased $26.2 million, or 24%, to $134.9 million for the three months ended June 30, 2025, compared with $108.7 million for the three months ended June 30, 2024. Auction fees per vehicle sold for the three months ended June 30, 2025 increased $60, or 20%, to $355, compared with $295 for the three months ended June 30, 2024. The increase in auction fees per vehicle sold reflects the mix of vehicles sold in the second quarter of 2025 and the impact of price increases.

Previous wording

Service revenue decreased $9.9 million, or 7%, to $140.3 million for the three months ended March 31, 2025, compared with $150.2 million for the three months ended March 31, 2024, primarily as a result of a decrease in revenue of $10.5 million as a result of the sale of our automotive key business in 2024, and decreases in repossession revenue of $4.2 million and other miscellaneous service revenues aggregating approximately $1.4 million, partially offset by an increase in transportation revenue of $6.2 million.

Current wording

Service revenue decreased $5.0 million, or 3%, to $142.1 million for the three months ended June 30, 2025, compared with $147.1 million for the three months ended June 30, 2024, primarily as a result of a decrease in revenue of $9.4 million as a result of the sale of our automotive key business in 2024, and decreases in repossession revenue of $2.6 million, inspection revenue of $1.8 million and other miscellaneous service revenues aggregating approximately $0.1 million, partially offset by an increase in transportation revenue of $8.9 million.

Previous wording

For the three months ended March 31, 2025, gross profit from the Marketplace segment increased $6.9 million, or 7%, to $108.7 million, compared with $101.8 million for the three months ended March 31, 2024. Gross profit improvements were driven by a $4.8 million increase from pricing, a $1.4 million benefit from lower depreciation and amortization, and a $1.3 million increase resulting from mix and other items. These improvements were partially offset by a $0.6 million decrease in auction and service volumes.

Current wording

For the three months ended June 30, 2025, gross profit from the Marketplace segment increased $32.7 million, or 37%, to $120.6 million, compared with $87.9 million for the three months ended June 30, 2024. Gross profit improvements were driven by a $12.5 million increase from pricing, a $10.5 million benefit from lower Canadian DST, a $10.3 million increase resulting from a higher mix of dealer consignment vehicles, a $1.7 million net increase in auction and service volumes and a $0.7 million benefit from lower depreciation and amortization. These improvements were partially offset by a decrease in other miscellaneous items aggregating $3.0 million.

Previous wording

Gross profit from the Marketplace segment was 31.0% of revenue for the three months ended March 31, 2025, compared with 32.0% of revenue for the three months ended March 31, 2024. Gross profit as a percentage of revenue decreased for the three months ended March 31, 2025 as compared with the three months ended March 31, 2024, primarily due to an increase in purchased vehicle sales, partially offset by increased prices.

Current wording

Gross profit from the Marketplace segment was 32.1% of revenue for the three months ended June 30, 2025, compared with 26.2% of revenue for the three months ended June 30, 2024. Gross profit as a percentage of revenue increased for the three months ended June 30, 2025 as compared with the three months ended June 30, 2024, primarily due to the benefit of lower Canadian DST, increased prices and increased volumes, partially offset by an increase in purchased vehicle sales.

Previous wording

Provision for credit losses from the Marketplace segment decreased $1.9 million, or 86%, to $0.3 million for the three months ended March 31, 2025, compared with $2.2 million for the three months ended March 31, 2024, primarily as a result of initiatives implemented to reduce risk in the marketplace and decrease bad debt expense.

Current wording

Provision for credit losses from the Marketplace segment decreased $1.1 million, or 85%, to $0.2 million for the three months ended June 30, 2025, compared with $1.3 million for the three months ended June 30, 2024, primarily as a result of initiatives implemented to reduce risk in the marketplace and initiatives to decrease bad debt expense.

Previous wording

Selling, general and administrative expenses from the Marketplace segment increased $2.1 million, or 2%, to $94.7 million for the three months ended March 31, 2025, compared with $92.6 million for the three months ended March 31, 2024, primarily as a result of increases in incentive-based compensation of $4.4 million, marketing costs of $1.7 million and other miscellaneous expenses aggregating $2.5 million, partially offset by decreases in stock-based compensation of $3.7 million, information technology costs of $1.4 million and fluctuations in the Canadian exchange rate of $1.4 million.

Current wording

Selling, general and administrative expenses from the Marketplace segment increased $7.2 million, or 8%, to $99.9 million for the three months ended June 30, 2025, compared with $92.7 million for the three months ended June 30, 2024, primarily as a result of increases in incentive-based compensation of $7.9 million, compensation expense of $1.9 million, sales-related expenses of $1.7 million and other miscellaneous expenses aggregating $1.2 million, partially offset by decreases in severance of $3.0 million, information technology costs of $1.5 million and $1.0 million related to costs incurred by the Company's automotive key business prior to its sale in the fourth quarter of 2024.

Previous wording

On April 30, 2025, the Company closed on the sale of excess property in Montreal that was originally purchased as part of the December 2023 Manheim Canada acquisition. This transaction resulted in cash proceeds of approximately $42 million, net of commissions and fees, and will result in a loss on sale of approximately $7 million in the second quarter of 2025.

Current wording

In April 2025, the Company closed on the sale of excess property in Montreal that was originally purchased as part of the December 2023 Manheim Canada acquisition. This transaction resulted in a loss on sale of approximately $7.0 million in the second quarter of 2025.

Previous wording

For the three months ended March 31, 2025, the Finance segment revenue decreased $2.7 million, or 2%, to $108.9 million, compared with $111.6 million for the three months ended March 31, 2024. The decrease in revenue was primarily the result of decreases in interest yields driven by a decrease in prime rates, partially offset by a 2% increase in loan transaction units and an increase in loan values.

Current wording

For the three months ended June 30, 2025, the Finance segment revenue decreased $1.6 million, or 1%, to $106.2 million, compared with $107.8 million for the three months ended June 30, 2024. The decrease in revenue was primarily the result of decreases in interest yields driven by a decrease in prime rates and a 1% decrease in loan transaction units (vehicle finance transactions), partially offset by an increase in loan values.

Previous wording

For the three months ended March 31, 2025, finance interest expense decreased $5.0 million, or 15%, to $27.6 million, compared with $32.6 million for the three months ended March 31, 2024. The decrease in finance interest expense was attributable to an approximately 1.5% decrease in the average interest rate on the securitization obligations, partially offset by an increase in the average balance on the AFC securitization obligations.

Current wording

For the three months ended June 30, 2025, finance interest expense decreased $5.0 million, or 16%, to $26.9 million, compared with $31.9 million for the three months ended June 30, 2024. The decrease in finance interest expense was attributable to an approximately 1.6% decrease in the average interest rate on the securitization obligations, partially offset by an increase in the average balance on the AFC securitization obligations.

Previous wording

For the three months ended March 31, 2025 and 2024, the net Finance margin percent was approximately 13.9% and 13.8%, respectively. The net interest yield was approximately 5.0% for the three months ended March 31, 2025 and 2024.

Current wording

For the three months ended June 30, 2025 and 2024, the net Finance margin percent was approximately 13.6% and 13.5%, respectively. The net interest yield was approximately 4.9% for the three months ended June 30, 2025 and 2024.

Previous wording

For the three months ended March 31, 2025, the finance provision for credit losses decreased $4.6 million, or 34%, to $9.0 million, compared with $13.6 million for the three months ended March 31, 2024. The provision for credit losses decreased to 1.5% of the average receivables managed for the three months ended March 31, 2025 from 2.4% for the three months ended March 31, 2024. The provision for credit losses is expected to be approximately 2% or under, on a long-term basis, of the average receivables managed balance. However, the actual losses in any particular quarter or year could deviate from this range.

Current wording

For the three months ended June 30, 2025, the finance provision for credit losses decreased $3.5 million, or 29%, to $8.5 million, compared with $12.0 million for the three months ended June 30, 2024. The provision for credit losses decreased to 1.5% of the average receivables managed for the three months ended June 30, 2025 from 2.1% for the three months ended June 30, 2024. The provision for credit losses is expected to be approximately 2% or under, on a long-term basis, of the average receivables managed balance. However, the actual losses in any particular quarter or year could deviate from this range.

Previous wording

For the three months ended March 31, 2025, cost of services for the Finance segment increased $0.3 million, or 2%, to $17.1 million, compared with $16.8 million for the three months ended March 31, 2024. The increase in cost of services was primarily the result of an increase in incentive-based compensation of $0.3 million.

Current wording

For the three months ended June 30, 2025, cost of services for the Finance segment increased $1.0 million, or 6%, to $17.8 million, compared with $16.8 million for the three months ended June 30, 2024. The increase in cost of services was primarily the result of increases in incentive-based compensation of $0.6 million, compensation expense of $0.3 million and other miscellaneous expenses aggregating $0.1 million.

Previous wording

Selling, general and administrative expenses for the Finance segment decreased $1.4 million, or 10%, to $12.5 million for the three months ended March 31, 2025, compared with $13.9 million for the three months ended March 31, 2024 primarily as a result of decreases in stock-based compensation of $1.2 million and compensation expense of $0.5 million, partially offset by an increase in incentive-based compensation of $0.3 million.

Current wording

Selling, general and administrative expenses for the Finance segment increased $2.4 million, or 20%, to $14.4 million for the three months ended June 30, 2025, compared with $12.0 million for the three months ended June 30, 2024 primarily as a result of increases in incentive-based compensation of $1.2 million, stock-based compensation of $0.8 million and other miscellaneous expenses aggregating $0.4 million.

Previous wording

Interest expense decreased $3.1 million, or 44%, to $4.0 million for the three months ended March 31, 2025, compared with $7.1 million for the three months ended March 31, 2024. The decrease in interest expense was primarily the result of a decrease in the borrowings on lines of credit.

Current wording

Interest expense decreased $5.5 million, or 44%, to $7.1 million for the six months ended June 30, 2025, compared with $12.6 million for the six months ended June 30, 2024. The decrease in interest expense was primarily the result of a decrease in the borrowings on lines of credit.

Previous wording

The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold, which represent approximately 2% of total vehicles sold. Purchased vehicle sales increased $27.5 million, or 47%, to $85.7 million for the three months ended March 31, 2025, compared with $58.2 million for the three months ended March 31, 2024, primarily as a result of an increase in purchased vehicles sold in Europe and the U.S. marketplace.

Current wording

The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold, which represent approximately 2% of total vehicles sold. Purchased vehicle sales increased $45.8 million, or 33%, to $184.2 million for the six months ended June 30, 2025, compared with $138.4 million for the six months ended June 30, 2024, primarily as a result of an increase in purchased vehicles sold in the U.S. marketplace and Europe.

Previous wording

On June 28, 2024, Canada enacted a new 3% Digital Services Tax (“Canadian DST”) on certain online revenues, including online marketplace service revenues, of companies with consolidated revenues of at least €750 million. The Company recorded $1.4 million of Canadian DST in the first quarter of 2025, compared with $0.0 million in the first quarter of 2024. In addition, as previously disclosed, the Canadian DST was partially mitigated by corresponding price increases put in place during the third quarter of 2024.

Current wording

On June 28, 2024, Canada enacted a new 3% Digital Services Tax (“Canadian DST”) on certain online revenues, including online marketplace service revenues, of companies with consolidated revenues of at least €750 million. On June 29, 2025, the Canadian government announced that it plans to rescind the Canadian DST as part of trade negotiations with the United States. The Company continues to record Canadian DST expense until the Canadian DST is officially rescinded by an act of Parliament. The Company recorded $2.9 million of Canadian DST in the first six months of 2025, compared with $12.0 million in the first six months of 2024 (of which $10 million related to prior years). In total, the Company recorded Canadian DST related to the periods 2022 through 2024 of $10.2 million in 2024. The Company will reverse these expenses in the period the Canadian DST is officially rescinded.

Previous wording

A substantial amount of our working capital (current assets less current liabilities) associated with our Marketplace segment is generated from the payments received for services provided. The majority of our working capital needs in the Marketplace segment are short-term in nature, usually less than a week in duration. Most financial institutions place a temporary hold on the availability of the funds deposited that generally can range up to two business days, resulting in cash in our accounts and on our balance sheet that is unavailable for use until it is made available. There are outstanding checks (book overdrafts) to sellers and vendors included in current liabilities. Because a portion of these outstanding checks for operations in the U.S. are drawn upon bank accounts at financial institutions other than the financial institutions that hold the cash, we cannot offset all the cash and the outstanding checks on our balance sheet. Changes in working capital vary from quarter-to-quarter as a result of the timing of collections and disbursements of funds to consignors from marketplace sales held near period end. The primary reason for the decrease in working capital year-over-year is the result of the senior notes being reclassified to current debt in June 2024, due to their maturity on June 1, 2025.

Current wording

A substantial amount of our working capital (current assets less current liabilities) associated with our Marketplace segment is generated from the payments received for services provided. The majority of our working capital needs in the Marketplace segment are short-term in nature, usually less than a week in duration. Most financial institutions place a temporary hold on the availability of the funds deposited that generally can range up to two business days, resulting in cash in our accounts and on our balance sheet that is unavailable for use until it is made available. There are outstanding checks (book overdrafts) to sellers and vendors included in current liabilities. Because a portion of these outstanding checks for operations in the U.S. are drawn upon bank accounts at financial institutions other than the financial institutions that hold the cash, we cannot offset all the cash and the outstanding checks on our balance sheet. Changes in working capital vary from quarter-to-quarter as a result of the timing of collections and disbursements of funds to consignors from marketplace sales held near period end.

Previous wording

Approximately $69.7 million of available cash was held by our foreign subsidiaries at March 31, 2025. If funds held by our foreign subsidiaries were to be repatriated, state and local income tax expense and withholding tax expense would need to be recognized, net of any applicable foreign tax credits.

Current wording

Approximately $48.7 million of available cash was held by our foreign subsidiaries at June 30, 2025. If funds held by our foreign subsidiaries were to be repatriated, state and local income tax expense and withholding tax expense would need to be recognized, net of any applicable foreign tax credits.

Previous wording

As of March 31, 2025 and December 31, 2024, there were no borrowings on the Revolving Credit Facilities. We had related outstanding letters of credit in the aggregate amount of $42.7 million and $48.8 million at March 31, 2025 and December 31, 2024, respectively, which reduce the amount available for borrowings under the Revolving Credit Facilities. Our European operations have lines of credit aggregating $32.4 million (€30 million) of which $23.4 million was drawn at March 31, 2025.

Current wording

As of June 30, 2025 and December 31, 2024, there were no borrowings on the Revolving Credit Facilities. We had related outstanding letters of credit in the aggregate amount of $42.7 million and $48.8 million at June 30, 2025 and December 31, 2024, respectively, which reduce the amount available for borrowings under the Revolving Credit Facilities. Our European operations have lines of credit aggregating $47.2 million (€40 million) of which $0.9 million was drawn at June 30, 2025.

Previous wording

In addition, the Credit Agreement and the indenture governing our senior notes (see Note 6, "Long-Term Debt" for addit ional information) contain certain limitations on our ability to pay dividends and other distributions, make certain acquisitions or investments, grant liens and sell assets, and the Credit Agreement contains certain limitations on our ability to incur indebtedness. The applicable covenants in the Credit Agreement affect our operating flexibility by, among other things, restricting our ability to incur expenses and indebtedness that could be used to grow the business, as well as to fund general corporate purposes. We were in compliance with the covenants in the Credit Agreement and the indenture governing our senior notes at March 31, 2025.

Current wording

In addition, the Credit Agreement (see Note 6, "Long-Term Debt" for addit ional information) contains certain limitations on our ability to pay dividends and other distributions, make certain acquisitions or investments, grant liens and sell assets, and contains certain limitations on our ability to incur indebtedness. The applicable covenants in the Credit Agreement affect our operating flexibility by, among other things, restricting our ability to incur expenses and indebtedness that could be used to grow the business, as well as to fund general corporate purposes. We were in compliance with the covenants in the Credit Agreementat June 30, 2025.

Previous wording

On May 31, 2017, we issued $950 million of 5.125% senior notes due June 1, 2025. The Company pays interest on the senior notes semi-annually in arrears on June 1 and December 1 of each year. The senior notes may be redeemed at par and are guaranteed by the Subsidiary Guarantors. As of March 31, 2025 there was $210.0 million of senior notes outstanding, which are classified as current debt.

Current wording

On May 31, 2017, we issued $950 million of 5.125% senior notes due June 1, 2025. The Company paid interest on the senior notes semi-annually in arrears on June 1 and December 1 of each year. The senior notes were guaranteed by the Subsidiary Guarantors and as of June 1, 2023 became redeemable at par. The Company repaid the outstanding $210.0 million of senior notes upon maturity during the second quarter of 2025 with cash on hand.

Previous wording

At March 31, 2025, the remaining $210.0 million of senior notes are classified as current debt and there were no borrowings on the Revolving Credit Facilities. At March 31, 2025, cash totaled $220.5 million and there was an additional $403.9 million available for borrowing under the Revolving Credit Facilities (net of $42.7 million in outstanding letters of credit). Funds held by our foreign subsidiaries could be repatriated, at which point state and local income tax expense and withholding tax expense would need to be recognized, net of any applicable foreign tax credits.

Current wording

At June 30, 2025, there were no borrowings on the Revolving Credit Facilities. At June 30, 2025, cash totaled $119.1 million and there was an additional $410.9 million available for borrowing under the Revolving Credit Facilities (net of $42.7 million in outstanding letters of credit). Funds held by our foreign subsidiaries could be repatriated, at which point state and local income tax expense and withholding tax expense would need to be recognized, net of any applicable foreign tax credits.

Previous wording

We believe our sources of liquidity from our cash and cash equivalents on hand, working capital, availability under our Revolving Credit Facilities and ongoing sources of liquidity from cash generated by operations and borrowings under our Revolving Credit Facilities are sufficient to meet our operating needs for the foreseeable future. In addition, we believe the previously mentioned sources of liquidity will be sufficient to fund our capital requirements and debt service payments for the foreseeable future, including the repayment of the$210.0 million in senior notes in 2025. Changes in macroeconomic conditions could materially affect the Company's liquidity.

Current wording

We believe our sources of liquidity from our cash and cash equivalents on hand, working capital, availability under our Revolving Credit Facilities and ongoing sources of liquidity from cash generated by operations and borrowings under our Revolving Credit Facilities are sufficient to meet our operating needs for the foreseeable future. In addition, we believe the previously mentioned sources of liquidity will be sufficient to fund our capital requirements and debt service payments for the foreseeable future. Changes in macroeconomic conditions could materially affect the Company's liquidity.

Previous wording

We also have an agreement for the securitization of AFCI's receivables, which expires on January 31, 2028. AFCI's committed facility is provided through a third-party conduit (separate from the U.S. facility) and was C$300 million at March 31, 2025. The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings.

Current wording

We also have an agreement for the securitization of AFCI's receivables, which expires on January 31, 2028. AFCI's committed facility is provided through a third-party conduit (separate from the U.S. facility) and was C$375 million at June 30, 2025. In May 2025, AFCI entered into an Amendment No. 2 (the "Amendment No. 2") to the Receivables Purchase Agreement. The Amendment No. 2 increased AFCI's committed liquidity from C$300 million to C$375 million. The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings.

Previous wording

AFC managed total finance receiva bles of $2,327.8 million and $2,314.0 million at March 31, 2025 and December 31, 2024, respectively. AFC's allowance for losses was $20.5 million and $19.8 million at March 31, 2025 and December 31, 2024, respectively.

Current wording

AFC managed total finance receiva bles of $2,347.4 million and $2,314.0 million at June 30, 2025 and December 31, 2024, respectively. AFC's allowance for losses was $19.0 million and $19.8 million at June 30, 2025 and December 31, 2024, respectively.

Previous wording

As of March 31, 2025 and December 31, 2024, $2,346.1 million and $2,335.1 million, respectively, of finance receivables (inclusive of accrued interest and fees) and a cash reserve of 1 or 3 percent of the obligations collateralized by finance receivables served as security for the $1,676.8 million and $1,679.1 million of gross obligations collateralized by finance receivables at March 31, 2025 and December 31, 2024, respectively. The amount of the cash reserve depends on circumstances which are set forth in the securiti zation agreements. There were unamortized securitization issuance costs of approximately $17.3 million and $18.8 million at March 31, 2025 and December 31, 2024, respectively. After the occurrence of a termination event, as defined in the U.S. securitization agreement, the banks may, and could, cause the stock of AFC Funding Corporation to be transferred to the bank facility, though as a practical matter the bank facility would look to the liquidation of the receivables under the transaction documents as their primary remedy.

Current wording

As of June 30, 2025 and December 31, 2024, $2,343.7 million and $2,335.1 million, respectively, of finance receivables (inclusive of accrued interest and fees) and a cash reserve of 1 or 3 percent of the obligations collateralized by finance receivables served as security for the $1,740.9 million and $1,679.1 million of gross obligations collateralized by finance receivables at June 30, 2025 and December 31, 2024, respectively. The amount of the cash reserve depends on circumstances which are set forth in the securiti zation agreements. There were unamortized securitization issuance costs of approximately $16.1 million and $18.8 million at June 30, 2025 and December 31, 2024, respectively. After the occurrence of a termination event, as defined in the U.S. securitization agreement, the banks may, and could, cause the stock of AFC Funding Corporation to be transferred to the bank facility, though as a practical matter the bank facility would look to the liquidation of the receivables under the transaction documents as their primary remedy.

Previous wording

EBITDA and Adjusted EBITDA, as presented herein, are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States, or GAAP. They are not measurements of our financial performance under GAAP and should not be considered substitutes for net income (loss), operating profit (loss) or any other performance measures derived in accordance with GAAP.

Current wording

EBITDA and Adjusted EBITDA, as presented herein, are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States, or GAAP. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.