OPENLANE, Inc.

Previous wording

However, macroeconomic and geopolitical factors, including the conflict with Iran and inflationary pressures, interest rates, volatility of oil and natural gas prices and declining consumer confidence continue to impact the affordability and demand for new and used vehicles. Further, the continuously evolving tariff and trade environment is another source of uncertainty in the automotive industry. Due to their evolving nature, we cannot predict whether or for how long certain trends will continue, nor to what degree these trends will impact us in the future.

Current wording

However, macroeconomic and geopolitical factors, including the conflict with Iran and inflationary pressures, interest rates, volatility of oil and natural gas prices and consumer confidence continue to impact the affordability and demand for new and used vehicles. In addition, increases in fuel prices, including as a result of the conflict with Iran, have increased transportation and logistics costs for the wholesale used vehicle industry. Further, the continuously evolving tariff and trade environment continues to be a source of uncertainty in the automotive industry. Due to their evolving nature, we cannot predict whether or for how long certain trends will continue, nor to what degree these trends will impact us in the future.

Previous wording

For the three months ended March 31, 2026, we had revenue of $527.9 million compared with revenue of $460.1 million for the three months ended March 31, 2025, an increase of 15%. For a further discussion of our operating results, see the segment results discussions below.

Current wording

For the three months ended June 30, 2026, we had revenue of $554.6 million compared with revenue of $481.7 million for the three months ended June 30, 2025, an increase of 15%. For a further discussion of our operating results, see the segment results discussions below.

Previous wording

Interest expense increased $6.1 million, or 153%, to $10.1 million for the three months ended March 31, 2026, compared with $4.0 million for the three months ended March 31, 2025. The increase in interest expense was primarily the result of new term loan borrowings in the fourth quarter of 2025, partially offset by the repayment of the senior notes in the second quarter of 2025.

Current wording

Interest expense increased $6.9 million, or 223%, to $10.0 million for the three months ended June 30, 2026, compared with $3.1 million for the three months ended June 30, 2025. The increase in interest expense was primarily the result of new term loan borrowings in the fourth quarter of 2025, partially offset by the repayment of the senior notes in the second quarter of 2025.

Previous wording

For the three months ended March 31, 2026, we had other income of $1.6 million compared with $5.0 million for the three months ended March 31, 2025. The decrease in other income was primarily attributable to a decrease in foreign currency gains on intercompany balances of $3.3 million and a net decrease in other miscellaneous items aggregating $0.1 million, primarily a decrease in interest income.

Current wording

For the three months ended June 30, 2026, we had other income of $3.6 million compared with $7.4 million for the three months ended June 30, 2025. The decrease in other income was primarily attributable to a decrease in foreign currency gains on intercompany balances of $4.4 million and a net decrease in other miscellaneous items aggregating $0.7 million, primarily a decrease in interest income, partially offset by a $1.3 million realized gain on investment securities.

Previous wording

We had an effective tax rate of 25.1% for the three months ended March 31, 2026, compared with an effective tax rate of 30.0% for the three months ended March 31, 2025. The effective tax rate for the three months ended March 31, 2025 was unfavorably impacted by an increase in the valuation allowance related to movement of the adjusted U.S. net deferred tax asset.

Current wording

We had an effective tax rate of 27.5% for the three months ended June 30, 2026, compared with an effective tax rate of 35.4% for the three months ended June 30, 2025. 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.

Previous wording

Revenue from the Marketplace segment increased $70.3 million, or 20%, to $421.5 million for the three months ended March 31, 2026, compared with $351.2 million for the three months ended March 31, 2025. The increase in revenue was primarily attributable to the 19% increase in the number of vehicles sold. For the three months ended March 31, 2026, there were increases in auction and related fees, purchased vehicle sales and SaaS and other revenue. The change in revenue included the impact of an increase in revenue of $13.3 million due to fluctuations in the euro and Canadian dollar exchange rates.

Current wording

Revenue from the Marketplace segment increased $71.8 million, or 19%, to $447.3 million for the three months ended June 30, 2026, compared with $375.5 million for the three months ended June 30, 2025. The increase in revenue was primarily attributable to the 27% increase in the number of vehicles sold. For the three months ended June 30, 2026, there were increases in auction and related fees, purchased vehicle sales and SaaS and other revenue. The change in revenue included the impact of an increase in revenue of $2.1 million due to fluctuations in the euro exchange rate.

Previous wording

The 19% increase in the number of vehicles sold was comprised of a 25% increase in commercial vehicles sold, primarily due to the onboarding of a new private label customer, and a 13% increase in dealer consignment vehicles sold. The GMV of vehicles sold for the three months ended March 31, 2026 and 2025 was approximately $9.1 billion and $6.9 billion, respectively. The year-over-year increase in GMV for the three months ended March 31, 2026 was driven by the increase in vehicles sold and an increase in the average value of vehicles sold.

Current wording

The 27% increase in the number of vehicles sold was comprised of a 39% increase in commercial vehicles sold and a 13% increase in dealer consignment vehicles sold. The increase in commercial vehicles sold was primarily due to the onboarding of a new private label customer and an increase in off-lease vehicles sold. The GMV of vehicles sold for the three months ended June 30, 2026 and 2025 was approximately $10.5 billion and $7.5 billion, respectively. The year-over-year increase in GMV for the three months ended June 30, 2026 was driven by the increase in vehicles sold and an increase in the average value of vehicles sold.

Previous wording

Auction and related fees increased $42.9 million, or 22%, to $241.8 million for the three months ended March 31, 2026, compared with $198.9 million for the three months ended March 31, 2025. Yield represents auction and related fees divided by GMV. Yield decreased 20 basis points to 2.7% for the three months ended March 31, 2026, compared with 2.9% for the three months ended March 31, 2025. The year-over-year decrease in consolidated yield for the three months ended March 31, 2026, was driven by an increased mix of commercial vehicles which carry lower yields than the consolidated average, as well as an increase in the average value of vehicles sold.

Current wording

Auction and related fees increased $45.1 million, or 21%, to $259.0 million for the three months ended June 30, 2026, compared with $213.9 million for the three months ended June 30, 2025. Yield represents auction and related fees divided by GMV. Yield decreased 40 basis points to 2.5% for the three months ended June 30, 2026, compared with 2.9% for the three months ended June 30, 2025. The year-over-year decrease in consolidated yield for the three months ended June 30, 2026, was driven by an increased mix of commercial vehicles which carry lower yields than the consolidated average, as well as an increase in the average value of vehicles sold.

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 $26.5 million, or 31%, to $112.2 million for the three months ended March 31, 2026, compared with $85.7 million for the three months ended March 31, 2025, primarily as a result of an increase in the number of purchased vehicles sold in the U.S. marketplace and an increase in the average selling price of purchased vehicles sold in Europe, partially offset by a decrease in the number of purchased vehicles sold in Europe.

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 $16.4 million, or 17%, to $114.9 million for the three months ended June 30, 2026, compared with $98.5 million for the three months ended June 30, 2025, primarily as a result of an increase in the number of purchased vehicles sold in the U.S. marketplace, partially offset by a decrease in the average selling price of purchased vehicles sold in the U.S. marketplace, and further offset by a decrease in the number of purchased vehicles sold in Europe, partially offset by an increase in the average selling price of purchased vehicles sold in Europe.

Previous wording

Provision for credit losses from the Marketplace segment increased $0.3 million to $0.6 million for the three months ended March 31, 2026, compared with $0.3 million for the three months ended March 31, 2025.

Current wording

Provision for credit losses from the Marketplace segment increased $1.2 million, or 600%, to $1.4 million for the three months ended June 30, 2026, compared with $0.2 million for the three months ended June 30, 2025, mainly as a result of growth in the Marketplace business.

Previous wording

For the three months ended March 31, 2026, the Finance segment revenue decreased $2.5 million, or 2%, to $106.4 million, compared with $108.9 million for the three months ended March 31, 2025. 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.

Current wording

For the three months ended June 30, 2026, the Finance segment revenue increased $1.1 million, or 1%, to $107.3 million, compared with $106.2 million for the three months ended June 30, 2025. The increase in revenue was primarily the result of a 4% increase in loan transaction units (vehicle finance transactions) and an increase in loan values, partially offset by decreases in interest yields driven by a decrease in average prime rates.

Previous wording

For the three months ended March 31, 2026, finance interest expense decreased $2.8 million, or 10%, to $24.8 million, compared with $27.6 million for the three months ended March 31, 2025. The decrease in finance interest expense was attributable to an approximately 0.8% 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, 2026, finance interest expense decreased $1.2 million, or 4%, to $25.7 million, compared with $26.9 million for the three months ended June 30, 2025. The decrease in finance interest expense was attributable to an approximately 0.6% 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, 2026, the net Finance margin percent decreased 0.3% to 13.6%, compared with 13.9% for the three months ended March 31, 2025. The decrease was primarily attributable to a 0.3% decrease in fee and other revenue yield driven by increasing loan values. The net interest yield was 5.0% for the three months ended March 31, 2026 and 2025.

Current wording

For the three months ended June 30, 2026, the net Finance margin percent decreased 0.8% to 12.8%, compared with 13.6% for the three months ended June 30, 2025. The decrease was attributable to a 0.8% decrease in fee and other revenue yield driven by increasing loan values and other fee changes. The net interest yield was 4.9% for the three months ended June 30, 2026 and 2025.

Previous wording

For the three months ended March 31, 2026, the finance provision for credit losses increased $0.7 million, or 8%, to $9.7 million, compared with $9.0 million for the three months ended March 31, 2025. The provision for credit losses increased to 1.6% of the average receivables managed for the three months ended March 31, 2026 from 1.5% for the three months ended March 31, 2025. 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, 2026, the finance provision for credit losses decreased $1.0 million, or 12%, to $7.5 million, compared with $8.5 million for the three months ended June 30, 2025. The provision for credit losses decreased to 1.2% of the average receivables managed for the three months ended June 30, 2026 from 1.5% for the three months ended June 30, 2025. 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, 2026, cost of services for the Finance segment increased $0.4 million, or 2%, to $17.5 million, compared with $17.1 million for the three months ended March 31, 2025. The increase in cost of services was primarily the result of an increase in compensation expense of $1.1 million, partially offset by decreases in inventory audit expense of $0.5 million and other miscellaneous expenses aggregating $0.2 million.

Current wording

For the three months ended June 30, 2026, cost of services for the Finance segment increased $0.6 million, or 3%, to $18.4 million, compared with $17.8 million for the three months ended June 30, 2025. The increase in cost of services was primarily the result of an increase in compensation expense of $1.1 million, partially offset by a decrease in inventory audit expense of $0.5 million.

Previous wording

For the three months ended March 31, 2026 compared with the three months ended March 31, 2025, the change in the euro exchange rate increased revenue by $9.5 million, operating profit by $0.6 million and net income by $0.4 million. For the three months ended March 31, 2026 compared with the three months ended March 31, 2025, the change in the Canadian dollar exchange rate increased revenue by $4.9 million, operating profit by $2.1 million and net income by $1.1 million.

Current wording

For the six months ended June 30, 2026 compared with the six months ended June 30, 2025, the change in the euro exchange rate increased revenue by $11.3 million, operating profit by $0.7 million and net income by $0.5 million. For the six months ended June 30, 2026 compared with the six months ended June 30, 2025, the change in the Canadian dollar exchange rate increased revenue by $4.9 million, operating profit by $1.9 million and net income by $1.0 million.

Previous wording

For the three months ended March 31, 2026, gross profit from the Marketplace segment increased $40.6 million, or 37%, to $149.3 million, compared with $108.7 million for the three months ended March 31, 2025. Gross profit improvements were driven by a $21.9 million net increase from vehicles sold and a $17.3 million benefit related to the rescission of the digital services tax in Canada (see below), which includes a $15.9 million reversal of previously recognized expense and a $1.4 million benefit from the absence of expense for the current period. Additional drivers include a $9.3 million increase from pricing, partially offset by a $6.8 million decrease resulting from a higher mix of commercial vehicles and a decrease in other miscellaneous items aggregating $1.1 million.

Current wording

For the six months ended June 30, 2026, gross profit from the Marketplace segment increased $61.5 million, or 27%, to $290.8 million, compared with $229.3 million for the six months ended June 30, 2025. Gross profit improvements were driven by a $32.2 million net increase in auction and service volumes (which is net of a decrease resulting from a higher mix of commercial vehicles sold and partially offset by $5.9 million of transportation margin compression). The gross profit improvement also included an $18.8 million benefit related to the rescission of the digital services tax in Canada (see below), which includes a $15.9 million reversal of previously recognized expense and a $2.9 million benefit from the absence of expense for the current period. Additional drivers include a $12.0 million increase from pricing, partially offset by a decrease in other miscellaneous items aggregating $1.5 million.

Previous wording

Gross profit from the Marketplace segment was 35.4% of revenue for the three months ended March 31, 2026, compared with 31.0% of revenue for the three months ended March 31, 2025. Gross profit as a percentage of revenue increased for the three months ended March 31, 2026 as compared with the three months ended March 31, 2025, primarily due to the reversal of the Canadian digital services tax. The $17.3 million benefit related to the rescission of the Canadian digital service tax increased gross profit as a percentage of revenue by 4.1%.

Current wording

Gross profit from the Marketplace segment was 33.5% of revenue for the six months ended June 30, 2026, compared with 31.6% of revenue for the six months ended June 30, 2025. Gross profit as a percentage of revenue increased for the six months ended June 30, 2026 as compared with the six months ended June 30, 2025, primarily due to the reversal of the Canadian digital services tax, higher pricing and increased auction and service volumes, partially offset by reduced margins in transportation services as a result of elevated fuel prices in North America in the second quarter of 2026. The $18.8 million benefit related to the rescission of the Canadian digital service tax increased gross profit as a percentage of revenue by 2.2%.

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. On March 26, 2026, Canada enacted a bill (C-15) including the repeal of the Canadian DST. This repeal is retroactive and applies to all periods since the tax's original inception. Consequently, the Company recorded an expense reversal of $15.9 million in the first quarter of 2026 (representing expense recorded in 2025 and prior periods). As of March 31, 2026, the Company has recorded a receivable of $10.0 million (C$13.9 million) within trade receivables on the consolidated balance sheet, representing the refund due for amounts previously remitted to the Canada Revenue Agency.

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 March 26, 2026, Canada enacted a bill (C-15) including the repeal of the Canadian DST. This repeal is retroactive and applies to all periods since the tax's original inception. Consequently, the Company recorded an expense reversal of $15.9 million in the first quarter of 2026 (representing expense recorded in 2025 and prior periods, of which $2.9 million was recorded as expense in the first six months of 2025). As of March 31, 2026, the Company recorded a receivable of $10.0 million (C$13.9 million) within trade receivables on the consolidated balance sheet, representing the refund due for amounts previously remitted to the Canada Revenue Agency. In the second quarter of 2026, the Company received the full cash refund.

Previous wording

Selling, general and administrative expenses from the Marketplace segment increased $15.4 million, or 16%, to $110.1 million for the three months ended March 31, 2026, compared with $94.7 million for the three months ended March 31, 2025, primarily as a result of increases in stock-based compensation of $6.1 million, compensation expense of $3.0 million, sales-related expenses of $2.7 million, incentive-based compensation of $1.8 million, fluctuations in the Canadian exchange rate of $1.0 million and other miscellaneous expenses aggregating $0.8 million.

Current wording

Selling, general and administrative expenses from the Marketplace segment increased $25.4 million, or 13%, to $220.0 million for the six months ended June 30, 2026, compared with $194.6 million for the six months ended June 30, 2025, primarily as a result of increases in stock-based compensation of $9.6 million, sales-related expenses of $6.5 million, compensation expense of $4.9 million, travel expenses of $1.8 million, incentive-based compensation of $1.5 million, information technology costs of $1.0 million, supplies expense of $0.9 million, fluctuations in the Canadian exchange rate of $0.9 million and other miscellaneous expenses aggregating $0.4 million, partially offset by a decrease in severance of $2.1 million.

Previous wording

Approximately $49.1 million of available cash was held by our foreign subsidiaries at March 31, 2026. 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 $85.0 million of available cash was held by our foreign subsidiaries at June 30, 2026. 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

Debt discounts and issuance costs are presented as a direct reduction from the amount of the related debt liability to arrive at the carrying amount. Unamortized debt discounts and issuance costs totaled $13.4 million and $14.4 million at March 31, 2026 and December 31, 2025, respectively.

Current wording

Debt discounts and issuance costs are presented as a direct reduction from the amount of the related debt liability to arrive at the carrying amount. Unamortized debt discounts and issuance costs totaled $12.5 million and $14.4 million at June 30, 2026 and December 31, 2025, respectively.

Previous wording

As of March 31, 2026 and December 31, 2025, there were no borrowings on the Revolving Credit Facilities. We had related outstanding letters of credit in the aggregate amount of $42.6 million at March 31, 2026 and December 31, 2025, which reduce the amount available for borrowings under the Revolving Credit Facilities. Our European operations have lines of credit aggregating $46.2 million (€40 million) of which $19.4 million was drawn at March 31, 2026.

Current wording

As of June 30, 2026 and December 31, 2025, there were no borrowings on the Revolving Credit Facilities. We had related outstanding letters of credit in the aggregate amount of $42.6 million at June 30, 2026 and December 31, 2025, which reduce the amount available for borrowings under the Revolving Credit Facilities. Our European operations have lines of credit aggregating $45.7 million (€40 million) of which $0.0 million was drawn at June 30, 2026.

Previous wording

Certain covenants contained within the Credit Agreement are critical to an investor’s understanding of our financial liquidity, as the failure to maintain compliance with these covenants could result in a default and allow the lenders under the Credit Agreement to declare all amounts borrowed immediately due and payable. The Credit Agreement contains a financial covenant requiring compliance with a maximum Consolidated Senior Secured Net Leverage Ratio not to exceed 3.5 as of the last day of each fiscal quarter on which any loans under the Revolving Credit Facilities are outstanding. The Consolidated Senior Secured Net Leverage Ratio is calculated as Consolidated Total Debt (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement) for the last four quarters. Consolidated Total Debt includes, among other things, term loan borrowings, revolving loans, finance lease liabilities and other obligations for borrowed money less Unrestricted Cash (as defined in the Credit Agreement). Consolidated EBITDA is EBITDA (earnings before interest expense, income taxes, depreciation and amortization) adjusted to exclude, among other things, (a) gains and losses from asset sales; (b) unrealized foreign currency translation gains and losses in respect of indebtedness; (c) certain non-recurring gains and losses; (d) stock-based compensation expense; (e) certain other non-cash amounts included in the determination of net income; (f) charges and revenue reductions resulting from purchase accounting; (g) minority interest; (h) consulting expenses incurred for cost reduction, operating restructuring and business improvement efforts; (i) expenses realized upon the termination of employees and the termination or cancellation of leases, software licenses or other contracts in connection with the operational restructuring and business improvement efforts; (j) expenses incurred in connection with permitted acquisitions; (k) any impairment charges or write-offs of intangibles; and (l) any extraordinary, unusual or non-recurring charges, expenses or losses. Our Consolidated Senior Secured Net Leverage Ratio was 1.2 at March 31, 2026.

Current wording

Certain covenants contained within the Credit Agreement are critical to an investor’s understanding of our financial liquidity, as the failure to maintain compliance with these covenants could result in a default and allow the lenders under the Credit Agreement to declare all amounts borrowed immediately due and payable. The Credit Agreement contains a financial covenant requiring compliance with a maximum Consolidated Senior Secured Net Leverage Ratio not to exceed 3.5 as of the last day of each fiscal quarter on which any loans under the Revolving Credit Facilities are outstanding. The Consolidated Senior Secured Net Leverage Ratio is calculated as Consolidated Total Debt (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement) for the last four quarters. Consolidated Total Debt includes, among other things, term loan borrowings, revolving loans, finance lease liabilities and other obligations for borrowed money less Unrestricted Cash (as defined in the Credit Agreement). Consolidated EBITDA is EBITDA (earnings before interest expense, income taxes, depreciation and amortization) adjusted to exclude, among other things, (a) gains and losses from asset sales; (b) unrealized foreign currency translation gains and losses in respect of indebtedness; (c) certain non-recurring gains and losses; (d) stock-based compensation expense; (e) certain other non-cash amounts included in the determination of net income; (f) charges and revenue reductions resulting from purchase accounting; (g) minority interest; (h) consulting expenses incurred for cost reduction, operating restructuring and business improvement efforts; (i) expenses realized upon the termination of employees and the termination or cancellation of leases, software licenses or other contracts in connection with the operational restructuring and business improvement efforts; (j) expenses incurred in connection with permitted acquisitions; (k) any impairment charges or write-offs of intangibles; and (l) any extraordinary, unusual or non-recurring charges, expenses or losses. Our Consolidated Senior Secured Net Leverage Ratio was 1.0 at June 30, 2026.

Previous wording

At March 31, 2026, there were no borrowings on the Revolving Credit Facilities. When drawn upon, the Revolving Credit Facilities are classified as current debt based on the Company's past practice of using the Revolving Credit Facilities for short term borrowings. However, the terms of the Revolving Credit Facilities do not require repayment until maturity at June 23, 2028. At March 31, 2026, cash totaled $180.1 million and there was an additional $408.2 million available for borrowing under the Revolving Credit Facilities (net of $42.6 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, 2026, there were no borrowings on the Revolving Credit Facilities. When drawn upon, the Revolving Credit Facilities are classified as current debt based on the Company's past practice of using the Revolving Credit Facilities for short term borrowings. However, the terms of the Revolving Credit Facilities do not require repayment until maturity at June 23, 2028. At June 30, 2026, cash totaled $189.7 million and there was an additional $405.7 million available for borrowing under the Revolving Credit Facilities (net of $42.6 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

AFC managed total finance receiva bles of $2,448.3 million and $2,423.5 million at March 31, 2026 and December 31, 2025, respectively. AFC's allowance for losses was $30.0 million and $27.5 million at March 31, 2026 and December 31, 2025, respectively.

Current wording

AFC managed total finance receiva bles of $2,622.5 million and $2,423.5 million at June 30, 2026 and December 31, 2025, respectively. AFC's allowance for losses was $30.0 million and $27.5 million at June 30, 2026 and December 31, 2025, respectively.

Previous wording

As of March 31, 2026 and December 31, 2025, finance receivables (inclusive of accrued interest and fees) totaling $2,469.2 million and $2,448.2 million, respectively, served as security for the obligations collateralized by finance receivables. In addition, a cash reserve of 1 or 3 percent of the obligations collateralized by finance receivables was also maintained as security. The amount of the cash reserve depends on circumstances which are set forth in the securiti zation agreements. The amount above for December 31, 2025, reflects the correction of an error from the $2,803.5 million previously disclosed in the 2025 Form 10-K. At March 31, 2026 and December 31, 2025, there were gross obligations collateralized by finance receivables of $1,705.0 million and $1,771.7 million, respectively, and unamortized securitization issuance costs of approximately $11.8 million and $13.4 million, 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, 2026 and December 31, 2025, finance receivables (inclusive of accrued interest and fees) totaling $2,643.8 million and $2,448.2 million, respectively, served as security for the obligations collateralized by finance receivables. In addition, a cash reserve of 1 or 3 percent of the obligations collateralized by finance receivables was also maintained as security. The amount of the cash reserve depends on circumstances which are set forth in the securiti zation agreements. The amount above for December 31, 2025, reflects the correction of an error from the $2,803.5 million previously disclosed in the 2025 Form 10-K. At June 30, 2026 and December 31, 2025, there were gross obligations collateralized by finance receivables of $1,897.1 million and $1,771.7 million, respectively, and unamortized securitization issuance costs of approximately $10.1 million and $13.4 million, 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

Cash flow from operating activities Net cash provided by operating activities was $159.6 million for the three months ended March 31, 2026, compared with $122.6 million for the three months ended March 31, 2025. Cash provided by operating activities for the three months ended March 31, 2026 consisted primarily of cash earnings and an increase in accounts payable and accrued expenses, partially offset by an increase in trade receivables and other assets. Cash provided by operating activities for the three months ended March 31, 2025 consisted primarily of cash earnings and an increase in accounts payable and accrued expenses, partially offset by an increase in trade receivables and other assets. The increase in operating cash flow was primarily attributable to increased profitability and changes in operating assets and liabilities as a result of the timing of collections and disbursement of funds to consignors for marketplace sales held near period-ends.

Current wording

Cash flow from operating activities Net cash provided by operating activities was $212.4 million for the six months ended June 30, 2026, compared with $194.2 million for the six months ended June 30, 2025. Cash provided by operating activities for the six months ended June 30, 2026 consisted primarily of cash earnings and an increase in accounts payable and accrued expenses, partially offset by an increase in trade receivables and other assets. Cash provided by operating activities for the six months ended June 30, 2025 consisted primarily of cash earnings and an increase in accounts payable and accrued expenses, partially offset by an increase in trade receivables and other assets. The increase in operating cash flow was primarily attributable to increased profitability, partially offset by changes in operating assets and liabilities as a result of the timing of collections and disbursement of funds to consignors for marketplace sales held near period-ends.

Previous wording

Cash flow from investing activities Net cash used by investing activities was $44.7 million for the three months ended March 31, 2026, compared with $31.9 million for the three months ended March 31, 2025. The cash used by investing activities for the three months ended March 31, 2026 was primarily from an increase in finance receivables held for investment and purchases of property, equipment and computer software. The cash used by investing activities for the three months ended March 31, 2025 was primarily from an increase in finance receivables held for investment and purchases of property, equipment and computer software.

Current wording

Cash flow from investing activities Net cash used by investing activities was $243.3 million for the six months ended June 30, 2026, compared with $29.4 million for the six months ended June 30, 2025. The cash used by investing activities for the six months ended June 30, 2026 was primarily from an increase in finance receivables held for investment and purchases of property, equipment and computer software. The cash used by investing activities for the six months ended June 30, 2025 was primarily from an increase in finance receivables held for investment and purchases of property, equipment and computer software, partially offset by proceeds from the sale of property.

Previous wording

Cash flow from financing activities Net cash used by financing activities was $78.7 million for the three months ended March 31, 2026, compared with $18.9 million for the three months ended March 31, 2025. The cash used by financing activities for the three months ended March 31, 2026 was primarily due to a net decrease in obligations collateralized by finance receivables, repurchases and retirement of common stock, tax withholding payments for vested RSUs and dividends paid on the Series A Preferred Stock, partially offset by net borrowings from lines of credit. The cash used by financing activities for the three months ended March 31, 2025 was primarily due to dividends paid on the Series A Preferred Stock, a net decrease in book overdrafts and tax withholding payments for vested RSUs.

Current wording

Cash flow from financing activities Net cash provided by financing activities was $76.8 million for the six months ended June 30, 2026, compared with net cash used by operating activities of $218.9 million for the six months ended June 30, 2025. The cash provided by financing activities for the six months ended June 30, 2026 was primarily due to a net increase in obligations collateralized by finance receivables, partially offset by repurchases and retirement of common stock. The cash used by financing activities for the six months ended June 30, 2025 was primarily due to payments on long-term debt, repayments on lines of credit and dividends paid on the Series A Preferred Stock, partially offset by a net increase in obligations collateralized by finance receivables.

Previous wording

Capital expenditures for the three months ended March 31, 2026 and 2025 approximated $13.1 million and $11.9 million, respectively. Capital expenditures were funded from internally generated funds. We continue to invest in our core information technology capabilities and our service locations. Capital expenditures are expected to be approximately $55 million to $60 million for fiscal year 2026. Future capital expenditures could vary substantially based on capital project timing, capital expenditures related to acquired businesses and the initiation of new information systems projects to support our business strategies.

Current wording

Capital expenditures for the six months ended June 30, 2026 and 2025 approximated $26.9 million and $26.1 million, respectively. Capital expenditures were funded from internally generated funds. We continue to invest in our core information technology capabilities and our service locations. Capital expenditures are expected to be approximately $55 million to $60 million for fiscal year 2026. Future capital expenditures could vary substantially based on capital project timing, capital expenditures related to acquired businesses and the initiation of new information systems projects to support our business strategies.

Previous wording

The Series A Preferred Stock ranks senior to the shares of the Company’s common stock, par value $0.01 per share, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The holders of the Series A Preferred Stock are entitled to a cumulative dividend at the rate of 7% per annum, payable quarterly in arrears. Dividends are payable in cash or in kind, or in any combination of both, at the option of the Company. For the three months ended March 31, 2026 and 2025, the holders of the Series A Preferred Stock received cash dividends aggregating $5.3 million and $11.1 million, respectively. The holders of the Series A Preferred Stock are also entitled to participate in dividends declared or paid on our common stock on an as-converted basis. There were 300,277 shares of Series A Preferred Stock outstanding at March 31, 2026.

Current wording

In the second quarter of 2026, the Company filed a Certificate of Elimination with the Secretary of State of the State of Delaware eliminating the Series A Preferred Stock, and the shares that were designated as Series A Preferred Stock were returned to the status of authorized but unissued shares of preferred stock of the Company, without designation as to series. The Series A Preferred Stock ranked senior to the shares of the Company’s common stock, par value $0.01 per share, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The holders of the Series A Preferred Stock were entitled to a cumulative dividend at the rate of 7% per annum, payable quarterly in arrears. Dividends were payable in cash or in kind, or in any combination of both, at the option of the Company. For the six months ended June 30, 2026 and 2025, the holders of the Series A Preferred Stock received cash dividends aggregating $5.3 million and $22.2 million, respectively. In the second quarter 2026, the holders of the Series A Preferred Stock elected to convert the remaining shares of Series A Preferred Stock into shares of common stock (a non-cash transaction). The total shares of common stock converted included approximately $3.3 million in accrued dividends through the dates of conversion. The holders of the Series A Preferred Stock were also entitled to participate in dividends declared or paid on our common stock on an as-converted basis. There were no shares of Series A Preferred Stock outstanding at June 30, 2026.