OPENLANE, Inc. Q1 FY2026 Earnings Call

Good morning, and welcome to the OPENLANE Inc. First Quarter 2026 Earnings Call. Please note that this event is being recorded. I would now like to turn the conference over to Bill Wright. Please go ahead, sir.

Thank you, operator. Good morning, everyone. Welcome to OPENLANE's First Quarter 2026 Earnings Call. With me today are Peter Kelly, CEO of OPENLANE; and Brad Herring, EVP and CFO of OPENLANE. Our remarks today include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties that may cause our actual results or performance to differ materially from such statements. Factors that may cause such differences include those discussed in our press release issued today and in our SEC filings. Certain non-GAAP financial measures as defined under SEC rules will be discussed on this call. Reconciliations of GAAP to non-GAAP measures are provided in our earnings materials and available in the Investor Relations section of our website. Please note that all financial and operational metrics presented during this call are on a year-over-year basis, unless specifically noted. With that, I'll turn the call over to Peter.

Thank you, Bill, and thank you, everyone, for joining the call today. I'm very pleased to report on OPENLANE's strong first quarter results and to provide you with an update on our strategy and our outlook. I'll begin with a few opening remarks, and then Brad will walk you through our financial and operational performance and our increased guidance for 2026. But before I turn to our results, I'd like to highlight that this week marks the three-year anniversary of our rebrand to OPENLANE. As I stated at our March investor events, the rebrand was never about a new name or logo; it was about forging an entirely new company founded on a single purpose, which is to make wholesale easy so our customers can be more successful. Over the past three years, our investments, strategy and execution have delivered on that commitment and reinforced several key pillars of differentiation for OPENLANE, including the leading commercial off-lease solution that connects thousands of franchise dealers into our marketplace. A dealer business that is outpacing the industry and capturing meaningful market share, a high-performing finance business that is synergistic with our marketplace, an accelerating network effect of new buyers, sellers, listings and transactions and a winning culture and team that I consider to be the very best in the industry. The performance and outcomes OPENLANE is delivering are the direct result of the strategy we began executing three years ago. And I believe our first quarter results are further evidence of OPENLANE's strength and differentiation in the market. During the first quarter, we continued to build on OPENLANE's positive momentum, growing consolidated revenue by 15% and delivering adjusted EBITDA of $97 million, a 17% increase. We also generated $160 million in cash flow from operations. These results were led by strong performance in the marketplace business with both commercial and dealer customers and solid contributions from our finance business. In the Marketplace segment, we grew overall vehicles sold by 19%, increased gross merchandise value by 32% to $9.1 billion and delivered $52 million in adjusted EBITDA, representing a 39% increase. In our dealer-to-dealer business, we grew vehicles sold by 13%, with similar geographic dynamics to those experienced in Q4 of 2025. In the United States, OPENLANE dealer-to-dealer transactions continue to accelerate with growth in the upper 20% range. This represents a significant outperformance of the industry and a meaningful gain in market share. Our go-to-market strategy in the U.S. is working and OPENLANE's unique inventory, technology advantage and superior customer experience are expanding our dealer network and compounding our growth in transactions. In Canada, we were pleased to see some improvement in the macroeconomic and automotive retail environment. And while Canadian dealer unit sales declined versus a strong prior year comp, we did see sequential improvement over Q4 of 2025. On the commercial vehicle side, the 25% increase in vehicles sold was driven in large part by the onboarding of our latest private-label customer. Even excluding that step function increase, commercial vehicle sales grew by 6% during the quarter. This reinforces that the inflection of off-lease supply has officially begun, and we expect to see year-on-year growth in off-lease volumes throughout the remainder of 2026 and beyond. Moving to our Finance segment. AFC also had a good quarter, growing average receivables managed, holding the loan loss rate to 1.6% and generating $45 million in adjusted EBITDA. Now we do believe the industry experienced a strong spring market driven by higher-than-normal tax refunds and constrained supply paired with high consumer demand, which led to high conversion rates and appreciating asset values. That said, there is no question that OPENLANE's digital operating model is resonating in the market, and I am highly encouraged by the output of our investments and our focused execution. So now let me turn to our strategy and outlook. As I mentioned at the start of the call, our strategy is delivering results, and we remain committed to advancing our three strategic priorities. First, delivering the best marketplace, expanding our depth and breadth with more buyers and more sellers and offering the most diverse commercial and dealer inventory available. Second, delivering the best technology, innovative products and services that help our customers make informed decisions and achieve better outcomes. And third, delivering the best customer experience, keeping our marketplace fast, fair and transparent, making it easy for customers to transact and making OPENLANE the most preferred marketplace. And I'll touch on each of these in a little more detail. First, in terms of offering the best marketplace, we continue to make significant gains and drove another quarter of double-digit increases in new buyers, sellers and unique vehicles listed, each of which were up over 20% in the United States. Customer anticipation for the off-lease recovery is also driving more franchise dealers from our private-label programs into OPENLANE's open sale. During the quarter, we nearly doubled the number of commercial vehicles sold in this higher-margin channel versus the prior year. And on the independent dealer side, AFC new dealer registrations also increased during the quarter, each of which also presents a new dealer opportunity for OPENLANE. At the end of Q1, approximately 54% of all AFC dealers were registered with OPENLANE. From a best-technology perspective, we extended our technology advantage in the first quarter with our public release of OPENLANE Intelligence. OPENLANE Intelligence unifies our human and AI-enhanced capabilities to deliver actionable insights that improve customer decision-making. We see AI as a true enabler and accelerator of our digital solutions. And during the quarter, we released several new offerings and features that leverage our AI expertise and deep data resources. In Canada, we launched our new MyLot inventory management solution. Initial interest has exceeded our expectations with hundreds of early sign-ups, and we are optimistic about the potential of this subscription-based SaaS offering. Across the U.S. and Canada, we also released our new predictive pricing feature, the only technology in the industry that provides dealers with a forward-looking 30-day, 60-day, 90-day view into the anticipated value of every dealer vehicle offered on OPENLANE. And finally, in terms of providing the best customer experience, we are also leveraging our human and AI capabilities to streamline and enhance the customer experience, improve the consistency, accuracy and speed of arbitrations and to help address dealer inquiries as quickly as possible. At the end of Q1, our transactional NPS scores across all geographies sit squarely in the excellent range with our U.S. seller NPS achieving the highest scores, indicating exceptional customer loyalty and brand satisfaction. So as we look into the remainder of 2026, while we cannot count on an industry environment as strong as Q1, there is still a lot of opportunity for OPENLANE. We are continuing to build momentum, and I'm very optimistic about our ability to execute our strategy with precision. As our 2025 go-to-market investments in dealer-to-dealer continue to ramp up towards full productivity, we remain focused on increasing market share and wallet share. As stated earlier, we expect off-lease supply to scale up throughout the year, and OPENLANE will be a primary beneficiary of this cyclical recovery. Our Canadian business is leveraging its strong market position to introduce new revenue-generating products and services. Used vehicle values significantly appreciated in Q1 and remained strong. This is a positive for the marketplace and for AFC, though any sharp decline in used vehicle values could lead to a higher risk environment for floor-plan financers. And while no industry is immune to geopolitical or macroeconomic events, we have not seen a material industry impact from fuel prices, new and used vehicle affordability, chip production or any other external factors that we monitor. So just to summarize, OPENLANE remains well positioned to capture the opportunities ahead, and we're executing a strategy that is delivering results, winning customers and outpacing the industry. Because of that, I believe the key elements of our value proposition for investors remain very compelling. OPENLANE is a highly scalable digital marketplace leader focused on making wholesale easy for automotive dealers, manufacturers and commercial sellers. There is a large addressable market for our services, and OPENLANE is uniquely well positioned with commercial customers and franchise and independent dealers. Our customer surveys and third-party research indicate we are the most preferred pure-play digital marketplace in the industry. Our technology advantage is a competitive differentiator. Our floor-plan finance business, AFC, is a high-performing business that is synergistic with the marketplace. We generate significant cash flow and have a strong balance sheet. And we believe our business has the capability to deliver meaningful growth, profitability and cash generation over the next several years. So with that, I will now turn the call over to Brad.

Thanks, Peter. Good morning to everyone for joining us today. On behalf of our management team and all of our employees, we are very proud to report a record quarter for OPENLANE. For the quarter, we transacted more GMV, sold more vehicles, generated more revenue and produced more adjusted EBITDA than any quarter in our company's history as a digital marketplace. These results would not be possible without the tireless commitment and stellar execution of our nearly 5,000 employees that work every day to make wholesale easy for our customers. Before we dive into the financial results, I'd like to thank all of our investors and sell-side analysts that came to visit us in Fort Lauderdale for our Investor Day on March 3. During my remarks and Q&A today, I may reference selected slides we reviewed during our presentation. These slides can be found on the Investor Relations section of our website. Moving on to actual results. We reported total revenues of $528 million, which represents growth of 15%. Revenue growth in the quarter was exclusively driven by the results in the Marketplace segment, which I'll dive into more shortly. Consolidated adjusted EBITDA for the quarter was $97 million, which represents an increase of 17%. I'll talk more about our adjusted EBITDA results within the discussions about each business segment. Consistent with previous quarters, we will be discussing adjusted free cash flow metrics on a rolling 12-month basis due to the inherent volatility in our quarterly cash flow numbers. For the trailing 12 months, our adjusted free cash flow totaled $259 million, representing an adjusted free cash flow conversion rate of 75%. The 75% conversion rate is slightly above our expected range of 65% to 70% and reflects the strong cash generation of both our marketplace and financing businesses. As you may have heard, on March 26, the Canadian Parliament enacted a bill repealing the digital service tax or DST. This action resulted in a $17.3 million reduction to our marketplace cost of services. $15.9 million of the reduction represents prior period expenses that have been removed from our current quarter adjusted EBITDA calculation, while the remaining $1.4 million is reflected as an in-quarter expense savings. Moving to the performance of our business segments, I'll start with the marketplace. In Q1, we transacted GMV totaling $9.1 billion, which represents growth of 32%. GMV growth in the dealer category was 20%, representing a 13% increase in vehicles sold and a 6% increase in average vehicle values. In the commercial category, the GMV growth of 38% was made up of a 25% increase in vehicles sold with an 11% increase in average values. Auction and related revenues were $242 million, which reflects growth of 22%. The primary driver of this growth was in the U.S. dealer category, where we saw a 38% increase in auction and related fees driven mostly by the strong vehicles-sold performance that Peter mentioned earlier. In addition to the growth in vehicles sold, U.S. dealer GMV growth also included a 22% increase in average vehicle values, driven by a higher mix of sales from our large dealer group customers and an overall increase in wholesale auto prices. Exclusively due to the significant increase in average vehicle values, yields for the U.S. dealer business declined approximately 60 basis points from the 680 basis point to 700 basis point baseline range that we provided in our Investor Day materials. On a per-vehicle-sold basis, revenue generation in U.S. dealer improved by high single digits. Complementing our performance in the U.S. dealer business, auction and related fees in our U.S. commercial business were up 42%. GMV in the U.S. commercial business was up approximately 46% due largely to the successful launch of a returning private-label customer as well as improvement in the lease return waterfall. Yields in the U.S. commercial business remained largely consistent with the baseline that we reviewed at Investor Day. SaaS and other revenues in the quarter were $68 million, which is up 1% due to increases in our subscription-based revenue streams. Rounding out the revenues in the Marketplace segment, our purchased vehicle sales grew 31% to $112 million. The variance was driven by the increase in U.S. vehicles sold as well as an increase in the average vehicle values in both U.S. and Europe. Adjusted EBITDA for the Marketplace segment was $52 million, which results in an adjusted EBITDA margin of 12%. That represents growth of 39% in adjusted EBITDA and 160 basis points of expansion in adjusted EBITDA margin. The year-over-year expansion in adjusted EBITDA margin was driven by the structural scaling effects of our digital platform and a higher mix of revenues coming from our U.S. commercial business that comes with an accretive variable contribution. In our Finance segment, the average outstanding receivables managed in the quarter was $2.4 billion, which is up 3%. Growth here was driven by a 3% increase in the average vehicle values, offset by a 1% decrease in transaction counts. Net yield for the quarter was 13.6%, which is down 30 basis points. The decrease was primarily attributable to a decrease in transaction fee yields driven by slightly lower transaction counts and increasing loan values. The Q1 provision for credit losses was 1.6%, which is consistent with our results from last quarter and 7 basis points higher than the same quarter last year. While recent performance has hovered in the mid-1% range, we continue to reiterate our targeted range of 1.5% to 2.0% for credit losses. The combination of the changes in the portfolio balance, the net yield and the loss provisions resulted in adjusted EBITDA for the Finance segment of $45 million, which was down 1%. With respect to capital considerations, I'll refer investors to Page 75 of the Investor Day deck where we laid out our objectives for capital deployment. To summarize that message, our first and foremost priority is to fund the organic growth of our business. That will be followed by share repurchases and finally, debt repayment. In addition to our investments in go-to-market, we repurchased 964,000 shares in the first quarter at an average price of $27.20. This represents the retirement of approximately 0.7% of our fully diluted share count that includes the assumed conversion of the remaining preferred shares. As we also mentioned in our Investor Day, we are considering debt repayment options, although investors should not expect to see any material paydowns to start until later in 2026 or early 2027. From a liquidity perspective, we ended the quarter with an unrestricted cash balance of $180 million and capacity of over $400 million on our existing revolver facilities. Moving along to our guidance. We are raising our full year expectations for adjusted EBITDA from a range of $350 million to $370 million to a range of $365 million to $385 million. The entire increase is coming from our Marketplace segment and is driven mostly by strong performances in both our U.S. dealer and U.S. commercial businesses. This revision also reflects the full year impact of the repeal of the Canadian DST that I mentioned earlier. Countering the strong performance in the marketplace, we remain cautious around downstream impact of evolving and volatile macro conditions. Sustained increases in fuel prices, the impact of rising auto prices on consumer affordability and subsequent impact on our customers and the automotive supply chain challenges are all front of mind as we look into the back half of 2026. With respect to our Finance segment, we maintain our previous guided position as the volatility and macro trends are largely offsetting the decreased likelihood of any rate cuts in 2026. To summarize, we're very pleased with our quarterly results and are proud to increase our full year 2026 projections. Our revised outlook represents strong momentum in both the dealer and commercial elements of our Marketplace segment, while at the same time reflecting on some potential challenges. We are also proud of our prudent balance between growth and risk management in our Finance segment. With that, I'll turn it over to the operator for questions.

The first question that we have comes from Bob Labick of CJS Securities.

Congratulations on a great start to 2026. So obviously, really strong performance on commercial volumes, and you mentioned the returning off-lease customer there. Can you tell us, was there a full impact from that customer? Meaning, did you have it for the full quarter? Or do you get a little incremental benefit in Q2 as well? Just trying to figure out the kind of run rate from that and the impact going forward?

Yes, Bob, it launched mid-January. So it was pretty much a full quarter. If you're being precise, there were about two extra weeks that weren't live, but it was live for 11 of the 13 weeks in the quarter.

Okay. Great. And then sticking with commercial, lots of EVs coming off lease and there's pretty significant negative equity on that side. How are they behaving in the OPENLANE auctions, EVs in general? And then similarly, how are the ICE vehicles that may still have a little bit of equity behaving? Just give us a sense as we see this divergence of off-lease coming on more EVs probably this year and more ICE next year?

Thanks, Bob. I'll start with commercial overall and then go into the EV piece. We had a really good quarter from commercial—25% growth and strong GMV. With a strong spring market, used vehicle values went up about 7% by the end of the quarter versus January 1, so GMV was strong. The new customer also had a premium vehicle portfolio that contributed to EV volume. In addition to the volume increase, we saw an improved mix relative to a year ago—fewer payoffs across the portfolio, although payoffs remain abnormally high, they have come down a bit in percentage terms. Corresponding to that was an increase in nongrounding and open sales, which are higher-revenue, higher-margin transactions for us. So we saw improved mix through the commercial funnel, EV and ICE combined. Regarding EVs specifically, we saw an increase in EV volumes in the first quarter and they performed very well. Conversion rates for EVs are comparable to ICE vehicles; it varies a bit by portfolio, indicating some sellers adopt different remarketing strategies. Overall, conversion rates on EVs in our marketplace are very strong. Because EVs often have more negative equity, we're seeing even fewer payoffs—almost no payoffs in some portfolios—so those cars flow deeper in the funnel. That leads to relatively higher conversion of EVs in the nongrounding and open channels, which is positive for our margins. In the quarter, geopolitical events and oil price movements likely boosted EV retail demand late in March and into April. In short, demand has strengthened. The main operational issue is sellers must acknowledge current market values rather than old residuals written years ago. Absent that, performance is good. As commercial volumes pick up, our sellers are increasingly interested in techniques to maximize conversion and outcomes in the digital channel. We're running pilots and programs with many customers to drive adoption and conversion of these vehicles.

The next question we have comes from Craig Kennison of Baird.

I wanted to go to Slide 11, if I could, and just ask you, Brad, if you could help us understand the yield dynamic in Q1—why it dropped and what the mix issues are that impacted that?

Yes, Craig. If you look at the yield on the commercial side where the drop occurred, it's a mix issue. At Investor Day we outlined that commercial yields vary across geographies and the U.S. range is lower than Canada and Europe. In Q1 last year, the U.S. made up roughly 71% of commercial GMV. With the ramp-up of the new customer and an increase from lease returns this quarter, that number is now north of 75% to 76%. That geographic mix shift drove the yield down from about 1.59% to 1.43%. Yields across the different categories themselves were relatively stable, so it's primarily a mix-driven change.

And while I have you, Brad, could you help us understand the full-year implications of the repeal of the digital service tax?

Yes. The full-year impact is about $5.5 million to $6 million. I disclosed about $1.4 million in the first quarter. It's a relatively steady run rate across quarters and will vary somewhat with volumes, but using $5.5 million to $6 million for the full year is appropriate.

The next question we have comes from Jeff Lick of Stephens Inc.

Congrats on a great quarter. Peter, I was wondering, as it relates to the U.S. dealer-to-dealer, you said it was in the upper 20% range, which implies a bit of sequential improvement from Q4, which was in the low 20s. The market was actually down a little more in Q1 than Q4, which implies your spread to market is widening. Could you elaborate on that? And does the lease return business have a halo or synergistic effect that's helping drive that dealer-to-dealer performance?

Jeff, we were very pleased with the dealer performance in Q1. In aggregate, dealer volumes grew year-on-year by a higher number than in Q4, driven by the U.S., where year-on-year growth moved into the upper 20s. That acceleration suggests OPENLANE gained market share; dealer volumes of physical auctions declined a bit in the first quarter, so our performance indicates share gains. It also appears a greater portion of industry volumes moved toward digital, driven in part by our volume increase. We're seeing the value proposition of digital—speed, ease, access to a broader buyer network, better outcomes—resonate with customers. Our go-to-market investments continue to support those results. Regarding lease returns, yes, improving commercial volumes can create a halo effect. Dealers know lease volumes are increasing and OPENLANE is well positioned. Franchise dealer registrations improved and our ability to convert private-label buyers into the open sale has improved. There's also a network effect: adding buyers increases value for sellers and adding sellers increases value for buyers. That's compounding over time and benefiting us. We feel very good about the results, but I would not project upper-20s growth for the full year; we'll drive traction as strongly as possible.

And then just a quick follow-up on commercial. You said commercial was up about 25% and excluding the new customer it was up about 6%, implying the new customer accounted for roughly 19% of that increase. Is that right?

Yes, that's what I said. Commercial was up about 25%; excluding the new customer, it was up about 6%, so the new customer was a significant step function. With this customer, we're handling all their transactions, including all payoffs, which isn't always the case with every customer. So transaction counts were processed through our platform and that had a significant volume impact. It did have some mix impact—more payoffs and lower-revenue transactions as part of that—but it's beneficial because each transaction brings a dealer to our platform and can be a touch point for other services.

Was Q1 disproportionately high because maybe there were some units bottlenecked from Q4 that flowed into Q1, or will this impact be similar across the next three quarters?

I don't think there was a bottleneck. Customers have different quarterly maturity profiles based on lease programs, incentives and other factors, so volumes ebb and flow. I would expect a solid positive volume impact from this customer through the rest of the year, but not necessarily an identical step each quarter. Every customer's portfolio has seasonality.

And I would assume, given that this is a luxury customer, a greater portion of luxury leases happen in Q4, so Q4 could be even bigger?

I hadn't thought of that, Jeff. It's possible, but I don't know at this moment.

The next question we have comes from John Babcock of Barclays.

So it sounds like that mix impact is going to continue through the year just because of this new customer. Is that fair to say?

There are a number of mix dynamics at play. The new customer generated volume and we process a lot of their payoffs, which tends to be negative for yield. Offsetting that, we're seeing cars flow deeper in the funnel into nongrounding dealer and open sales, which has a positive impact on mix. We're also seeing U.S. private-label volumes increase relative to other commercial volumes. So there are multiple puts and takes affecting mix.

To add, the new customer was dilutive to yield because it's higher GMV per sale at a lower yield, with more payoffs processed. However, we saw yield improvement among non-new customers as those transactions flowed deeper in the waterfall. Net-net, yields were around the baseline we discussed at Investor Day, but the composition had divergent elements.

Okay. That's very helpful. As we think about off-lease volumes for the year, demand seems strong and people seem more willing to take used vehicles given new vehicle affordability issues. Are there any concerns that off-lease volumes will stay more with the grounding dealer? Or will they flow to the open market?

Used vehicle values appreciated in Q1, which can increase consumer equity and potentially lower payoff percentages. But maturities coming off lease are increasing—especially in Q2 and accelerating into Q3 and Q4. We have seen consumer payoffs come down a bit year-over-year, so more cars are flowing our way and flowing deeper in the funnel. Market conditions will influence timing and payoffs, but overall I am optimistic about the setup for commercial through the balance of the year and into 2027 and 2028.

The next question we have comes from Gary Prestopino of Barrington Research.

Peter, you said your open sales in commercial doubled in the quarter, which means things are flowing down the funnel. Given the turn in lease returns, were you surprised at that magnitude? Does that indicate franchise dealers have solid used vehicle inventory and more of this is going to flow down to independent dealers?

I wasn't massively surprised by the doubling; we expected high growth—somewhere between 50% and 100%—but it was growing off a fairly small base. Importantly, selling in the open sale doesn't mean independent dealers are the only buyers. Franchise dealers can buy across brands in the open sale, large used-car retail operations buy there as well, and independent dealers participate. So the buyer mix includes franchise dealers, large retailers and independents. We're working with commercial sellers to drive conversion in the open sale because it's often their last chance to sell before incurring downstream expenses. We're running productive strategies and expect to do more of that going forward.

The next question we have comes from Rajat Gupta of JPMorgan.

Could you quantify the open-sale units you are seeing in commercial? Any unit number or percentage you could provide for the quarter?

We don't disclose that specific number. Our U.S. open sale skews heavily toward dealers, but commercial is an increasing percentage over time. Year-over-year, dealer open sale growth was high-20s while commercial grew roughly double, so commercial was a larger percentage of open sale in Q1 than a year ago, but we don't release exact open-sale unit numbers.

On guidance, given the strong first quarter, if you assume normal seasonality it would imply results above the upper end of your new range. Is there conservatism baked into the back half regarding new car sales or the macro? Should we assume normal seasonality?

We were pleased with Q1, which was stronger than the last two or three years, driven by tax refunds and constrained supply. The question is how those factors trend. We haven't seen an above-average correction yet, but that possibility exists. We're also mindful of geopolitical and macro risks—fuel prices, affordability, supply chain issues. Additionally, in the U.S. dealer business, second-half comps are tougher as we lap strong quarters from last year. So while the first quarter was very strong, we didn't assume the same environment persists unchanged for the remainder of the year. That said, there is a lot of opportunity for OPENLANE and we're focused on execution. Brad, do you want to add?

Peter summarized it well. If our view of the remaining quarters changes materially, we'll update guidance in our next quarterly discussion.

The next question we have comes from John Healy of Northcoast Research.

Peter, I want to ask about the relationship between lease returns and wholesale sellout timing. If off-lease returns grow 25% in a quarter, will that be spread over multiple quarters in terms of what you move through the platform? How should we think about timing from returns to realized transactions?

The equation of how many leases return to market and how many we get is complex. Some customers pull maturities forward; others extend leases. I look at the maturity forecast—how many leases were written three years ago—as the best barometer of incoming returns. Typically, leases can come back a month or two early if consumers decide to buy sooner. Looking at the maturity curve, I believe off-lease volumes in the back half of this year could be up around 20% to 25% excluding the impact of a new customer. So that's the kind of volume I'm expecting, but many variables will influence the timing.

Thanks. And on the AFC business, loans have shown modest growth the last few quarters. Do you expect that to improve? Is there a desire to grow AFC more aggressively, or do you plan to keep it at a controlled pace?

AFC is a strong, category-leading business with excellent risk management, return on assets and cash flow. We manage AFC within a targeted risk band of roughly 1.5% to 2.0% loss provision, so we don't chase growth for growth's sake. That said, AFC is growing its customer base and is synergistic with the marketplace. We're also seeing cross-pollination: independent dealers on OPENLANE who haven't used AFC see the value of a floor-plan option and may register. There is growth opportunity, but we'll manage the business for risk while extracting the synergistic value it brings to the marketplace.

I'll add that we view AFC as a low single-digit grower over time. We are focused on staying in the risk band we're comfortable with and extracting value both within the AFC segment and through its contribution to marketplace growth.

We have a follow-up question from Rajat Gupta.

You mentioned earlier you expect roughly 20% growth in off-lease volumes excluding the new customer in the back half. Given the new customer step function, can we think of total commercial U.S. growth this year as that off-lease growth plus the new customer's impact?

What I said was that maturities in our underlying customer base appear to be up in the 20%-ish range in the back half. I would expect that level of growth from our existing customers, and then the new customer adds additional volume on top of that. I won't say the new customer will contribute the same rate every quarter—its portfolio has seasonality—but the initial Q1 volume from that customer exceeded our expectations.

Also keep in mind the new customer was a step function starting in January. That element of year-over-year growth will not recur at the same rate in Q1 of 2027, of course.

Some large public customers noted certain luxury OEMs have dialed up early lease terminations to manage captive finance losses. Have you observed early terminations? Has that provided incremental off-lease inventory recently, and what are the implications for OPENLANE?

Captives can run pull-ahead programs from time to time, and you often don't get much advanced notice. I'm not aware of a specific industry-wide program that materially benefited our volumes outside of what we reported, but the new customer we onboarded has a premium portfolio and strong volumes in Q1. It's possible some of that reflected pull-ahead activity, but I don't have a definitive signal attributing a large portion of volume to captive-driven early terminations.

At this stage, that was our final question. I will now hand back to management for any closing remarks.

Thanks again, everybody, for your time this morning. We really appreciate your interest in our company and your questions. We're very pleased with the quarter we had and remain focused on our strategy and our purpose of making wholesale easy so our customers can be more successful. I'm looking forward to reconnecting with you all in 90 days to discuss our second quarter results. Thank you all very much.

Thank you. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.