Digital vehicle marketplace OPENLANE (NYSE: KAR) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 7% year on year to $460.1 million. Its non-GAAP profit of $0.31 per share was 40.9% above analysts’ consensus estimates.
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OPENLANE (KAR) Q1 CY2025 Highlights:
- Revenue: $460.1 million vs analyst estimates of $453.7 million (7% year-on-year growth, 1.4% beat)
- Adjusted EPS: $0.31 vs analyst estimates of $0.22 (40.9% beat)
- Adjusted EBITDA: $82.8 million vs analyst estimates of $75.72 million (18% margin, 9.3% beat)
- Management reiterated its full-year Adjusted EPS guidance of $0.95 at the midpoint
- EBITDA guidance for Q2 CY2025 is $300 million at the midpoint, above analyst estimates of $74.17 million
- Operating Margin: 11.2%, down from 16.1% in the same quarter last year
- Free Cash Flow Margin: 24.1%, up from 20.3% in the same quarter last year
- Market Capitalization: $2.08 billion
"OPENLANE delivered a strong start to 2025, building on our positive momentum and delivering record performance in many areas, particularly within the marketplace business," said Peter Kelly, CEO of OPENLANE.
Company Overview
Facilitating the sale of approximately 1.3 million used vehicles in 2023, OPENLANE (NYSE: KAR) operates digital marketplaces that connect sellers and buyers of used vehicles across North America and Europe, facilitating wholesale transactions.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $1.82 billion in revenue over the past 12 months, OPENLANE is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.
As you can see below, OPENLANE’s revenue declined by 7.9% per year over the last five years, a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. OPENLANE’s annualized revenue growth of 7.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
This quarter, OPENLANE reported year-on-year revenue growth of 7%, and its $460.1 million of revenue exceeded Wall Street’s estimates by 1.4%.
Looking ahead, sell-side analysts expect revenue to grow 1.3% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges.
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Operating Margin
OPENLANE was profitable over the last five years but held back by its large cost base. Its average operating margin of 8.1% was weak for a business services business.
On the plus side, OPENLANE’s operating margin rose by 7.6 percentage points over the last five years.
This quarter, OPENLANE generated an operating profit margin of 11.2%, down 4.9 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for OPENLANE, its EPS and revenue declined by 7.2% and 7.9% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, OPENLANE’s low margin of safety could leave its stock price susceptible to large downswings.
In Q1, OPENLANE reported EPS at $0.31, up from $0.10 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects OPENLANE’s full-year EPS of $0.64 to grow 57.5%.
Key Takeaways from OPENLANE’s Q1 Results
We were impressed by how significantly OPENLANE blew past analysts’ EPS and EBITDA expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 5% to $20.12 immediately following the results.
Sure, OPENLANE had a solid quarter, but if we look at the bigger picture, is this stock a buy? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
