KAR Auction Services reported higher first-quarter revenue, but the rollout of its TradeRev online vehicle auction platform continued to weigh on company profits.
KAR reported late Tuesday that net income dropped 14 percent to $77.8 million and that the TradeRev business had an operating loss of $16.8 million in the quarter. KAR executives said in February that the expansion of TradeRev is expected to weigh on its bottom line until 2021.
KAR revenue grew 10 percent to $1.05 billion in the first quarter. Revenue at the company's ADESA auction unit rose 14 percent to $599.7 million, driven by a 7.6 percent increase in total vehicles sold. Most of the volume gain was from vehicles sold online, which represented about 57 percent of the total vehicles ADESA sold in the quarter vs. 52 percent in the same period a year earlier.
KAR also said it expects to complete the spinoff of its Insurance Auto Auctions business in June. KAR announced in February 2018 that it would spin off that salvage auction unit so each business could focus more on returning value to shareholders. After the spinoff, IAA will become a separate, publicly traded entity.
KAR's guidance for the year, which was unchanged, calls for net income in the range of $330 million to $355.5 million.
KAR shares were trading at $55.23 at midday, down 1.36 percent.