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1. Company Snapshot

1.a. Company Description

KAR Auction Services, Inc., together with its subsidiaries, provides used vehicle auctions and related vehicle remarketing services for the automotive industry in the United States, Europe, Canada, Mexico, and the United Kingdom.The company operates through two segments, ADESA Auctions and AFC.The ADESA Auctions segment offers whole car auctions and related services to the vehicle remarketing industry through online auctions and auction facilities.


It also provides value-added services, such as auction related, transportation, reconditioning, inspection, title and repossession administration and remarketing, vehicle research, and analytical services, as well as data as a service.This segment sells its products and services through vehicle manufacturers, fleet companies, rental car companies, finance companies, and others.As of December 31, 2021, this segment had a network of approximately 70 vehicle logistics center locations in North America.


The AFC segment offers floorplan financing, a short-term inventory-secured financing to independent used vehicle dealers; and sells vehicle service contracts.The company provides wheel repair and hail catastrophe response services.It serves vehicle manufacturers, vehicle rental companies, financial institutions, commercial fleets and fleet management companies, and dealer customers.


The company was formerly known as KAR Holdings, Inc.and changed its name to KAR Auction Services, Inc.in November 2009.


KAR Auction Services, Inc.was incorporated in 2006 and is headquartered in Carmel, Indiana.

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1.b. Last Insights on KAR

KAR Auction Services, Inc. faced negative drivers, including reduced stakes from significant investors. Paradice Investment Management LLC sold $32 million worth of KAR shares, and the State of New Jersey Common Pension Fund D cut its holdings by 9%. Additionally, the Teacher Retirement System of Texas lowered its position by 13.4%. Despite beating Q3 earnings estimates with $0.35 per share, KAR faced selling pressure, becoming technically oversold, which may lead to a trend reversal.

1.c. Company Highlights

2. OPENLANE's Q3 2025 Earnings: Strong Growth and Margin Expansion

OPENLANE reported a robust third quarter in 2025, with revenue growing 8% to $498 million, driven primarily by its Marketplace segment. The company's adjusted EBITDA reached $87 million, a 17% increase year-over-year, with an adjusted EBITDA margin of 17%, up 130 basis points. Earnings per share (EPS) came in at $0.35, beating estimates of $0.3. The strong financial performance was underscored by the growth in gross merchandise value (GMV) in the Marketplace segment, which rose 9% to $7.3 billion.

Publication Date: Nov -23

📋 Highlights
  • Revenue & EBITDA Growth:: Q3 revenue rose 8% to $498M; adjusted EBITDA increased 17% to $87M with a 17% margin, up 130 bps YoY.
  • Marketplace Segment Performance:: GMV grew 9% to $7.3B, driven by 19% dealer category growth and 20% auction fee increase; EBITDA rose 22% to $44M.
  • Finance Segment Expansion:: Average receivables climbed 11% to $2.4B; EBITDA grew 12% to $44M amid 5% higher transaction counts and balances.
  • Guidance Upgrade & Liquidity:: 2025 adjusted EBITDA guidance raised to $328–$333M from $310–$320M; cash balance of $119M and $400M+ revolver capacity.
  • Strategic Cross-Segment Synergies:: 50% of AFC dealers registered on OPENLANE’s platform; plans to deepen integration via financing for inventory purchases.

Segment Performance

The Marketplace segment saw significant growth, with auction fees increasing by 20% and adjusted EBITDA rising 22% to $44 million. The Finance segment also performed well, with average outstanding receivables growing 11% to $2.4 billion and adjusted EBITDA increasing by 12% to $44 million. The strong results in both segments were driven by the company's asset-light digital operating model and prudent portfolio growth and credit management.

Guidance and Share Repurchase

OPENLANE increased its 2025 guidance for adjusted EBITDA to $328 million to $333 million, up from the previous range of $310 million to $320 million. The company also announced a share repurchase program, having bought back approximately 53% of its outstanding Series A convertible preferred shares and 1.5 million shares of common stock year-to-date. As of the end of the quarter, OPENLANE had a cash balance of $119 million and over $400 million in revolver capacity.

Valuation and Outlook

With a P/E Ratio of 15.6 and an EV/EBITDA of 9.74, the market appears to have priced in a certain level of growth for OPENLANE. Analysts estimate revenue growth at 5.3% for the next year. The company's return on equity (ROE) stands at 12.27%, indicating a relatively healthy profitability level. As the company continues to expand its digital model and capture market share, its unique advantage in the franchise dealer space and leadership in the floor plan business through AFC position it well for future growth.

Management Insights

During the earnings call, management highlighted the potential for cross-pollination between the Marketplace and Finance segments, noting that about 50% of AFC dealers are registered on the OPENLANE marketplace, with plans to increase this percentage. Peter Kelly explained that purchased cars, which have seen significant growth, are largely driven by European business and are considered "low-calorie" revenue with minimal gross profit. The company's focus on leveraging its open sale channel and converting a higher percentage of off-lease volumes is expected to drive future growth.

3. NewsRoom

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OPENLANE Announces Participation in Four Upcoming Investor Conference

Nov -11

Source: prnewswire.com

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OPENLANE (KAR) Loses 6.9% in 4 Weeks, Here's Why a Trend Reversal May be Around the Corner

Nov -07

Source: zacks.com

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OPENLANE, Inc. (KAR) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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OPENLANE (KAR) Q3 Earnings and Revenues Surpass Estimates

Nov -05

Source: zacks.com

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OPENLANE, Inc. Reports Third Quarter 2025 Financial Results

Nov -05

Source: prnewswire.com

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OPENLANE, Inc. $KAR Shares Sold by Teacher Retirement System of Texas

Nov -05

Source: defenseworld.net

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KAR or RACE: Which Is the Better Value Stock Right Now?

Nov -04

Source: zacks.com

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State of New Jersey Common Pension Fund D Cuts Stock Position in OPENLANE, Inc. $KAR

Oct -30

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.52%)

6. Segments

Marketplace

Expected Growth: 5%

KAR Auction Services' Marketplace growth is driven by increasing adoption of digital marketplaces, rising demand for used vehicles, and expansion into new markets. Additionally, strategic partnerships, investments in technology, and a strong brand reputation contribute to its growth. Furthermore, the company's ability to provide a seamless customer experience, efficient pricing, and a wide inventory of vehicles also support its growth.

Finance

Expected Growth: 3%

KAR Auction Services, Inc.'s 3% growth is driven by increasing demand for used vehicles, expansion of digital marketplaces, and strategic acquisitions. Additionally, the company's focus on improving operational efficiency, investing in technology, and enhancing customer experience also contribute to its growth.

7. Detailed Products

Auction Services

KAR Auction Services provides whole car auction services, offering a wide range of vehicles to dealers, fleet companies, and other buyers.

Salvage Auction Services

KAR's salvage auction services provide a platform for insurance companies, dealers, and other sellers to sell damaged or salvage vehicles to licensed dismantlers, rebuilders, and exporters.

Fleet Management Services

KAR's fleet management services provide customized solutions for fleet owners to manage their vehicles, including vehicle inspections, reconditioning, and sales.

Remarketing Services

KAR's remarketing services provide a range of solutions for sellers to remarket their vehicles, including online marketplaces, auction services, and pricing analytics.

Inspection and Reconditioning Services

KAR's inspection and reconditioning services provide detailed vehicle inspections and reconditioning services to help sellers prepare their vehicles for sale.

Digital Marketplaces

KAR's digital marketplaces provide online platforms for buyers and sellers to connect and transact, including TradeRev, BacklotCars, and others.

8. KAR Auction Services, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for KAR Auction Services, Inc. is medium. While there are some substitutes available, they are not a significant threat to the company's business model.

Bargaining Power Of Customers

The bargaining power of customers for KAR Auction Services, Inc. is low. The company's customers are primarily dealerships and other businesses, which do not have significant bargaining power.

Bargaining Power Of Suppliers

The bargaining power of suppliers for KAR Auction Services, Inc. is medium. The company relies on a network of suppliers to provide vehicles and other services, but it has some flexibility to negotiate prices and terms.

Threat Of New Entrants

The threat of new entrants for KAR Auction Services, Inc. is low. The company has a strong brand and established relationships with dealerships and other customers, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The intensity of rivalry for KAR Auction Services, Inc. is high. The company operates in a competitive industry with several established players, and it must continually innovate and improve its services to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 18.06%
Debt Cost 9.93%
Equity Weight 81.94%
Equity Cost 9.93%
WACC 9.93%
Leverage 22.04%

11. Quality Control: KAR Auction Services, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

25.7$

Current Price

25.7$

Potential

-0.00%

Expected Cash-Flows