Liquidity Services(LQDT) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 fiscal year 2026, GAAP revenue was flat, while consolidated gross merchandise volume (GMV) increased to $398 million and direct profit rose to $57 million [4][11] - GAAP net income increased by 29%, non-GAAP adjusted EBITDA grew by 38% year-over-year to $18.1 million, and adjusted EPS rose by 39% year-over-year to $0.39 per share [4][13] - The company ended the quarter with $181.4 million in cash and no financial debt, providing strategic flexibility for growth investments [5][14] Business Line Data and Key Metrics Changes - The GovDeals segment achieved 7% GMV growth, with a 13% increase in direct profit due to market share expansion and improved rates [5][15] - The SEG segment saw 3% GMV growth and a 16% increase in direct profit, driven by strong buyer participation [6][15] - Direct-to-consumer GMV increased by 40% year-over-year, reflecting growing consumer demand [6] - The CAG segment experienced a 10% decline in GMV but a 17% increase in revenue and a 7% increase in direct profit [15] Market Data and Key Metrics Changes - The company serves 6.2 million registered buyers, a 9% year-over-year increase, with 983,000 auction participants and 264,000 completed transactions in the quarter [9] - Heavy Equipment category logged 27% year-over-year organic GMV growth and 88% growth in the number of transactions [7] Company Strategy and Development Direction - The company is focused on profitable technology-enabled growth, leveraging AI, data analytics, and automation to improve efficiency and customer experience [4][8] - The strategy includes expanding the auction software business and enhancing the marketplace for buyers and sellers [8][10] - The company aims to scale its auction software business to 1,000 customers with annual recurring revenue of $10,000 or more [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model's resilience, supported by trends in Circular Commerce, sustainability, and digitization [9] - The outlook for Q2 includes expectations for double-digit adjusted EBITDA growth and continued strength in GovDeals and retail segments [16][19] - Management anticipates GMV to range from $375 million to $450 million in Q2, with GAAP net income expected between $6.5 million and $9.5 million [19][20] Other Important Information - The company conducted $1.5 million in share repurchases during the quarter, with $15 million remaining on the authorization for additional repurchases [14] - The fiscal second quarter guidance reflects a product mix within retail that is expected to be at a slightly lower margin than the previous quarter [17] Q&A Session Summary Question: What are the bigger drivers of tech-enabled growth? - Management highlighted improvements in buyer conversion rates through automation and machine-driven systems, enhancing productivity and accuracy in asset listings [24] Question: How significant is the impact of new clients in CAG and GovDeals? - Management noted a structural improvement in buyer and seller acquisition, with expectations for significant asset sales with Fortune 1,000 clients [26][27] Question: Has the sales force been increased to drive new client acquisition? - Management indicated that most growth is driven by automation, but targeted resources have been added to support sales outreach [31][33] Question: What competitive advantages does the company have in heavy equipment sales? - Management cited lower commission rates, flexibility for sellers, and strong buyer recovery rates as key differentiators [36] Question: What is the status of the Retail Rush product? - Management confirmed that Retail Rush is live and ramping up, with improved recovery rates for assets sold through this channel [38]