Liquidity Services(LQDT) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved a record Gross Merchandise Volume (GMV) of $413 million, representing a 9% year-over-year growth [16] - Revenue increased by 28% to $119.9 million, consistent with the guidance provided for the revenue to GMV ratio [16] - GAAP earnings per share rose by 21% to $0.23, while non-GAAP adjusted earnings per share increased by 13% to $0.34 [17] - Adjusted EBITDA for the fiscal third quarter was $17 million, a 16% increase year-over-year, with a 31% adjusted EBITDA margin on total segment direct profit [17] Business Line Data and Key Metrics Changes - The GovDeals segment recorded GMV of $252 million, with revenue up 8% and direct profit margin up 7%, setting new quarterly records [17] - The retail segment saw a 30% increase in GMV and a 39% increase in revenue year-over-year, with direct profit growing by 12% [18] - The Capital Asset Group (CAG) segment experienced a 12% increase in GMV, 6% in revenue, and 14% in direct profit, driven by a more than doubling of heavy equipment asset sales [19] - The Machinio and Software Solutions segments increased revenue by 27% and direct profit by 23% [19] Market Data and Key Metrics Changes - The company noted tempered activity in certain industrial categories within the CAG segment due to economic and tariff-related supply chain uncertainties [19] - The GovDeals segment continues to expand in new geographies, including notable new account wins in California and Florida [9] Company Strategy and Development Direction - The company is focused on capturing greater market share through strategic investments in software, platform innovation, and marketing [7] - A new consumer auction experience is being piloted in Columbus, Ohio, aimed at leveraging auction software technology to create a direct-to-consumer channel [29][42] - The company is transitioning away from selected purchase model programs to focus on higher-margin consignment relationships [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive sustainable long-term growth despite economic uncertainties related to tariffs and interest rates [6] - The company anticipates double-digit growth in adjusted EBITDA for the full year of 2025, with a strong financial foundation and zero debt [15][20] - Management highlighted the importance of adapting to changing market conditions and optimizing resource allocation to higher-margin activities [35] Other Important Information - The company ended the quarter with $167 million in cash and cash equivalents, with zero financial debt [15] - The company is establishing online B2C auctions to enhance market recovery and expand market share [12] Q&A Session Summary Question: Discussion on tariff impacts - Management noted that international activity is affected by evolving negotiations, causing delays in asset trading, but domestic used equipment is moving normally [26][27] Question: Details on the e-commerce program in Columbus - The company is piloting a consumer auction experience in Columbus, leveraging auction software for a direct-to-consumer channel [29][30] Question: Process of turning off certain purchase flows - Management explained that they periodically review business commitments and reallocate resources to higher-margin activities when necessary [33][35] Question: Timing of new business development impacts - New business wins may take a few months to impact financial results, depending on the client and the breadth of services [39] Question: Consumer auction software deployment - This is the first deployment of consumer auction software, aimed at creating a vibrant direct-to-consumer channel [42][43]