ACV Auctions(ACVA) - 2025 Q2 - Quarterly Results

Executive Summary Second Quarter 2025 Performance Highlights ACV delivered record revenue and Adjusted EBITDA in Q2 2025, driven by continued market share gains and strong adoption of its Marketplace Services, despite challenging market conditions in the latter half of the quarter Q2 2025 Key Performance Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------- | :------ | :------ | :--------- | | Revenue | $194M | $160.6M | +21% | | Marketplace & Service Revenue | $176M | $144.1M | +22% | | Marketplace GMV | $2.7B | $2.4B | +12% | | Marketplace Units | 210,429 | 186,220 | +13% | | GAAP Net Income (Loss) | ($7M) | ($17M) | Improved | | Non-GAAP Net Income | $12M | $3M | +$9M | | Adjusted EBITDA | $19M | $7M | +$12M | CEO Commentary and Market Outlook CEO George Chamoun expressed satisfaction with record Q2 results, attributing success to market share gains and Marketplace Services adoption. He noted a modest year-over-year growth in the dealer wholesale market, which decelerated due to weakening retail demand and elevated trade retention, leading to an updated revenue guidance while maintaining profitability objectives - Record revenue and Adjusted EBITDA achieved despite challenging market conditions in the back half of Q2 2025[3] - Results were driven by continued market share gains and strong adoption of Marketplace Services[3] - The dealer wholesale market grew modestly year-over-year, with growth decelerating due to weakening retail demand and elevated trade retention rates[4] - Revenue guidance was updated to reflect macroeconomic crosscurrents, while the midpoint of Adjusted EBITDA guidance was maintained, reflecting commitment to profitability[4] Company Overview About ACV Auctions ACV (NYSE: ACVA) is a leading digital automotive marketplace and data services partner dedicated to transforming the used vehicle industry. The company provides trusted and efficient solutions for sourcing, selling, and managing used vehicles with enhanced transparency and insights, offering services such as ACV Auctions, ACV Transportation, ACV Capital, ACV MAX, True360, and ClearCar - ACV's mission is to transform the automotive industry by building the most trusted and efficient digital marketplace and data solutions for sourcing, selling, and managing used vehicles[9] - ACV offerings include ACV Auctions, ACV Transportation, ACV Capital, ACV MAX, True360, and ClearCar[9] Financial Guidance Third Quarter 2025 Guidance ACV projects total revenue for the third quarter of 2025 to be between $198 million and $203 million, representing a year-over-year increase of 16% to 18%. Non-GAAP net income is expected to be $11 million to $13 million, with Adjusted EBITDA projected at $18 million to $20 million Q3 2025 Financial Guidance | Metric | Q3 2025 Guidance | | :-------------------- | :--------------- | | Total revenue | $198M - $203M | | YoY Growth | 16% - 18% | | GAAP net income (loss)| ($13M) - ($11M) | | Non-GAAP net income | $11M - $13M | | Adjusted EBITDA | $18M - $20M | Full-Year 2025 Guidance For the full year 2025, ACV anticipates total revenue of $765 million to $775 million, reflecting a 20% to 22% year-over-year growth. The company expects a GAAP net loss of ($51) million to ($47) million, with non-GAAP net income projected at $38 million to $42 million and Adjusted EBITDA at $68 million to $72 million Full-Year 2025 Financial Guidance | Metric | Full-Year 2025 Guidance | | :-------------------- | :---------------------- | | Total revenue | $765M - $775M | | YoY Growth | 20% - 22% | | GAAP net income (loss)| ($51M) - ($47M) | | Non-GAAP net income | $38M - $42M | | Adjusted EBITDA | $68M - $72M | Guidance Assumptions Key assumptions underpinning ACV's financial guidance include a flat to modestly down dealer wholesale market year-over-year in 2025. Conversion rates and wholesale price depreciation are expected to follow normal seasonal patterns, and non-GAAP Operating Expense (excluding Cost of Revenue) is projected to increase approximately 11% year-over-year - The dealer wholesale market is expected to be flat to modestly down year over year in 2025[10] - Conversion rates and wholesale price depreciation are expected to follow normal seasonal patterns[10] - Non-GAAP Operating Expense (excluding Cost of Revenue) is expected to increase approximately 11% year-over-year[10] Non-GAAP Financial Measures Definition and Rationale ACV provides supplemental non-GAAP financial measures to offer investors a clearer view of operating performance by excluding items not indicative of core results. These measures, while useful for period-to-period comparisons and internal management, should not be considered alternatives to GAAP results due to their material impact and recurring nature - Non-GAAP financial measures assist investors in making period-to-period comparisons by providing a view of operating results without items not indicative of core operations[10][11] - These measures are used by management for assessing business health, determining incentive compensation, and evaluating operating performance, as well as for internal planning and forecasting[12] - Non-GAAP measures should not be construed as an alternative to GAAP results, as excluded items often have a material impact and can be recurring[11] Adjusted EBITDA Adjusted EBITDA is defined as net loss, adjusted to exclude depreciation and amortization, stock-based compensation expense, interest (income) expense, provision for income taxes, and other one-time non-recurring items. While used by management for business assessment, it has limitations, such as not reflecting capital commitments, stock-based compensation, or tax payments, and may not be comparable to other companies' measures - Adjusted EBITDA is defined as net loss, adjusted to exclude depreciation and amortization, stock-based compensation expense, interest (income) expense, provision for income taxes, and other one-time non-recurring items[13] - Limitations include not reflecting future capital commitments, the need to replace underlying assets (despite non-cash D&A), stock-based compensation impact, non-operating income/expenses, contingent consideration adjustments, and tax payments[14] - The measure may not be comparable to similarly titled measures of other companies due to varying calculation methods[14] Non-GAAP Net Income (Loss) and Operating Expenses Non-GAAP net income (loss) and non-GAAP operating expenses are defined by excluding stock-based compensation expense, amortization of acquired intangible assets, and other one-time, non-recurring items from their GAAP counterparts. These adjustments aim to facilitate more meaningful period-to-period comparisons by removing non-cash or non-recurring impacts, but they also carry limitations similar to Adjusted EBITDA, such as not reflecting capital expenditures or certain one-time charges - Non-GAAP net income (loss) is defined as net income (loss) adjusted to exclude stock-based compensation expense, amortization of acquired intangible assets, and other one-time, non-recurring items[16] - Non-GAAP operating expenses are defined by excluding the same items as non-GAAP net income (loss)[16] - Exclusions are made to allow for more meaningful comparisons between operating results from period to period, particularly for stock-based compensation (due to valuation variability) and acquired intangible asset amortization (due to non-cash, multi-year impact)[17] Operating and Financial Metrics Marketplace GMV Marketplace GMV (Gross Merchandise Value) is a key indicator of ACV's business health, scale, and growth, primarily driven by the volume and dollar value of Marketplace Unit transactions. It is defined as the total dollar value of vehicles transacted within a period, excluding auction and ancillary fees - Marketplace GMV is primarily driven by the volume and dollar value of Marketplace Unit transactions[21] - It acts as an indicator of ACV's success, signaling dealer and buyer satisfaction, and the health, scale, and growth of the business[21] - Marketplace GMV is defined as the total dollar value of vehicles transacted within the applicable period, excluding any auction and ancillary fees[21] Marketplace Units Marketplace Units is a crucial metric for ACV's potential growth in GMV and revenue, reflecting customer engagement and market share in wholesale transactions. It represents the number of vehicles successfully transacted, even if subsequently unwound (which has been immaterial). This metric has generally increased with territory expansion, new dealer partnerships, and increased share from existing customers - Marketplace Units is a key indicator of potential for growth in Marketplace GMV and revenue[22] - It demonstrates overall customer engagement and market share of wholesale transactions in the United States[22] - Marketplace Units are defined as the number of vehicles transacted within the applicable period, including those successfully sold even if subsequently unwound[22][23] Financial Statements (Unaudited) Condensed Consolidated Statements of Operations The unaudited condensed consolidated statements of operations detail ACV's financial performance for the three and six months ended June 30, 2025, and 2024. For Q2 2025, total revenue reached $193.7 million, leading to a net loss of ($7.3) million, an improvement compared to a net loss of ($17.1) million in Q2 2024 Condensed Consolidated Statements of Operations | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Marketplace and service revenue | $175,995 | $144,126 | $341,932 | $273,940 | | Customer assurance revenue | $17,708 | $16,498 | $34,468 | $32,373 | | 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 The unaudited condensed consolidated balance sheets present ACV's financial position as of June 30, 2025, and December 31, 2024. Total assets increased to $1,138.3 million from $984.1 million, primarily driven by growth in current assets such as cash, trade receivables, and finance receivables. Total liabilities also rose to $689.5 million from $544.1 million, mainly due to increases in accounts payable and long-term debt Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $258,365 | $224,065 | | Trade receivables (net) | $209,880 | $168,770 | | Finance receivables (net) | $207,068 | $139,045 | | Total current assets | $737,935 | $593,197 | | Total assets | $1,138,273| $984,149 | | Accounts payable | $430,646 | $345,605 | | Total current liabilities | $462,658 | $381,166 | | Long-term debt | $186,500 | $123,000 | | Total liabilities | $689,490 | $544,145 | | Total stockholders' equity | $448,783 | $440,004 | Condensed Consolidated Statements of Cash Flows The unaudited condensed consolidated statements of cash flows illustrate ACV's cash movements for the six months ended June 30, 2025, and 2024. Net cash provided by operating activities significantly increased to $80.3 million in 2025 from $47.5 million in 2024. Investing activities resulted in a net cash outflow of ($93.6) million, while financing activities provided $47.4 million, leading to a net increase in cash of $34.3 million Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 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 | | Cash, cash equivalents, and restricted cash, end of period | $258,365 | $214,972 | Non-GAAP Reconciliations Non-GAAP Net Income (Loss) Reconciliation This section provides a reconciliation of GAAP net income (loss) to non-GAAP net income (loss) for the three and six months ended June 30, 2025, and 2024. For Q2 2025, non-GAAP net income was $12.3 million, a significant improvement from the GAAP net loss of ($7.3) million, primarily due to adjustments for stock-based compensation and amortization of acquired intangible assets Non-GAAP Net Income (Loss) Summary | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) (GAAP) | ($7,298) | ($17,063) | ($22,115) | ($37,534) | | Stock-based compensation | $15,454 | $14,965 | $32,028 | $29,794 | | Amortization of acquired intangible assets | $2,591 | $3,013 | $5,364 | $5,226 | | Non-GAAP Net income (loss) | $12,251 | $3,227 | $19,747 | $4,442 | Adjusted EBITDA Reconciliation This table reconciles GAAP net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2025, and 2024. Adjusted EBITDA for Q2 2025 was $18.6 million, substantially higher than the GAAP net loss of ($7.3) million, after accounting for depreciation, amortization, stock-based compensation, interest, taxes, and other adjustments Adjusted EBITDA Summary | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) (GAAP) | ($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 | | Interest expense (income) | $134 | ($1,723) | $155 | ($4,219) | | Provision for income taxes | ($31) | $145 | $334 | $585 | | Adjusted EBITDA | $18,577 | $7,078 | $32,485 | $11,347 | Non-GAAP Operating Expenses Reconciliation This reconciliation details the adjustments from GAAP total operating expenses to non-GAAP total operating expenses (excluding cost of revenue) for the three and six months ended June 30, 2025, and 2024. For Q2 2025, non-GAAP total operating expenses (excluding cost of revenue) were $90.4 million, compared to GAAP total operating expenses of $200.9 million, after excluding cost of revenue, stock-based compensation, and amortization of acquired intangibles Non-GAAP Operating Expenses Summary | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating expenses (GAAP) | $200,898 | $179,265 | $398,026 | $347,481 | | Marketplace and service cost of revenue | ($74,319) | ($64,253) | ($143,721) | ($119,946) | | Customer assurance cost of revenue | ($16,909) | ($14,558) | ($30,886) | ($27,372) | | Stock-based compensation | ($15,173) | ($14,759) | ($31,442) | ($29,339) | | Amortization of acquired intangible assets | ($2,591) | ($3,013) | ($5,364) | ($5,226) | | Non-GAAP Total operating expenses (excluding cost of revenue) | $90,402 | $80,370 | $182,143 | $158,640 | Non-GAAP Guidance Reconciliation This table provides a reconciliation of non-GAAP net income (loss) to GAAP net income (loss) guidance for the third quarter and full year 2025. For Q3 2025, non-GAAP net income guidance is $11 million to $13 million, adjusted from a GAAP net loss guidance of ($13) million to ($11) million, primarily by adding back stock-based compensation and intangible amortization Non-GAAP Guidance Summary | Metric (in millions) | Three months ended September 30, 2025 | Year ended December 31, 2025 | | :-------------------------------- | :------------------------------------ | :--------------------------- | | Net income (loss) (GAAP) | ($13) - ($11) | ($51) - ($47) | | Non-GAAP Adjustments: | | | | Stock-based compensation | $19 | $70 | | Intangible amortization | $3 | $11 | | Amortization of capitalized stock-based compensation | $2 | $6 | | Other | — | $2 | | Non-GAAP net income | $11 - $13 | $38 - $42 | Forward-Looking Statements & Contacts Forward-Looking Statements This presentation contains forward-looking statements regarding ACV's financial guidance and future events, which are based on current assumptions and subject to substantial risks and uncertainties. These risks include operating losses, limited operating history, ability to manage growth, market conditions, competition, and compliance. Readers are cautioned not to rely on these statements as predictions of future events and are directed to ACV's SEC filings for a comprehensive description of risks - The presentation contains forward-looking statements concerning financial guidance for Q4 2024 and full year 2024 (Note: The report's context is Q2 2025 and FY 2025 guidance, but the chunk specifically mentions 2024)[24] - Forward-looking statements are based on current assumptions and are subject to substantial risks, uncertainties, and changes in circumstances that may cause actual results to differ materially[25] - Key risks include a history of operating losses, limited operating history, ability to manage growth, market conditions, competition, and compliance with laws and regulations[25] Investor and Media Contacts Contact information for investor relations and media inquiries is provided for stakeholders - Investor Contact: Tim Fox, tfox@acvauctions.com[26] - Media Contact: Maura Duggan, mduggan@acvauctions.com[26]