Core Points - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues [1] Group 1 - The article suggests that users may face blocks if they have an ad-blocker enabled, indicating a need to disable it for proper access [1]

Company Overview - ACV Auctions, an online used car auction platform, experienced a 35% drop in share price following disappointing third-quarter results and a weak financial outlook [1] - The company reported a GAAP loss of $0.14 per share, which was double the expected loss of $0.07 [2] - Third-quarter revenue reached $199.6 million, meeting Wall Street's expectations and reflecting a year-over-year growth of 16.5% [2] Financial Performance - The fourth-quarter revenue guidance is projected at $182 million, nearly 5% below consensus estimates [2] - Full-year EBITDA guidance of $57 million fell significantly short of the anticipated $68.56 million [2] - The combination of an earnings miss and a weaker-than-expected forecast led to a sharp sell-off in the stock [2] Market Reaction - ACV Auctions' shares are noted for their volatility, with 20 moves greater than 5% over the past year, indicating significant market impact from recent news [4] - The recent drop is considered a rare occurrence for the company, highlighting the market's altered perception of its business following the earnings report [4]

Core Insights - ACV Auctions Inc. reported quarterly earnings of $0.07 per share, matching the Zacks Consensus Estimate and showing an increase from $0.04 per share a year ago [1] - The company posted revenues of $199.56 million for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.17%, but up from $171.33 million year-over-year [2] - ACV Auctions shares have declined approximately 58.6% year-to-date, contrasting with a 15.1% gain in the S&P 500 [3] Earnings and Revenue Performance - The company has surpassed consensus EPS estimates only once in the last four quarters [1] - Over the same period, ACV Auctions has exceeded consensus revenue estimates twice [2] - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $193.63 million, and for the current fiscal year, it is $0.24 on revenues of $769.18 million [7] Market Outlook and Industry Context - The stock's future price movement will largely depend on management's commentary during the earnings call [3] - The Zacks Industry Rank places Auction and Valuation Services in the top 8% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and earnings estimate revisions, with ACV Auctions currently holding a Zacks Rank 2 (Buy) [5][6]

Financial Data and Key Metrics Changes - Q3 revenue reached $200 million, growing 16% year over year, compared to a tough comparison of 44% growth in Q3 2024 [5][15] - Adjusted EBITDA was $19 million, with a margin improvement of 280 basis points year over year [15][16] - Non-GAAP net income was $11 million, also at the midpoint of guidance [16] Business Line Data and Key Metrics Changes - Auction and assurance revenue accounted for 56% of total revenue, growing 10% year over year, with auction and assurance ARPU at $508, which declined 3% quarter over quarter [16][17] - Marketplace Services revenue comprised 40% of total revenue, growing 28% year over year, driven by record revenue from ACV Transport and ACV Capital [15][17] - ACV Capital team delivered strong revenue performance with 70% growth in Q3 [11] Market Data and Key Metrics Changes - The dealer wholesale market is expected to decline in the mid-single digits in Q4, reflecting a more challenging market environment [20] - Emerging regions like Southern California and the Midwest saw unit growth exceeding 20% in Q3 [8] Company Strategy and Development Direction - The company focuses on three pillars: growth, innovation, and scale, with a strong emphasis on leveraging AI to enhance marketplace experiences [5][6] - The strategy includes enhancing field engagement models in emerging regions and launching new innovations to drive market share gains [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in recovering the dealer wholesale market despite current macro challenges, emphasizing that it is too early to assume a structural change [27][30] - The company anticipates strong adjusted EBITDA growth of over 100% while continuing to invest in long-term growth objectives [5][21] Other Important Information - The company updated its 2025 guidance to reflect ongoing macro challenges while still expecting 19% year-over-year growth [4][20] - The ACV Guarantee program saw an increase in units sold from 11% in Q2 to 18% in Q3, indicating strong buyer engagement [12] Q&A Session Summary Question: Has the dealer wholesale market changed structurally? - Management believes it is too early to assume a long-term structural change in the dealer wholesale market, which is expected to recover as macro factors stabilize [27] Question: How have competitive dynamics changed? - The company reported significant quarter-over-quarter growth, indicating strong performance against competitors despite market softness [30] Question: Can you explain the moderation in auction ARPU? - Management noted targeted regional pricing campaigns to support market share, expecting ARPU to increase sequentially in Q4 [36][40] Question: What is the outlook for the 2026 wholesale market? - Management suggests assuming a flat market for 2026 due to macro uncertainties, while aiming for mid-teen market share gains [41][45] Question: What is the status of ACV Capital? - The company is taking a cautious approach to ACV Capital, lowering revenue forecasts for Q4 while maintaining confidence in long-term growth [71][73] Question: How is the company leveraging its technology? - The company is using AI to provide accurate pricing and improve decision-making for dealers, enhancing their ability to sell vehicles effectively [102]

Marketplace Performance - Marketplace Units increased to 218,065 in Q3 2025, up from 198,354 in Q3 2024, representing a growth of 9%[85] - Marketplace GMV reached $2.7 billion in Q3 2025, compared to $2.5 billion in Q3 2024, reflecting a year-over-year increase of 8%[85] - The total Marketplace GMV for the nine months ended September 30, 2025, was $8.1 billion, an increase from $7.2 billion in the same period of 2024, marking a growth of 12.5%[85] - For the nine months ended September 30, 2025, marketplace and service revenue reached $518.4 million, up 21% from $429.8 million, driven by auction marketplace and transportation services revenue growth[139] - The volume of Marketplace Units sold increased to 636,519 for the nine months ended September 30, 2025, compared to 559,511 in the prior year, indicating enhanced customer engagement[139] Financial Performance - Adjusted EBITDA for Q3 2025 was $18.7 million, up from $11.2 million in Q3 2024, indicating a growth of 67%[85] - Total revenue for the nine months ended September 30, 2025, was $576.0 million, a 20.6% increase from $477.6 million in 2024[125] - Loss from operations for the three months ended September 30, 2025, was $23.7 million, compared to a loss of $17.1 million in the same period of 2024[123] - The net loss for the three months ended September 30, 2025, was $24.5 million, compared to a net loss of $16.0 million in 2024[123] - Non-GAAP Net income for the three months ended September 30, 2025, was $11.2 million, compared to $7.6 million for the same period in 2024, reflecting a 46.5% increase[161] - For the nine months ended September 30, 2025, Non-GAAP Net income was $30.9 million, up from $12.1 million in 2024, representing a 155.4% increase[161] Revenue Breakdown - For the three months ended September 30, 2025, marketplace and service revenue was $176.5 million, accounting for 88% of total revenue, compared to $155.9 million and 91% in the same period of 2024[123] - Customer assurance revenue for the same period was $23.1 million, representing 12% of total revenue, up from $15.4 million and 9% in 2024[123] - Auction marketplace revenue rose to $87.8 million from $84.9 million, while other marketplace revenue increased to $80.3 million from $62.7 million, indicating strong volume-driven growth[127] - Customer assurance revenue surged by 49%, reaching $23.1 million compared to $15.4 million, primarily due to increased Go Green assurance revenue[128] - Customer assurance revenue increased to $57.5 million for the nine months ended September 30, 2025, up from $47.8 million in the same period of 2024, representing a 20% increase[140] Expenses and Costs - Operating expenses for the three months ended September 30, 2025, totaled $223.3 million, compared to $188.5 million in 2024, reflecting an increase in costs associated with business scaling[123] - Selling, general, and administrative expenses for the three months ended September 30, 2025, were $72.8 million, up from $55.0 million in 2024, but expected to decrease as a percentage of revenue over the long term[117] - Operating expenses for marketplace and service cost of revenue increased to $70.9 million from $67.1 million, a 6% rise, with costs related to generating other marketplace revenue being the main contributor[129] - Selling, general, and administrative expenses rose by 32% to $72.8 million from $55.0 million, largely due to higher non-personnel related costs including a $18.7 million reserve for Tricolor bankruptcy[133] - Depreciation and amortization expenses increased to $32.4 million from $26.4 million, a 23% increase, mainly due to higher amortization of internal-use software costs[146] Cash Flow and Liquidity - Cash and cash equivalents totaled $265.3 million, with marketable securities amounting to $50.7 million as of September 30, 2025[164] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $90.6 million, an increase from $68.6 million in 2024, marking a 32.5% growth[178] - Net cash used in investing activities was $(124.8) million for the nine months ended September 30, 2025, compared to $12.3 million in 2024, indicating a significant increase in investment outflows[179] - Net cash provided by financing activities was $75.2 million for the nine months ended September 30, 2025, a turnaround from $(10.9) million in 2024[182] - The company’s liquidity position is expected to support working capital and capital expenditure requirements for at least the next 12 months[164] Debt and Financing - As of September 30, 2025, $100.0 million was drawn under the 2021 Revolver with an interest rate of 9.00%[171] - The Warehouse Facility had borrowings of $120.0 million as of September 30, 2025, with an interest rate of 7.32%[173] - The company may seek additional equity or debt financing in the future, depending on capital requirements and market conditions[164] - The company had borrowings from banks amounting to $220.0 million as of September 30, 2025, with variable interest rates indexed to SOFR[190] Market Conditions - The demand for used vehicles remains strong, with the company benefiting from rising consumer demand since early 2020[102] - Vehicle auction volume typically experiences seasonal fluctuations, with lower volumes expected in the fourth quarter and winter months[185] - Market risk exposure is primarily due to fluctuations in interest rates, which may impact the financial position[189] - A hypothetical 100 basis point change in interest rates would not have a material impact on the company's condensed consolidated financial statements[190] - The company does not engage in trading or speculative investments and has not used derivative financial instruments to manage interest rate risk exposure[190]

Q3 2025 Performance Highlights - ACV Auctions achieved revenue of $200 million in Q3 2025, representing a 16% year-over-year growth compared to $171 million in Q3 2024[13] - Marketplace units reached 218,000 in Q3 2025, up from 198,000 in Q3 2024[13] - Adjusted EBITDA was $19 million in Q3 2025, compared to $11 million in Q3 2024[13] Growth Initiatives - The company is focused on transforming the automotive market with a data-driven platform[16] - ACV Auctions is leveraging technology to expand its product suite and data services[16] - The company aims to deliver growth at scale with attractive unit economics and long-term operating leverage[16] Financial Outlook - Q4 2025 revenue is projected to be between $180 million and $184 million, representing a year-over-year growth of 13% to 15%[65] - Full year 2025 revenue is expected to be between $756 million and $760 million, a growth of approximately 19% year-over-year[65] - Adjusted EBITDA for full year 2025 is projected to be between $56 million and $58 million, with an Adjusted EBITDA margin of 7% to 8%[65] Revenue Diversification - The company has diversified revenue streams, including SaaS & Data Services, Marketplace Services, Transportation, Capital, and Auction & Assurance[54]

Revenue Performance - Third quarter revenue reached $200 million, representing a 16% year-over-year increase[6] - Marketplace and Service Revenue totaled $177 million, up 13% year-over-year[7] - Marketplace GMV was $2.7 billion, reflecting a 9% year-over-year growth[7] - Marketplace Units transacted were 218,065, an increase of 10% year-over-year[7] - Total revenue for the three months ended September 30, 2025, was $199,561,000, representing a 16.4% increase from $171,329,000 in the same period of 2024[29] - Marketplace and service revenue increased to $176,510,000 for the three months ended September 30, 2025, up from $155,908,000, marking a 13.2% growth year-over-year[29] - Customer assurance revenue rose to $23,051,000 for the three months ended September 30, 2025, compared to $15,421,000 in 2024, reflecting a 49.5% increase[29] - Fourth quarter revenue is expected to be between $180 million and $184 million, a 13% to 15% increase year-over-year[10] - Full-year 2025 revenue guidance is set at $756 million to $760 million, indicating a 19% year-over-year growth[10] Profitability and Losses - Adjusted EBITDA for the third quarter was $19 million, compared to $11 million in the same quarter of 2024[7] - Non-GAAP net income for the full year 2025 is projected to be between $27 million and $29 million[10] - GAAP net loss for the third quarter was ($24) million, compared to a loss of ($16) million in Q3 2024[7] - Net loss for the three months ended September 30, 2025, was $24,465,000, compared to a net loss of $16,029,000 in 2024, indicating a 52.5% increase in losses[29] - Non-GAAP net income of $11,179,000 for the three months ended September 30, 2025, compared to $7,629,000 in 2024, a 46.5% increase[34] - Adjusted EBITDA for the three months ended September 30, 2025, was $18,651,000, up from $11,170,000 in the same period of 2024, reflecting a 67.1% increase[34] - Non-GAAP net loss for Q3 2025 is projected between $4 million and $2 million, while GAAP net loss is estimated between $23 million and $21 million[35] Operating Expenses - Operating expenses totaled $223,278,000 for the three months ended September 30, 2025, an increase of 18.5% from $188,468,000 in the same period of 2024[29] - Total operating expenses for Q3 2025 were $223.3 million, up from $188.5 million in Q3 2024, representing a 18.5% increase[35] - Non-GAAP total operating expenses (excluding cost of revenue) for Q3 2025 were $94.9 million, compared to $83.9 million in Q3 2024, reflecting a 13.0% increase[35] - Stock-based compensation for Q3 2025 amounted to $15 million, compared to $58 million for the year ended December 31, 2025[35] - Marketplace and service cost of revenue (excluding depreciation & amortization) for Q3 2025 was $70.9 million, up from $67.1 million in Q3 2024, a 4.0% increase[35] - Customer assurance cost of revenue (excluding depreciation & amortization) increased to $22.1 million in Q3 2025 from $14.2 million in Q3 2024, a significant 55.5% increase[35] Balance Sheet and Cash Flow - Cash and cash equivalents increased to $265,343,000 as of September 30, 2025, up from $224,065,000 at the end of 2024[31] - Total assets grew to $1,166,496,000 as of September 30, 2025, compared to $984,149,000 at the end of 2024, representing an 18.5% increase[31] - Long-term debt increased to $220,000,000 as of September 30, 2025, compared to $123,000,000 at the end of 2024, indicating a significant rise in leverage[31] Other Financial Metrics - Tricolor bankruptcy losses accounted for $18.7 million in Q3 2025, with total losses for the year expected to reach $19 million[35] - Amortization of acquired intangible assets for Q3 2025 was $2.6 million, down from $3.4 million in Q3 2024[35] - Acquisition-related costs were recorded at $0 in Q3 2025, compared to $0.2 million in Q3 2024[35] - The dealer wholesale market is anticipated to decline in the mid-single digits year-over-year in the fourth quarter[10]

Group 1 - ACV Auctions Inc. is recognized as a small-cap stock with significant upside potential, particularly noted by billionaire Steve Cohen [1] - Needham has reduced its price target for ACV Auctions from $16 to $14 while maintaining a Buy rating, indicating confidence in the company's future despite the adjustment [1][2] - The adjustment in price target is attributed to flattening unit growth assumptions due to ongoing volatility in used auto unit trends, although Needham believes this will have limited impact on long-term projections [2] Group 2 - ACV Auctions operates a digital wholesale marketplace that facilitates direct transactions between dealerships for buying and selling used vehicles, enhancing efficiency in the automotive industry [3] - The company is experiencing a surge in hiring activity, which is viewed as a positive indicator for future revenue growth amid improving used auto supply and industry momentum [1]

Core Viewpoint - ACV, a leading digital automotive marketplace, is set to report its third quarter 2025 financial results on November 5, 2025, after market close [1] Financial Reporting - The company will host a conference call at 5:00 p.m. ET on the same day to discuss the financial results [1] - Investors and analysts can participate in the call by dialing 877-704-4453, with international callers using 1-201-389-0920 [1]

Group 1 - The core focus of the research service is on identifying Asia-listed stocks that exhibit a significant disparity between market price and intrinsic value, particularly emphasizing deep value balance sheet bargains and wide moat stocks [1][2] - ACV Auctions Inc. (NYSE: ACVA) is highlighted as a bullish investment opportunity, with its Marketplace business expected to gain from the exit of smaller competitors, while its data services unit is in the early stages of growth [1] Group 2 - The investing group provides a variety of watch lists and monthly updates for value investors, specifically targeting investment opportunities in the Hong Kong market [2]