OPENLANE, Inc.

Good day and welcome to the OpenLane fourth quarter and year end results 2024 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Itano Arellaru. Please go ahead.

Thanks, Operator. Good afternoon, everyone. Welcome to OpenLane's fourth quarter and fiscal year 2024 earnings call. With me today are Peter Kelly, CEO of OpenLane, and Bradley Kia, EVP and CFO of OpenLane. Our remarks today include forward-looking statements within the meaning of the Private Securities Litigations Reform Act of 1995. Such forward-looking statements involve risk and uncertainties that may cause our actual results or performance to differ materially from such statements. Factors that could 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 gap to non-gap measures are provided in our earnings materials and available in the investor relations section of our website. With that, I'll turn the call over to Peter. Peter?

Thank you, Atunu, and good afternoon, everyone. I'm pleased to be here today to share OpenLane's fourth quarter and year-end results. I'll start with a few highlights, but spend the majority of my time discussing our strategy and where OpenLane is headed. Brad will then walk you through the financials and provide our guidance for 2025. OpenLane had a very positive fourth quarter and full year 2024. Customers are responding to our unique offerings and the differentiated value we deliver in terms of ease, speed, and outcomes. The momentum that we're building in the market is tangible, and all of this is reflected in our results. During the fourth quarter, we grew consolidated revenue by 12% and consolidated adjusted EBITDA by 18%. driven mainly by a 9% increase in marketplace volumes. This marks the seventh straight quarter of year-over-year volume growth in the marketplace segment, which included a 15% increase in dealer volumes. The marketplace also generated $31 million in adjusted EBITDA during the quarter, an impressive 30% increase. On a full-year basis, OpenLane generated $293 million in adjusted EBITDA, driven by a 24% increase in marketplace adjusted EBITDA. We also generated $293 million in cash flow from operations, and our gross merchandise value grew 12% to $27 billion, another powerful indicator of the momentum we're building in the market. I won't spend a lot of time on our finance segment today, given our detailed AFC investor update last November, but I will call out that AFC grew floor plan originations, held the loan loss rate to its lowest level in eight quarters, and generated $159 million of adjusted EBITDA for the year. So in summary, OpenLane's consistent pattern of growth and financial performance clearly demonstrates the strong scalability characteristics of our asset-light digital model. And it fuels my optimism for our long-term growth in volume, market share, and profitability. With that, let me turn to our strategy and how we plan to build on this positive momentum. As a reminder, our strategy for growth is anchored in our purpose, which is to make wholesale easy so our customers can be more successful. And we're making wholesale easy by focusing on three enabling priorities. First, by delivering the best marketplace, expanding to more buyers and more sellers, and offering the most diverse commercial and dealer inventory available. Second, by delivering the best technology, innovative products and services that help our customers make informed decisions and achieve better outcomes. And third, by 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. As I approach my four-year anniversary as CEO, I believe OpenLane is better positioned than ever to deliver on these priorities based on the many positive changes we've made during this period. We acquired, integrated, and consolidated new digital assets. We divested of physical assets, paid down debt, and improved the strength of our balance sheet. We rebranded the company into what I believe is rapidly becoming the strongest brand in our industry. We enhanced our team with new digital talent, and we unified our culture around our customers. We're a very different company today, and I would argue a much better and stronger company as well. So when I think about our strategy, delivering the best marketplace, the best technology, and the best customer experience, the word that I'm anchoring on for 2025 is execution. So building on all that we've accomplished to date, now is the time for us to execute and win. In terms of the marketplace, 2025 will be the bottom of the cycle for off-lease supply. We know that going in. However, we also have a clear line of sight that these volumes are coming back. New lease originations rose for the seventh straight quarter in Q4, and the majority of that volume will flow through open lane first as those leases mature in 2026 and beyond. At the same time, our data and the industry data confirm that the equity gap between off-lease values and residual lease values continues to narrow. This means a lower percentage of lease vehicles will be paid off when they mature, and that will also result in more volume flowing through our marketplace. So essentially, what was a double whammy for us over the past few years now looks set to become a double tailwind starting in 2026 and beyond. That is, increased volumes of lease maturities and a declining payoff percentage, and this will be to Openlanes' benefit. We already support the majority of OEM and financial institution leasing programs in North America today, and we were recently awarded back the off-lease remarketing business for a large OEM, which evidences Openlanes' technology advantage, leading customer experience, depth of remarketing knowledge, and expert decision support capability. So I feel very good about our growth potential in commercial, but I'm equally optimistic about the opportunity in the dealer-to-dealer space. So let me turn to that now. On the dealer front, our growth accelerated through every quarter in 2024, from lower volumes early in the year to single-digit growth in Q3 and then 15% dealer growth in Q4. Dealer listings grew, unique sellers and buyers grew, and we had several record months in terms of new dealer sign-ups in the United States. So there is a lot of positive momentum going into 2025, and there is still a lot of opportunity for growth. I remain fundamentally convinced that digital is the future. We have seen that in almost every industry. OpenLane offers a faster, more convenient solution that produces better outcomes for customers at a lower cost. That's something the physical auctions cannot easily replicate, and it's something our customers are increasingly drawn to. We're seeing it in our positive NPS surveys, We're hearing it from customers during dealership visits and industry events. And most importantly, we're seeing it in our volume growth. So the TAM is very large. We are well positioned in dealer to dealer. And I see this as a source of robust, long-term, sustainable growth for OpenLane. Hopefully these perspectives help reinforce what I believe is a positive industry position for OpenLane as we look to 2025 and to the years that follow. And I'm confident we can capture these opportunities by continuing to invest in and execute on our strategy. In the middle of last year, we made some meaningful investments in product, people, and our go-to-market approach. More sales, more marketing, and more innovation, including our recent launch of OneApp in the U.S. This new version of our platform allows dealers to seamlessly toggle between buying and selling and creates a direct link between the open marketplace and our private label programs. This has two beneficial effects. First, it connects our private label franchise dealers directly into the open-lane marketplace. And it offers the off-lease inventory that passes through the private labels to every franchise and independent dealer on our marketplace. More buyers, more sellers, and more inventory. I don't think we've seen the full impact of these investments yet, but our performance in the second half of the year definitely reflects some of the fruits of these investments. So we're going to lean in and invest further in delivering the best marketplace, the best technology, and the best customer experience. We have a robust pipeline of innovation slated for 2025 that we look forward to sharing over the coming weeks and months. These include additional enhancements to our condition reports, deeper market insights around supply, demand, values, and pricing, more AI-enabled features and capabilities, and more actionable data to help dealers make the best buying and selling decisions possible. To help promote these innovations and to stimulate even more dealer engagement, we're also investing in our go-to-market approach. It's sometimes hard to believe that OpenLane has only been our flagship marketplace brand in the United States for 16 months. And I'm very pleased that both our internal surveys and third-party sources show that OpenLane is rapidly climbing the ranks of the most recognized and most preferred marketplace in the industry. Anecdotally, I had one Midwestern dealer tell me recently that six months ago he'd never heard of OpenLane, and now we're his preferred solution. That's encouraging, and it reinforces to me that we're on the right track. So we will continue to lean into broader awareness campaigns to support new market expansion, more personalized journeys to stimulate engagement, and more targeted promotions to drive up transaction volume and wallet share. I had a West Coast dealer say to me during the fourth quarter that OpenLane is everywhere these days. And that's precisely our goal, to be the first to mind, first to list, first to sell, and first to buy. And then finally, we're investing more in people, more feet on the street, more sales resources, and a more personal support for our customers. As I've said before on these calls, OpenLane is a digital marketplace in a relationship business. The collaborative partnership approach we take with our customers fosters greater customer loyalty and ultimately will earn us a greater share of their business. As we've mentioned previously, we are making meaningful go-to-market investments in our U.S. dealer business. We have made the strategic decision to invest now to further accelerate our dealer volumes and share. We're already very strong in commercial off-lease, and we believe that these volumes will begin to return in 2026 and continue to grow thereafter. But I want to be sure we are equally strong in dealer-to-dealer, delivering growth in 2025 and continuing to grow as a multiplier to our commercial growth. These investments are reflected in our 2025 guidance, but you will also see our confidence in OpenLane's ability to both invest and grow revenue and also grow adjusted EBITDA simultaneously, just as we did in 2024. So overall, I believe we're well-positioned to execute our strategy for growth, and I believe our key value proposition for investors remains compelling. OpenLane is an asset-light, highly scalable digital marketplace leader, focused on making wholesale easy for automotive dealers, manufacturers, and commercial sellers. There is a large addressable market in North America and in Europe, and we're uniquely well positioned with both dealer and commercial segments. Our technology advantage is a competitive differentiator that enables us to bring new products and features to market very quickly. Our floor plan finance business is a category leader that is highly synergistic with our marketplace. We are cash flow positive with a strong balance sheet and well-positioned to invest in growth and deliver shareholder returns. And we believe that our business has the capabilities to deliver meaningful earnings growth over the next several years. So before I turn things over to Brad, I want to remind you that this will be his last earnings call with OpenLane. I appreciate his leadership and many contributions to our company, and we wish him all the best. As an update to our search, we have been actively evaluating CFO candidates for the past few months, And we look forward to introducing you to our new CFO when a final decision is made. So with that, I'll now turn the call over to Brad.