Liquidity Services(LQDT) - 2025 Q2 - Quarterly Results

Q2 FY2025 Financial & Operational Highlights Overall Performance Liquidity Services achieved strong Q2 FY2025 growth with GMV up 15% to $367.4 million and revenue up 27% to $116.4 million, driven by market expansion and operating leverage Q2 FY2025 Key Financial Metrics (YoY) | Metric | Q2 FY2025 | Q2 FY2024 | % Change | | :--- | :--- | :--- | :--- | | GMV | $367.4M | $319.4M | +15% | | Revenue | $116.4M | $91.5M | +27% | | GAAP Net Income | $7.1M | $5.7M | +24% | | GAAP Diluted EPS | $0.22 | $0.18 | +22% | | Non-GAAP Adjusted EBITDA | $12.2M | $12.1M | +1% | | Non-GAAP Adjusted EPS | $0.31 | $0.27 | +15% | - The company reported a strong financial position with cash balances of $149.0 million and zero financial debt[6] - Growth was attributed to market share expansion, enhanced service offerings, and realized operating leverage, with net income also benefiting from a lower effective tax rate due to increased tax-deductible stock compensation activity[1][5] Segment Performance All segments contributed to Q2 FY2025 GMV growth, with RSCG leading at 29%, CAG at 14%, and GovDeals at 9%, while Machinio & Software Solutions revenue grew 22% - RSCG: GMV increased 29% from expansion with existing and new retail client programs, and revenue grew 46% due to a higher volume from client purchase models[7] - CAG: GMV increased 14%, led by the heavy equipment category, though revenue decreased 22% as the prior-year quarter included large international spot purchase transactions[7] - GovDeals: GMV increased 9%, driven by new seller acquisition and strong real estate results, partially offset by weather-related delays[7] - Machinio & Software Solutions: Combined revenue increased 22% from increased subscriptions and the acquisition of Auction Software[7] Segment Financial Results (Three Months Ended March 31, 2025) | Segment | GMV ($ thousands) | Total Revenue ($ thousands) | Segment Direct Profit ($ thousands) | | :--- | :--- | :--- | :--- | | GovDeals | $203,329 | $19,236 | $17,712 | | RSCG | $102,843 | $82,692 | $16,569 | | CAG | $61,181 | $9,592 | $8,652 | | Machinio & Software Solutions | N/A | $4,872 | $4,513 | Operational Metrics Registered buyers grew 9% to 5.8 million in Q2 FY2025, while auction participants and completed transactions decreased 14% due to consumer auction location sunsetting Q2 Operational Metrics (YoY) | Metric | Q2-FY25 | Q2-FY24 | % Change | | :--- | :--- | :--- | :--- | | Registered Buyers | ~5.8 million | ~5.3 million | +9% | | Auction Participants | ~982,000 | ~1,139,000 | -14% | | Completed Transactions | ~258,000 | ~300,000 | -14% | - The decrease in auction participants and completed transactions reflects the sunset of selected consumer auction locations[12] Q3 FY2025 Business Outlook Financial Guidance Liquidity Services projects Q3 FY2025 GMV between $395 million and $430 million, with GAAP Net Income of $6.0 million to $9.0 million, and Non-GAAP Adjusted Diluted EPS of $0.27 to $0.36 Q3-FY25 Guidance | Metric | Guidance Range ($ in millions, except per share data) | | :--- | :--- | | GMV | $395 to $430 | | GAAP Net Income | $6.0 to $9.0 | | Non-GAAP Adjusted EBITDA | $14.5 to $17.5 | | GAAP Diluted EPS | $0.18 to $0.28 | | Non-GAAP Adjusted Diluted EPS | $0.27 to $0.36 | Key Assumptions and Risks Q3 outlook assumes client expansion and service growth, driven by RSCG purchase programs and CAG heavy equipment, with risks from transaction mix, inventory variability, project timing, and economic conditions - The company anticipates sequential growth in top-line results for the second half of the fiscal year compared to the first half, consistent with prior year trends[15] - Potential factors impacting future results include: - Fluctuations in the mix of purchase and consignment transactions[17] - Variability in inventory product mix handled by the RSCG segment[17] - Variability in project size and timing within the CAG segment[17] - Changes in economic, political, or international trading conditions[17] - The FY25 annual effective tax rate (ETR) is expected to range from approximately 25% to 31%[21] Financial Statements Consolidated Statements of Operations Total revenues for the three months ended March 31, 2025, increased to $116.4 million, driving income from operations to $6.8 million and net income to $7.1 million, or $0.22 per diluted share Condensed Statements of Operations (Three Months Ended March 31) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total revenue | $116,375 | $91,453 | | Income from operations | $6,803 | $6,595 | | Net income | $7,051 | $5,709 | | Diluted income per common share | $0.22 | $0.18 | Consolidated Balance Sheets As of March 31, 2025, Liquidity Services reported total assets of $358.8 million, cash and cash equivalents of $138.5 million, total liabilities of $162.5 million, and total stockholders' equity of $196.3 million Key Balance Sheet Items | Account | March 31, 2025 ($ in thousands) | September 30, 2024 ($ in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $138,486 | $153,226 | | Total current assets | $204,886 | $199,235 | | Total assets | $358,795 | $346,888 | | Total current liabilities | $152,073 | $155,153 | | Total liabilities | $162,470 | $164,328 | | Total stockholders' equity | $196,325 | $182,560 | Consolidated Statements of Cash Flows Net cash provided by operating activities for the six months ended March 31, 2025, was $9.5 million, with $18.6 million used in investing and $4.8 million in financing, resulting in a $14.7 million net decrease in cash Condensed Statements of Cash Flows (Six Months Ended March 31) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,504 | $25,973 | | Net cash used in investing activities | ($18,560) | ($17,591) | | Net cash used in financing activities | ($4,777) | ($10,342) | | Net decrease in cash and cash equivalents | ($14,740) | ($1,647) | Reconciliation of GAAP to Non-GAAP Measures Reconciliation to Non-GAAP Adjusted EBITDA Q2 FY2025 GAAP Net Income of $7.1 million reconciled to Non-GAAP Adjusted EBITDA of $12.2 million, nearly flat year-over-year, with key adjustments for depreciation, amortization, and stock compensation Reconciliation of Net Income to Non-GAAP Adjusted EBITDA (Three Months Ended March 31) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $7,051 | $5,709 | | Adjustments (Taxes, D&A, etc.) | $2,272 | $3,911 | | Non-GAAP EBITDA | $9,323 | $9,620 | | Stock compensation & other adjustments | $2,849 | $2,468 | | Non-GAAP Adjusted EBITDA | $12,172 | $12,088 | Reconciliation to Non-GAAP Adjusted Net Income Non-GAAP Adjusted Net Income for Q2 FY2025 increased to $10.0 million, resulting in Non-GAAP Adjusted Diluted EPS of $0.31, primarily adjusted for stock compensation and intangible asset amortization Reconciliation of Net Income to Non-GAAP Adjusted Net Income (Three Months Ended March 31) | ($ in thousands, except per share data) | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $7,051 | $5,709 | | Adjustments (Stock comp, amortization, etc.) | $3,664 | $3,552 | | Income tax impact on adjustments | ($696) | ($842) | | Non-GAAP Adjusted net income | $10,019 | $8,419 | | Non-GAAP Adjusted diluted EPS | $0.31 | $0.27 |