ACV Auctions(US:ACVA)2025-08-11 20:17PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents ACV Auctions Inc.'s unaudited condensed consolidated financial statements for Q2 and H1 2025 and 2024, including operations, balance sheets, cash flows, and notes Condensed Consolidated Statements of Operations Total revenue for Q2 2025 increased 20.6% to $193.7 million, with net loss narrowing to $7.3 million from $17.1 million year-over-year Condensed Consolidated Statements of Operations (in thousands) | | Three months ended June 30, | Six months ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Total revenue | $193,703 | $160,624 | $376,400 | $306,313 | | Total operating expenses | $200,898 | $179,265 | $398,026 | $347,481 | | Loss from operations | $(7,195) | $(18,641) | $(21,626) | $(41,168) | | Net loss | $(7,298) | $(17,063) | $(22,115) | $(37,534) | | Net loss per share - basic and diluted | $(0.04) | $(0.10) | $(0.13) | $(0.23) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1.14 billion from $984.1 million, with liabilities rising to $689.5 million and equity at $448.8 million Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $737,935 | $593,197 | | Total assets | $1,138,273 | $984,149 | | Total current liabilities | $462,658 | $381,166 | | Total liabilities | $689,490 | $544,145 | | Total stockholders' equity | $448,783 | $440,004 | Condensed Consolidated Statements of Cash Flows Net cash from operations for H1 2025 significantly increased to $80.3 million, with $93.6 million used in investing and $47.4 million provided by financing activities Six Months Ended June 30, Cash Flows (in thousands) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $80,339 | $47,491 | | Net cash used in investing activities | $(93,646) | $(3,997) | | Net cash provided by (used in) financing activities | $47,398 | $(11,025) | | Net increase in cash, cash equivalents, and restricted cash | $34,300 | $32,401 | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail the company's accounting policies and financial statement items, covering business nature, financial instruments, revenue, debt, compensation, acquisitions, and segments * The company operates in a single reportable segment, providing a wholesale auction marketplace for used vehicles, primarily in North America, with services including digital marketplaces, remarketing centers, data, transportation, and financing272871 Disaggregated Marketplace and Service Revenue (in thousands) | | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :--- | :--- | :--- | | Auction marketplace revenue | $92,267 | $182,250 | | Other marketplace revenue | $75,397 | $143,074 | | Data services revenue | $8,331 | $16,608 | | Total | $175,995 | $341,932 | * In Q2 2025, the company amended its 2021 Revolver, increasing borrowing capacity from $160 million to $250 million and extending maturity to June 203050 * The company completed four business acquisitions during 2024, including Indiana Auto Auction, 166 Auto Auction, and Alliance Auto Auctions, to expand offerings to dealers and commercial partners636467 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 financial results, highlighting a 22% revenue increase, improved profitability, narrowed net loss, and increased Adjusted EBITDA, covering key metrics, operations, liquidity, and debt Key Operating and Financial Metrics | | Three Months ended June 30, 2025 | Three Months ended June 30, 2024 | | :--- | :--- | :--- | | Marketplace Units | 210,429 | 186,526 | | Marketplace GMV | $2.7 billion | $2.4 billion | | Adjusted EBITDA | $18.6 million | $7.1 million | * Revenue growth was primarily volume-driven, with Marketplace Units increasing 13% YoY for Q2 2025, also boosted by higher buyer fee rates and ancillary service adoption121122 * Operating expenses as a percentage of revenue decreased across major categories, indicating improved operating leverage as the company scales124126127 * The company's liquidity remains strong with $258.4 million in cash and cash equivalents and $46.4 million in marketable securities as of June 30, 2025, sufficient for the next 12 months157 Results of Operations This section compares Q2 and H1 2025 and 2024 financial results, showing Q2 2025 total revenue growth of 20.6% to $193.7 million and improved operating loss Revenue Comparison - Q2 2025 vs Q2 2024 (in thousands) | Revenue Type | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Marketplace and service | $175,995 | $144,126 | $31,869 | 22% | | Customer assurance | $17,708 | $16,498 | $1,210 | 7% | | Total Revenue | $193,703 | $160,624 | $33,079 | 20.6% | Operating Expenses Comparison - Q2 2025 vs Q2 2024 (in thousands) | Expense Category | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Marketplace and service cost | $74,319 | $64,253 | $10,066 | 16% | | Customer assurance cost | $16,909 | $14,558 | $2,351 | 16% | | Operations and technology | $45,801 | $39,694 | $6,107 | 15% | | Selling, general, and administrative | $52,972 | $51,912 | $1,060 | 2% | | Depreciation and amortization | $10,897 | $8,848 | $2,049 | 23% | Non-GAAP Financial Measures The company uses Adjusted EBITDA and Non-GAAP Net Income (Loss) to evaluate performance, with Q2 2025 Adjusted EBITDA significantly increasing to $18.6 million from $7.1 million Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | | Three months ended June 30, | Six months ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net loss | $(7,298) | $(17,063) | $(22,115) | $(37,534) | | Depreciation and amortization | 10,904 | 8,880 | 21,450 | 16,682 | | Stock-based compensation | 15,454 | 14,965 | 32,028 | 29,794 | | Other adjustments | (483) | 286 | 818 | 1,875 | | Adjusted EBITDA | $18,577 | $7,078 | $32,485 | $11,347 | Liquidity and Capital Resources As of June 30, 2025, the company had $258.4 million in cash, $46.4 million in marketable securities, and $186.5 million in long-term debt, with improved H1 2025 operating cash flow * Principal sources of liquidity include $258.4 million in cash and cash equivalents, $46.4 million in marketable securities, and cash flow from operations157 * The company has two main debt facilities: the 2021 Revolver with $250 million capacity ($100.0 million drawn) and a Warehouse Facility with $125 million capacity ($86.5 million drawn) for auto floorplan loans162164165 Summary of Cash Flows - Six Months Ended June 30 (in thousands) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $80,339 | $47,491 | | Net cash used in investing activities | $(93,646) | $(3,997) | | Net cash provided by (used in) financing activities | $47,398 | $(11,025) | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations, affecting interest income and variable-rate debt, with $186.5 million in SOFR-indexed borrowings as of June 30, 2025 * The primary market risk is interest rate risk, impacting both interest-earning assets and variable-rate debt181 * As of June 30, 2025, the company had $186.5 million in variable-rate borrowings indexed to SOFR, where interest rate increases will lead to higher expense183 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter * The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025185 * No material changes in internal control over financial reporting were identified during the quarter186 PART II. OTHER INFORMATION Legal Proceedings The company is not currently subject to any material pending or threatened litigation that would adversely affect its business or financial results * The company states it is not presently subject to any material litigation189 Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, were reported * No material changes to risk factors were reported since the last Annual Report190 Other Information This section discloses the adoption, modification, or termination of Rule 10b5-1 trading plans by Section 16 officers during Q2 2025, including actions by the CEO, CAO, COO, and CFO * CFO William Zerella terminated a trading plan on April 7, 2025196 * CAO Andrew Peer adopted a trading plan on June 11, 2025196 * COO Vikas Mehta modified a trading plan on June 12, 2025, and CEO George Chamoun adopted a new trading plan on June 13, 2025199 Exhibits This section lists exhibits filed with the Form 10-Q, including the Amended and Restated Certificate of Incorporation, CEO and CFO certifications, and XBRL data files * Key exhibits filed include the Amended and Restated Certificate of Incorporation, Employee Stock Purchase Plan, and Sarbanes-Oxley Act certifications from the Principal Executive Officer and Principal Financial Officer200