ACV Auctions(ACVA) - 2023 Q1 - Quarterly Report

Financial Performance - Revenue for the three months ended March 31, 2023 was $119.6 million, up from $103.1 million in the same period of 2022, representing a year-over-year increase of 16%[68] - The net loss for the three months ended March 31, 2023 was $18.2 million, an improvement from a net loss of $29.5 million in the same period of 2022[68] - Adjusted EBITDA improved to $(5.6) million for the three months ended March 31, 2023, compared to $(18.0) million for the same period in 2022[69] - Marketplace and service revenue increased to $104.9 million in Q1 2023, up 19% from $88.3 million in Q1 2022[105] - Customer assurance revenue remained stable at $14.8 million in Q1 2023, compared to $14.7 million in Q1 2022[107] - Total operating expenses rose to $140.5 million in Q1 2023, compared to $132.2 million in Q1 2022[104] - Interest income surged to $3.3 million in Q1 2023, a 7391% increase from $44, driven by higher marketable securities[119] - Non-GAAP Net income (loss) for Q1 2023 was $(5.0) million, compared to $(20.1) million in Q1 2022, reflecting a 75.1% improvement[130] Market Activity - Marketplace Units sold increased by 8.2% year-over-year, reaching 151,563 for the three months ended March 31, 2023[68] - Marketplace Gross Merchandise Value (GMV) remained stable at $2.4 billion for both the three months ended March 31, 2023 and 2022, reflecting a slight decrease of 0.7%[69] - The company recognizes the importance of increasing Marketplace Buyers and Sellers to enhance marketplace vibrancy and overall transaction volume[76] - The demand for used vehicles is expected to remain strong, influenced by economic conditions and consumer purchasing power[88] Operational Strategy - The company plans to continue investing in growth, anticipating an increase in operating expenses to support sales, marketing, and technology development[87] - The company aims to grow its share of wholesale transactions from existing customers, enhancing engagement and spend on its platform[80] - New product offerings, including data services and inventory management systems, are expected to drive revenue growth and customer adoption[86] Cost Management - Marketplace and service cost of revenue (excluding depreciation & amortization) was $47.6 million, representing 40% of revenue, down from 46% in Q1 2022[108] - Customer assurance cost of revenue decreased to $12.1 million, accounting for 10% of revenue, down from 13% in Q1 2022[109] - Operations and technology expenses increased to $35.7 million, representing 30% of revenue, down from 32% in Q1 2022[113] - Selling, general, and administrative expenses rose to $41.8 million, maintaining 35% of revenue compared to Q1 2022[114] Cash Flow and Liquidity - As of March 31, 2023, cash and cash equivalents totaled $317.1 million, with marketable securities amounting to $208.7 million, indicating strong liquidity[132] - Net cash provided by operating activities for Q1 2023 was $43.0 million, a significant increase from net cash used of $(31.5) million in Q1 2022[142] - In Q1 2023, net cash used in investing activities was $23.9 million, primarily due to $35.6 million in purchases of marketable securities[145] - The company incurred $11.5 million in stock-based compensation in Q1 2023, up from $7.9 million in Q1 2022, reflecting increased employee compensation costs[130] Financing and Debt - The 2021 Revolver has a borrowing capacity of up to $160.0 million, with $95.0 million drawn as of March 31, 2023[139] - The company may seek additional equity or debt financing in the future to support growth and innovation, depending on capital requirements[132] - The company had borrowings from banks amounting to $95.5 million as of March 31, 2023, with a variable interest rate indexed to LIBOR[153] Risk Factors - The company is exposed to market risk primarily due to fluctuations in interest rates[152] - A hypothetical 10% change in interest rates would not have a material impact on the company's condensed consolidated financial statements[153] - Revenue and operating expenses related to vehicle auction volume will fluctuate quarterly due to seasonality and external factors[149] - Seasonality trends may be disrupted by significant external factors impacting the industry[149] Accounting and Estimates - There have been no material changes to critical accounting estimates compared to those disclosed in the Annual Report[150] - Estimates and assumptions used in financial statements are based on historical experience and ongoing evaluations[150]