ACV Auctions(ACVA) - 2024 Q4 - Annual Report

Marketplace Performance - In 2024, the company had 20,975 active Marketplace Buyers and 14,377 active Marketplace Sellers, generating $9.5 billion in Marketplace GMV, reflecting changes of 23%, 25%, and 8% respectively from the prior year[44]. - The company experiences seasonality in vehicle auction volumes, typically seeing lower volumes in the fourth quarter and winter months, which affects revenue and operating expenses[66]. - Seasonal fluctuations in vehicle sales may impact quarterly results, with sales typically peaking in the first quarter and declining in the fourth quarter[117]. Technology and Services - The company offers a comprehensive suite of products and services, including ACV Transportation and ACV Capital, to enhance the transaction journey for customers[45]. - The True360 Report provides proprietary, vehicle-specific intelligence, enabling dealers to make informed wholesale and retail transaction decisions[38]. - The ACV Market Report offers transaction data and condition reports for comparable used vehicles, assisting dealers in pricing and valuation strategies[40]. - The company's technology platform supports real-time transactions of wholesale vehicles, with thousands of dealers transacting daily[37]. - The growing repository of data enables transparent and accurate vehicle information, improving transaction efficiency[46]. - The company’s investments in technology have optimized process workflows, enhancing pre- and post-auction services[45]. Competitive Landscape - The company competes with large national physical vehicle auction companies, including Manheim and Adesa, which have expanded into online marketplaces, increasing competitive pressure[98]. - The company’s ability to grow the share of wholesale transactions from existing customers is critical for maintaining revenue, but customer satisfaction and competitive pressures could affect this[100]. - The company’s revenue and profitability may be impacted by decreases in the supply of used vehicles coming to the wholesale market, which could result from various external factors[101]. Financial Risks - The company faces risks related to fluctuations in benchmark interest rates, which could adversely affect its financial condition and liquidity due to its 2021 Revolver and Warehouse Facility[93]. - The company is exposed to credit risk from dealer borrowers, which could negatively impact its financial condition due to defaults on payments[107]. - The company bears settlement risk for vehicles sold through its marketplace, which could lead to significant net losses if receivables are not collected[111]. - Economic conditions, including consumer confidence and credit availability, significantly impact demand for used vehicles[130]. - The company is vulnerable to various risks including natural disasters, geopolitical tensions, and cyber-attacks, which could adversely affect business operations and financial conditions[137]. Compliance and Legal Risks - The company must comply with various laws and regulations regarding data privacy and security, and failure to do so could result in significant legal and financial consequences[153]. - The company is subject to numerous data privacy and security laws, including the California Consumer Privacy Act (CCPA), which provides California residents with expanded rights regarding their personal information[159]. - The company may face litigation and increased costs due to security breaches or cyber-attacks, which could adversely affect business operations and reputation[156]. - The company faces risks related to potential litigation over the use of open source software, which could lead to significant legal costs and operational disruptions[179]. Intellectual Property - The company relies on a combination of trademark, trade secret, patent, and copyright law to protect its intellectual property, but monitoring unauthorized use is challenging[167]. - The company may face legal proceedings alleging infringement of third-party intellectual property rights, which could adversely affect its business and financial condition[172]. - The assignment of intellectual property rights from employees and contractors may not be fully secured, leading to potential ownership disputes[178]. Financial Performance and Shareholder Impact - The company has U.S. federal net operating loss carryforwards (NOLs) of$ 348.0 million and state NOLs of $302.4 million as of December 31, 2024[194]. - The company expects to issue additional capital stock in the future, which will result in dilution for all other stockholders[204]. - The market price of Class A common stock may be highly volatile, influenced by various factors including market conditions and company performance[205]. - Significant sales of Class A common stock in the public market could depress its market price and impair the company's ability to raise capital[206]. - Analysts' coverage and reports significantly influence the market price and trading volume of Class A common stock; lack of coverage could lead to a decline in stock price[210].