ACV Auctions Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 16:10
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" relating to our financial condition and results of operations for the year ended December 31, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on February 19, 2025, or the Annual Report. Some of the information contained in this discussion and analysis, including information with respect to our financial condition or results of operations, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special Note Regarding Forward-Looking Statements" in this Form 10-Q. You should review the "Risk Factors" section of our Annual Report for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Our mission is to build and enable the most trusted and efficient Marketplace Platform for buying and selling used vehicles with transparency and comprehensive data that was previously unimaginable.
We provide a highly efficient and vibrant Marketplace Platform ("Marketplace Platform" or "Marketplace") for wholesale vehicle transactions and data services that offer transparent and accurate vehicle information to our customers. Our Marketplace Platform leverages data insights and technology to power our digital marketplace and data services, enabling our dealers and commercial partners to buy, sell, and value vehicles with confidence and efficiency. We strive to solve the challenges that the used automotive industry has faced for generations and provide powerful technology-enabled capabilities to our dealers and commercial partners who fulfill a critical role in the automotive ecosystem. We help dealers source and manage inventory and accurately price their vehicles as well as process payments, transfer titles, manage arbitrations, and finance and transport vehicles. Our Marketplace Platform encompasses:
•Digital Marketplace. Connects buyers and sellers of wholesale vehicles in an intuitive and efficient manner. Our core digital marketplace offerings are auctions in varying formats, which facilitate real time transactions of wholesale vehicles, and are accessible across multiple platforms including mobile apps, desktop, and directly through API integration. We also offer transportation, financing and assurance services to facilitate the entire transaction journey.
•Remarketing Centers. Provides an additional channel to provide dealers and commercial partners with auction services. At remarketing centers, vehicles may be auctioned onsite and/or launched into the digital marketplace. Additional services are offered at remarketing centers that are important to servicing commercial partners.
•Data Services. Offers insights into the condition and value of used vehicles for transactions both on and off our Marketplace and helps dealers, their end consumers, and commercial partners make more informed decisions and transact with confidence and efficiency. We enable dealers to manage their inventory and set pricing more effectively while turning vehicles faster and maximizing profit by leveraging predictive analytics informed by artificial intelligence, machine learning and market data.
•Data and Technology. Underpins everything we do, and powers our vehicle inspections, comprehensive vehicle intelligence reports, digital marketplace, inventory management software, and operations automation.
We have historically generated the majority of our revenue from our digital marketplace where we earn auction and ancillary fees from both buyers and sellers in each case only upon a successful auction. Buyer auction fees are variable based on the price of the vehicle, while seller auction fees include a fixed auction fee and an optional fee for the elective condition report associated with the vehicle. We also earn ancillary fees through additional value-added services to buyers and sellers in connection with the auction.
Our customers include participants on our Marketplace Platform and purchasers of our data services. Certain dealers and commercial partners purchase data services in connection with vehicle assessments, software subscriptions, and transactions that do not occur on our Marketplace. Our dealer customers include a majority of the top 100 used vehicle dealers in the United States.
Key Operating and Financial Metrics
We regularly monitor a number of operating and financial metrics in order to measure our current performance and estimate our future performance. Our business metrics may be calculated in a manner different than similar business metrics used by other companies.
| Three Months ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Marketplace Units | 218,065 | 198,354 | 636,519 | 559,511 | |||||||||||||||||||
| Marketplace GMV | $ | 2.7 | billion | $ | 2.5 | billion | $ | 8.1 | billion | $ | 7.2 | billion | |||||||||||
| Adjusted EBITDA | $ | 18.7 | million | $ | 11.2 | million | $ | 51.1 | million | $ | 22.5 | million | |||||||||||
Marketplace Units
Marketplace Units is a key indicator of our potential for growth in Marketplace GMV and revenue. It demonstrates the overall engagement of our customers and our market share of wholesale transactions in the United States. We define Marketplace Units as the number of vehicles transacted within the applicable period. Marketplace Units transacted includes any vehicle that successfully reaches sold status, even if the auction is subsequently unwound, meaning the buyer or seller does not complete the transaction. These instances were immaterial in the periods presented. Marketplace Units exclude vehicles that were inspected by ACV, but not sold. Marketplace Units have generally increased as we have expanded our territory coverage, added new Marketplace Buyers and Marketplace Sellers and increased our share of wholesale transactions from existing customers. Because we only earn auction and ancillary fees in the case of a successful auction, Marketplace Units will remain a critical driver of our revenue growth.
Marketplace GMV
Marketplace GMV is primarily driven by the volume and dollar value of Marketplace Units transactions. We believe that Marketplace GMV acts as an indicator of our success, signaling satisfaction of dealers and buyers, and the health, scale, and growth of our business. We define Marketplace GMV as the total dollar value of vehicles transacted within the applicable period, excluding any auction and ancillary fees. Because our definition of Marketplace Units does not include vehicles inspected but not sold, and because the value of the vehicle sold is not recognized as revenue, Marketplace GMV does not represent revenue earned by us. We expect that Marketplace GMV will continue to grow as Marketplace Units grow, though at a varying rate within a given applicable period, as Marketplace GMV is also impacted by the value of each vehicle transacted. In periods of declining used vehicle values, Marketplace GMV may decline even while Marketplace Units increase.
Marketplace Buyers
We define Marketplace Buyers as dealers or commercial partners with a unique customer ID that have transacted at least once in the last 12 months as a buyer on our Marketplace Platform. Marketplace Buyers include independent and franchise dealers buying on our marketplace.
Marketplace Sellers
We define Marketplace Sellers as dealers or commercial partners with a unique customer ID that have transacted at least once in the last 12 months as a seller on our Marketplace Platform. Marketplace Sellers include independent and franchise dealers selling on our marketplace, as well as commercial partners, consisting of commercial leasing companies, rental car companies, bank or other finance companies, who use our marketplace to sell their inventory.
We monitor the growth in both Marketplace Buyers and Marketplace Sellers as they each promote a more vibrant and healthy marketplace. We believe that our growth in Marketplace Sellers and Marketplace Buyers over time has been driven by the value proposition of our offerings, and our sales and marketing success, including our ability to attract new dealers and commercial partners to our Marketplace Platform. Based on our current position in the market, we believe that we have significant opportunity to continue to increase the number of Marketplace Buyers and Marketplace Sellers.
Adjusted EBITDA
Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business. We define Adjusted EBITDA as net income (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, when applicable, such as acquisition-related and restructuring expenses. We monitor Adjusted EBITDA as a non-GAAP financial measure to supplement the financial information we present in accordance with generally accepted accounting principles, or GAAP, to provide investors with additional information regarding our financial results. For further explanation of the uses and limitations of this measure and a reconciliation of our Adjusted EBITDA to the most directly comparable GAAP measure, net income (loss), please see "-Non-GAAP Financial Measures."
We expect Adjusted EBITDA to fluctuate in the near term as we continue to invest in our business and improve over the long term as we achieve greater scale in our business and efficiencies in our operating expenses.
Factors Affecting Our Performance
We believe that the growth and future success of our business depend on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth, improve our results of operations, and increase profitability.
Increasing Marketplace Units
Increasing Marketplace Units is a key driver of our revenue growth. The transparency, efficiency and vibrancy of our marketplace is critical to our ability to grow our share of wholesale transactions from existing customers and attract new buyers and sellers to our Marketplace Platform. Failure to increase the number of Marketplace Units would adversely affect our revenue growth, operating results, and the overall health of our marketplace.
Grow Our Share of Wholesale Transactions from Existing Customers
Our success depends in part on our ability to grow our share of wholesale transactions from existing customers, increasing their engagement and spend on our Marketplace Platform. We remain in the early stages of penetrating our Marketplace Buyers' and Sellers' total number of wholesale transactions. As we continue to invest in eliminating key risks of uncertainty related to the auction process through our trusted and efficient Marketplace Platform, we expect that we will capture an increasing share of transactions from our existing buyers and sellers. Our ability to increase share from existing customers will depend on a number of factors, including our customers' satisfaction with our Marketplace Platform, competition, pricing and overall changes in our customers' engagement levels.
Add New Marketplace Buyers and Marketplace Sellers
We believe we have a significant opportunity to add new marketplace participants. As we expand our presence within our existing territories, we are able to drive increased liquidity and greater vehicle selection, which in turn improves our ability to attract new Marketplace Buyers and Marketplace Sellers. Additionally, we intend to add more commercial consignors to our Marketplace Platform and capture a greater share of vehicles in the wholesale market that are sold to dealers by commercial consignors through auctions and private sales.
Our ability to attract new Marketplace Buyers and Marketplace Sellers will depend on a number of factors including: the ability of our sales team to onboard dealers and commercial consignors onto our Marketplace Platform and ensure their satisfaction, the ability of our territory managers to build awareness of our brand, the ability of our vehicle condition inspectors, or VCIs, to cultivate relationships with our customers in their respective territories, and the effectiveness of our marketing efforts.
Grow Awareness for Our Offerings and Brand
Wholesale vehicle online penetration is in the early stages, lagging the consumer automotive market, and we expect more dealers and commercial partners to source and manage their inventory online. As the digitization of the wholesale automotive market accelerates, we believe that our digital marketplace is well positioned to capture a disproportionate share of that growth. We use targeted sales and marketing efforts to educate potential Marketplace Buyers and Marketplace Sellers as to the benefits of our offerings and drive adoption of our Marketplace Platform. Our ability to grow awareness of our offerings and brand depend on a number of factors, including:
•Secure Trusted Supply. The more trusted supply on our marketplace, the more buyers we can attract to our Marketplace Platform.
•Deepen Relationships with Dealers and Commercial Partners.We have a team of VCIs that regularly interacts with our customers, providing high-quality inspection services and developing strong customer relationships.
•Drive Customer Loyalty.Our loyal customers and referrals serve as a highly effective customer acquisition tool, and help drive our growth in a given territory.
•Grow Brand Awareness. We invest in promoting our brand via targeted marketing spend to increase customer awareness in the territories in which we operate.
Our future success is dependent on our ability to successfully grow our market presence and market and sell products to both new and existing customers.
Grow Value-Added and Data Services
We continue to drive customer adoption of our existing value-added and data services and introduce new and complementary products. Our ability to drive higher attachment rates of existing value-added services, such as ACV Transportation, ACV Capital, and ACV MAX will help grow our revenue. We continue to drive customer adoption of our data services such as our inventory management system, which enables dealers to accurately price wholesale and retail inventory while maximizing profit by leveraging predictive analytics informed by artificial intelligence. These data services enable our customers to make more informed inventory management decisions both on and off our digital marketplace. In addition, we will continue to focus on developing new products and services that enhance our Marketplace Platform in areas including new data-powered products. Our ability to drive customer adoption of these products and services is dependent on the pricing of our products, the offerings of our competitors and the effectiveness of our marketing efforts.
Investment in Growth
We are actively investing in our business. In order to support our future growth and expanded product offerings, we expect this investment to continue. We anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts, expand our employee base and invest in our technology development. The investments we make in our Marketplace Platform are designed to grow our revenue opportunity and to improve our operating results in the long term, but these investments could also delay our ability to achieve or sustain profitability in the near term. Our success is dependent on making value-generative investments that support our future growth.
Used Car Demand
Our success depends in part on sufficient demand for used vehicles. Our growth over the last several years has coincided with a rising consumer demand for used vehicles. Since early 2020 demand for cars has outpaced supply. During this period, we have seen new car supply have a significant impact on the supply of wholesale vehicles available within our marketplace. More recently, new vehicle supply has begun to increase, although still below 2019 levels. However, this increase in new vehicle supply has been coupled with higher interest rates which has made both new and used vehicles more expensive for retail consumers utilizing financing. Used car demand will be in part dependent on the economic health of the retail consumer and their ability to afford a vehicle purchase, which may be impacted by macroeconomic and geopolitical conditions, including the impact of changes in trade policies.
Used vehicle sales are also seasonal. Sales typically peak late in the first quarter and early in the second quarter, with the lowest relative level of industry vehicle sales occurring in the fourth quarter. Due to our growth since launch, our sales patterns to date have not been entirely reflective of the general seasonality of the used vehicle market, but we expect
this to normalize as our business matures. Seasonality also impacts used vehicle pricing, with used vehicles depreciating at a faster rate in the last two quarters of each year and a slower rate in the first two quarters of each year. We may experience seasonal and other fluctuations in our quarterly results of operations, which may not fully reflect the underlying performance of our business. See the section titled "Seasonality" for additional information on the impacts of seasonality on our business.
Recent Developments
Tricolor Bankruptcy
On September 10, 2025, Tricolor Holdings, LLC, and certain of its affiliates (collectively, "Tricolor"),filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code with the United States Bankruptcy court for the Northern District of Texas. Several factors differentiated Tricolor from other dealership customers that have finance receivables with ACV Capital. Tricolor's significant focus on the offering of credit to consumers, the scope and complexity of Tricolor's operations including multiple large credit facilities with major U.S. banks, and the emergence of allegations of significant fraud being investigated by Federal authorities are among the differentiating factors. Due to these factors, we do not believe that the Tricolor bankruptcy losses are indicative of our ongoing operating performance. Tricolor accounted for approximately $18.7 million of our finance receivables as of September 30, 2025. The bankruptcy will not have a material negative impact on our future revenues. We are participating as a creditor in the bankruptcy proceedings, seeking to maximize the recovery of our outstanding finance receivables. However, the ultimate outcome of these collection efforts is uncertain at this time. We have recorded a loss of $18.7 million related to this event in the "selling, general, and administrative expenses" line item of the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2025.
Settlement of Class Action Lawsuit Against Data Services Vendors
On September 16, 2025, the Company entered into a class action settlement agreement with a data services vendor, pursuant to which the Company will receive $7.9 million in settlement payments. Of this total settlement, $7.6 million is included as a reduction in marketplace and service cost of revenue in the Condensed Consolidated Statements of Operations for both the three and nine months ended September 30, 2025. Based on the payment terms provided in the settlement, $6.4 million is included in other current assets and $1.5 million is included in other assets in the Condensed Consolidated Balance Sheet at September 30, 2025.
Components of Results of Operations
Revenue
Marketplace and Service Revenue
We have historically generated the majority of our revenue from our digital marketplace where we earn auction and ancillary fees from both buyers and sellers, in each case only upon a successful auction. Our marketplace and service revenue consists principally of revenue earned from facilitating auctions and arranging for the transportation of vehicles purchased in such auctions.
We act as an agent when facilitating a vehicle auction through the marketplace. Auction and related fees charged to the buyer and seller are reported as revenue on a net basis, excluding the price of the auctioned vehicle in the transaction.
We act as a principal when arranging for the transportation of vehicles purchased on the marketplace and leverage our network of third-party transportation carriers to secure the arrangement. Transportation fees charged to the buyer are reported on a gross basis.
We also generate data services revenue through our True360 reports and ACV MAX inventory management software subscriptions and offer short-term inventory financing to eligible customers purchasing vehicles through the marketplace.
Customer Assurance Revenue
We also generate revenue by providing our Go Green assurance to sellers on the condition of certain vehicles sold on the marketplace, which is considered a guarantee under GAAP. This assurance option is only available for Go Green
sellers on qualifying vehicles for which we have prepared the vehicle condition report. Customer assurance revenue also includes revenue from other price guarantee products offered to sellers. Customer assurance revenue is measured based upon the fair value of the guarantees that we provide. We expect the fair value per vehicle assured to decrease over time as we continue to improve the quality of our inspection product, which in turn reduces the costs of satisfying such assurance.
Operating Expenses
Marketplace and Service Cost of Revenue
Marketplace and service cost of revenue consists of third-party transportation carrier costs, titles shipping costs, customer support, website hosting costs, inspection costs related to data services and various other costs. These costs include salaries, benefits, bonuses and related stock-based compensation expenses, which we refer to as personnel expenses. We expect our marketplace and service cost of revenue to continue to increase in absolute dollars as we continue to scale our business and introduce new product and service offerings.
Customer Assurance Cost of Revenue
Customer assurance cost of revenue consists of the costs related to satisfying claims against the vehicle condition guarantees, and other price guarantees.
Operations and Technology
Operations and technology expense consists of costs for wholesale auction inspections, personnel costs related to payments and titles processing, transportation processing, product and engineering and other general operations and technology expenses. These costs include personnel-related expenses and other allocated facility and office costs. We expect that our operations and technology expense will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our marketplace, transportation capabilities and other technologies.
Selling, General and Administrative
Selling, general and administrative expense consists of costs resulting from sales, accounting, finance, legal, marketing, human resources, executive, and other administrative activities. These costs include personnel-related expenses, legal and other professional services expenses and other allocated facility and office costs. Also included in selling, general and administrative expense is advertising and marketing costs to promote our services. We expect that our selling, general and administrative expense will increase in absolute dollars as our business grows. However, we expect that our selling, general and administrative expense will decrease as a percentage of our revenue as our revenue grows over the longer term.
Depreciation and Amortization
Depreciation and amortization expense consists of depreciation of fixed assets, and amortization of acquired intangible assets and internal-use software.
Other Income (Expense)
Other income (expense) consists primarily of interest expense on our borrowings and interest earned on our marketable securities and cash and cash equivalents.
Provision for Income Taxes
Provision for income taxes consists of U.S. federal, state and foreign income taxes.
Results of Operations
The following table sets forth our Condensed Consolidated Statements of Operations data expressed as a percentage of total revenue for the periods presented:
| Three months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
|
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
||||||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Marketplace and service revenue | $ | 176,510 | 88 | % | $ | 155,908 | 91 | % | |||||||||||||||
| Customer assurance revenue | 23,051 | 12 | % | 15,421 | 9 | % | |||||||||||||||||
| Total revenue | 199,561 | 100 | % | 171,329 | 100 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
|
Marketplace and service cost of revenue (excluding depreciation & amortization) (1)
|
70,859 | 36 | % | 67,064 | 39 | % | |||||||||||||||||
|
Customer assurance cost of revenue (excluding depreciation & amortization)
|
22,098 | 11 | % | 14,176 | 8 | % | |||||||||||||||||
|
Operations and technology (1)(6)
|
46,526 | 23 | % | 42,539 | 25 | % | |||||||||||||||||
|
Selling, general, and administrative(1) (3) (5) (6) (7)
|
72,826 | 36 | % | 54,973 | 32 | % | |||||||||||||||||
|
Depreciation and amortization (2) (4)
|
10,969 | 5 | % | 9,716 | 6 | % | |||||||||||||||||
| Total operating expenses | 223,278 | 188,468 | |||||||||||||||||||||
|
Loss from operations
|
(23,717) | (17,139) | |||||||||||||||||||||
| Other Income (expense): | |||||||||||||||||||||||
| Interest income | 2,218 | 2,050 | |||||||||||||||||||||
| Interest expense | (2,483) | (1,077) | |||||||||||||||||||||
|
Total other (expense) income
|
(265) | 973 | |||||||||||||||||||||
|
Loss before income taxes
|
(23,982) | (16,166) | |||||||||||||||||||||
|
Provision for (benefit from) income taxes
|
483 | (137) | |||||||||||||||||||||
| Net loss | $ | (24,465) | $ | (16,029) | |||||||||||||||||||
| Nine months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
|
Amount
|
% of
Revenue
|
Amount
|
% of
Revenue
|
||||||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Marketplace and service revenue | $ | 518,442 | 90 | % | $ | 429,848 | 90 | % | |||||||||||||||
| Customer assurance revenue | 57,519 | 10 | % | 47,794 | 10 | % | |||||||||||||||||
| Total revenue | 575,961 | 100 | % | 477,642 | 100 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
|
Marketplace and service cost of revenue (excluding depreciation & amortization)(1)
|
214,580 | 37 | % | 187,010 | 39 | % | |||||||||||||||||
|
Customer assurance cost of revenue (excluding depreciation & amortization)
|
52,984 | 9 | % | 41,548 | 9 | % | |||||||||||||||||
|
Operations and technology (1) (6)
|
136,517 | 24 | % | 120,302 | 25 | % | |||||||||||||||||
|
Selling, general, and administrative (1) (3) (5) (6) (7)
|
184,816 | 32 | % | 160,738 | 34 | % | |||||||||||||||||
|
Depreciation and amortization (2) (4)
|
32,407 | 6 | % | 26,351 | 6 | % | |||||||||||||||||
| Total operating expenses | 621,304 | 535,949 | |||||||||||||||||||||
|
Loss from operations
|
(45,343) | (58,307) | |||||||||||||||||||||
| Other Income (expense): | |||||||||||||||||||||||
| Interest income | 6,259 | 7,410 | |||||||||||||||||||||
| Interest expense | (6,679) | (2,218) | |||||||||||||||||||||
|
Total other (expense) income
|
(420) | 5,192 | |||||||||||||||||||||
|
Loss before income taxes
|
(45,763) | (53,115) | |||||||||||||||||||||
| Provision for income taxes | 817 | 448 | |||||||||||||||||||||
|
Net loss
|
$ | (46,580) | $ | (53,563) | |||||||||||||||||||
| (1) Includes stock-based compensation expense as follows: | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Marketplace and service cost of revenue (excluding depreciation & amortization) | $ | 223 | $ | 294 | $ | 809 | $ | 753 | |||||||||||||||
| Operations and technology | 3,181 | 4,517 | 11,532 | 11,767 | |||||||||||||||||||
| Selling, general, and administrative | 7,899 | 13,449 | 30,990 | 35,535 | |||||||||||||||||||
| Stock-based compensation expense | $ | 11,303 | $ | 18,260 | $ | 43,331 | $ | 48,055 | |||||||||||||||
| (2) Includes acquired intangible asset amortization as follows: | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Depreciation and amortization | $ | 2,595 | $ | 3,390 | $ | 7,959 | $ | 8,616 | |||||||||||||||
| (3) Includes litigation-related costs as follows: | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Selling, general, and administrative | $ | - | $ | - | $ | 1,100 | $ | 1,553 | |||||||||||||||
| (4) Includes amortization of capitalized stock based compensation as follows: | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Depreciation and amortization | $ | 1,626 | $ | 1,247 | $ | 4,593 | $ | 3,155 | |||||||||||||||
| (5) Includes acquisition-related costs as follows: | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Selling, general, and administrative | $ | - | $ | 214 | $ | 403 | $ | 3,520 | |||||||||||||||
| (6) Includes other adjustments as follows: | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Operations and technology | $ | 66 | $ | 46 | $ | 66 | $ | 46 | |||||||||||||||
| Selling, general, and administrative | 1,343 | 501 | 1,343 | 737 | |||||||||||||||||||
| Other adjustments | $ | 1,409 | $ | 547 | $ | 1,409 | $ | 783 | |||||||||||||||
| (7) Includes Tricolor bankruptcy losses as follows: | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Selling, general, and administrative | $ | 18,711 | $ | - | $ | 18,711 | $ | - | |||||||||||||||
Comparison of the three months ended September 30, 2025 and 2024
Revenue
Marketplace and Service Revenue
| Three months ended September 30, | $ Change |
% Change
|
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Marketplace and service revenue | $ | 176,510 | $ | 155,908 | $ | 20,602 | 13 | % | |||||||||||||||
The increase was primarily driven by an increase in other marketplace revenue which is earned from providing transportation and financing services. Auction marketplace revenue from our Marketplace Buyers and Marketplace Sellers increased as well. For the three months ended September 30, 2025 compared to the three months ended September 30, 2024, auction marketplace revenue increased to $87.8 million from $84.9 million and other marketplace revenue increased to $80.3 million from $62.7 million. Revenue increases in the current quarter were primarily volume-driven and also impacted by higher buyer fee rates for the three months ended September 30, 2025 compared to the prior year period. The volume of Marketplace Units sold on the Marketplace Platform increased to 218,065 for the three months ended September 30, 2025 from 198,354 for the comparable prior year period which is an indicator of increased overall customer engagement. The increase in other marketplace revenue was primarily related to an increase in the revenue earned from the transportation of vehicles due to an increase in the number of units transported. The wholesale automotive industry continues to transition to digital transactions, with an increasing amount of customers transacting digitally versus at physical auction houses. This industry transition, and our position as a leader in the area of digital wholesale automotive auctions, continues to drive more business to our Marketplace Platform. The average total revenue per Marketplace Unit increased for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to the aforementioned higher buyer rates and customers adding more optional ancillary services to the auction such as transportation services and financing services which resulted in increase to both auction marketplace and other marketplace revenue.
Customer Assurance Revenue
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Customer assurance revenue | $ | 23,051 | $ | 15,421 | $ | 7,630 | 49 | % | |||||||||||||||
The increase was mainly driven by an increase in Go Green assurance revenue, driven by increases in the estimated fair value of the Go Green offering per unit and an increase in units that elected the Go Green offering. For the three months ended September 30, 2025 compared to the three months ended September 30, 2024, Go Green assurance revenue increased to $19.4 million from $13.5 million. Other customer assurance revenue increased to $3.7 million for the three months ended September 30, 2025 from $1.9 million for the three months ended September 30, 2024 due to an increase in units sold through our price guarantee sales.
Operating Expenses
Marketplace and Service Cost of Revenue
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Marketplace and service cost of revenue (excluding depreciation & amortization) | $ | 70,859 | $ | 67,064 | $ | 3,795 | 6 | % | |||||||||||||||
| Percentage of revenue | 36 | % | 39 | % | |||||||||||||||||||
The increase primarily consisted of higher costs related to generating other marketplace revenue, partially offset by a decrease in data services cost of revenue. For the three months ended September 30, 2025 compared to the three months
ended September 30, 2024, total cost attributed to generating auction marketplace revenue increased to $17.6 million from $15.8 million. The increase in auction marketplace cost of revenue is due to increased units sold through our marketplace. Other marketplace cost of revenues increased to $56.3 million for the three months ended September 30, 2025, compared to $46.2 million for the three months ended September 30, 2024, primarily due to an increase in the units transported. These increases were partially offset by a $7.6 million legal settlement benefit recognized in the three months ended September 30, 2025, which reduced data services cost of revenue by a corresponding amount. For the three months ended September 30, 2025 data services cost of revenue was a benefit of $2.9 million, compared to an expense of $5.1 million in the comparable prior year period. Marketplace and service costs of revenues as a percentage of revenue decreased during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to the impact of the legal settlement.
Customer Assurance Cost of Revenue
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Customer assurance cost of revenue (excluding depreciation & amortization) | $ | 22,098 | $ | 14,176 | $ | 7,922 | 56 | % | |||||||||||||||
| Percentage of revenue | 11 | % | 8 | % | |||||||||||||||||||
The increase primarily consisted of costs attributable to our Go Green assurance offerings driven by an increase in the number of arbitration claims due to increased volume of completed auctions where the customer elected the Go Green offering, and an increase in arbitration cost per unit sold. For the three months ended September 30, 2025 compared to the three months ended September 30, 2024, Go Green assurance cost of revenue increased to $18.1 million from $12.9 million. Other assurance cost of revenue also increased to $4.0 million for the three months ended September 30, 2025, compared to $1.3 million for the three months ended September 30, 2024 due to an increase in the current quarter in units sold through our price guarantee sales compared to the prior period . Customer assurance cost of revenue as a percentage of revenue increased during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to the aforementioned increases in arbitration claim volume and arbitration costs per unit sold.
Operations and Technology Expenses
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Operations and technology | $ | 46,526 | $ | 42,539 | $ | 3,987 | 9 | % | |||||||||||||||
| Percentage of revenue | 23 | % | 25 | % | |||||||||||||||||||
The increase was primarily due to higher personnel-related costs. For the three months ended September 30, 2025 compared to the three months ended September 30, 2024, personnel-related costs increased to $38.0 million from $36.3 million as a result of investment in our internal product and technology capabilities to enable future growth initiatives. Software and technology costs increased to $5.7 million from $4.2 million in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 as a result of continued investment in our technology and infrastructure amid ongoing business growth. Other expenses increased to $2.9 million from $2.0 million in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Operations and technology expense as a percentage of revenue decreased during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 as we continued our efforts to effectively manage costs while growing revenue.
Selling, General, and Administrative Expenses
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Selling, general, and administrative | $ | 72,826 | $ | 54,973 | $ | 17,853 | 32 | % | |||||||||||||||
| Percentage of revenue | 36 | % | 32 | % | |||||||||||||||||||
The increase was primarily due to higher non-personnel related costs. Non-personnel expenses in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 increased to $32.6 million from $9.0 million primarily due to the $18.7 million Tricolor bankruptcy reserve described in the Recent Developments section above. Increased bad debt provision charges on our finance receivable portfolio unrelated to Tricolor during the three months ended September 30, 2025 drove the remainder of the increase compared to the three months ended September 30, 2024. For the three months ended September 30, 2025 compared to the three months ended September 30, 2024, personnel-related costs decreased to $40.2 million from $46.0 million, primarily as a result of efforts to efficiently manage spending on both internal and contracted headcount. Selling, general, and administrative expenses increased as a percentage of revenue during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to the Tricolor bankruptcy reserve described above. Absent this charge related to Tricolor, selling, general and administrative expenses decreased as a percentage of revenue during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 as we continued our efforts to effectively manage costs while growing revenue.
Depreciation and Amortization
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Depreciation and amortization | $ | 10,969 | $ | 9,716 | $ | 1,253 | 13 | % | |||||||||||||||
| Percentage of revenue | 5 | % | 6 | % | |||||||||||||||||||
The increase was primarily due to an increase of $1.8 million in amortization of internal-use software costs due to the placing of internal-use software projects into service and the subsequent recognition of amortization expense. Depreciation and amortization as a percentage of revenue decreased during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 as we continue to grow revenue at a faster pace than depreciation and amortization expense increases.
Interest Income
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Interest income | $ | 2,218 | $ | 2,050 | $ | 168 | 8 | % | |||||||||||||||
Interest income is generated by our cash and cash equivalents as well as our marketable securities portfolio. Interest income increased during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Interest Expense
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Interest expense | $ | (2,483) | $ | (1,077) | $ | (1,406) | 131 | % | |||||||||||||||
The increase was primarily driven by the interest and fees related to the Warehouse facility. The increase in interest expense on the Warehouse facility during the three months ended September 30, 2025 was due to a higher average balance of Warehouse facility borrowings as we did not draw on our Warehouse facility until late in the third quarter of 2024.
Provision for Income Taxes
| Three months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
|
Provision for (benefit from) income taxes
|
$ | 483 | $ | (137) | $ | 620 | (453) | % | |||||||||||||||
Our effective tax rate was approximately (2)% and 1% for the three months ended September 30, 2025 and 2024, respectively. The principal differences between the federal statutory rate and the effective tax rate are related to state taxes, foreign taxes and credits and the non-recognition of tax benefits for certain entities in a loss position for which a full valuation allowance has been recorded.
Comparison of the nine months ended September 30, 2025 and 2024
Revenue
Marketplace and Service Revenue
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Marketplace and service revenue | $ | 518,442 | $ | 429,848 | $ | 88,594 | 21 | % | |||||||||||||||
The increase was primarily driven by an increase in auction marketplace revenue from our Marketplace Buyers and Marketplace Sellers, as well as increases in revenue earned from transportation and financing services. For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, auction marketplace revenue increased to $270.0 million from $227.7 million and other marketplace revenue increased to $223.4 million from $177.7 million. Revenue increases were primarily volume-driven and also impacted by higher buyer fee rates for the nine months ended September 30, 2025 compared to the prior year period. The volume of Marketplace Units sold on the Marketplace Platform increased to 636,519 for the nine months ended September 30, 2025 from 559,511 for the comparable prior year period which is an indicator of increased overall customer engagement. The increase in other marketplace revenue was primarily related to an increase in the revenue earned from the transportation of vehicles due to an increase in the number of units transported. The wholesale automotive industry continues to transition to digital transactions, with an increasing amount of customers transacting digitally versus at physical auction houses. This industry transition, and our position as a leader in the area of digital wholesale automotive auctions, continues to drive more business to our Marketplace Platform. The average total revenue per Marketplace Unit increased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to the aforementioned higher buyer fee rates and customers adding more optional ancillary services to the auction such as transportation services and financing services which resulted in increase to both auction marketplace and other marketplace revenue. To a lesser extent, acquisitions completed in 2024 drove increases in revenue in 2025 compared to 2024.
Customer Assurance Revenue
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Customer assurance revenue | $ | 57,519 | $ | 47,794 | $ | 9,725 | 20 | % | |||||||||||||||
The increase was primarily driven by an increase in Go Green assurance revenue, driven by increases in the estimated fair value of the Go Green offering per unit and an increase in units that elected the Go Green offering. For the
nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, Go Green assurance revenue increased to $50.4 million from $42.4 million. Other assurance revenue increased to $7.1 million for the nine months ended September 30, 2025 from $5.4 million for the nine months ended September 30, 2024 due to an increase in units sold through our price guarantee sales.
Operating Expenses
Marketplace and Service Cost of Revenue
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Marketplace and service cost of revenue (excluding depreciation & amortization) | $ | 214,580 | $ | 187,010 | $ | 27,570 | 15 | % | |||||||||||||||
| Percentage of revenue | 37 | % | 39 | % | |||||||||||||||||||
The increase primarily consisted of higher costs related to generating auction marketplace and other marketplace revenue, partially offset by a decrease in data services cost of revenue. For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, total cost attributed to generating auction marketplace revenue increased to $50.7 million from $39.6 million. The increase in auction marketplace cost of revenue is due to increased units sold through our marketplace and other costs of revenue associated with our prior year acquisitions. Other marketplace cost of revenues increased to $156.2 million for the nine months ended September 30, 2025, compared to $131.8 million for the nine months ended September 30, 2024, primarily due to an increase in the units transported. This was partially offset by a $7.6 million legal settlement benefit recognized in the nine months ended September 30, 2025, which reduced data services cost of revenue by a corresponding amount. For the nine months ended September 30, 2025 Data services cost of revenue was $7.6 million compared to $15.5 million for the nine months ended September 30, 2024. Marketplace and services cost of revenues as a percentage of revenue decreased during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to the benefit from the legal settlement.
Customer Assurance Cost of Revenue
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Customer assurance cost of revenue (excluding depreciation & amortization) | $ | 52,984 | $ | 41,548 | $ | 11,436 | 28 | % | |||||||||||||||
| Percentage of revenue | 9 | % | 9 | % | |||||||||||||||||||
The increase primarily consisted of costs attributable to our Go Green assurance offerings and was driven by an increase in the number of arbitration claims due to increased volume of completed auctions where the customer elected the Go Green offering, and an increase in the arbitration cost per unit sold. For the nine months ended September 30, 2025, Go Green assurance cost of revenue increased to $45.5 million from $37.8 million in the nine months ended September 30, 2024. For the nine months ended September 30, 2025, other assurance cost of revenue increased to $7.5 million from $3.7 million in the nine months ended September 30, 2024 due to an increase in the number of units sold through our price guarantee sales. Customer assurance cost of revenues as a percentage of revenue remained flat during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
Operations and Technology Expenses
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Operations and technology | $ | 136,517 | $ | 120,302 | $ | 16,215 | 13 | % | |||||||||||||||
| Percentage of revenue | 24 | % | 25 | % | |||||||||||||||||||
The increase is primarily due to higher personnel-related costs. For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, personnel-related costs increased to $113.3 million from $102.3 million as a result of headcount increases from our prior year acquisitions and investment in our internal product & technology capabilities to enable future growth initiatives. Software and technology expenses increased to $15.9 million from $12.1 million as a result of continued investment in our technology and infrastructure amid ongoing business growth. Other expenses increased to $7.4 million from $5.9 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Operations and technology expense as a percentage of revenue decreased during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 as we continued our efforts to effectively manage costs while growing our revenue.
Selling, General, and Administrative Expenses
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Selling, general, and administrative | $ | 184,816 | $ | 160,738 | $ | 24,078 | 15 | % | |||||||||||||||
| Percentage of revenue | 32 | % | 34 | % | |||||||||||||||||||
The increase primarily consisted of higher non-personnel-related other costs. Non-personnel expenses increased to $52.3 million in the nine months ended September 30, 2025 from $29.6 million in the nine months ended September 30, 2024 primarily due to the $18.7 million Tricolor bankruptcy reserve described in the Recent Developments section above. Increased bad debt provision charges on our finance receivable portfolio unrelated to Tricolor during nine months ended September 30, 2025 drove the remainder of the increase compared to the nine months ended September 30, 2024. For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, personnel-related costs increased to $132.5 million from $131.3 million, primarily as a result of headcount increases from our prior year acquisitions. Selling, general, and administrative expenses as a percentage of revenue decreased during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 as we continued our efforts to effectively manage costs while growing revenue.
Depreciation and Amortization
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Depreciation and amortization | $ | 32,407 | $ | 26,351 | $ | 6,056 | 23 | % | |||||||||||||||
| Percentage of revenue | 6 | % | 6 | % | |||||||||||||||||||
The increase was primarily due to an increase of $6.2 million in amortization of internal-use software costs due to the placing of internal-use software projects into service and the subsequent recognition of amortization expense. Depreciation and amortization as a percentage of revenue remained flat during the nine months ended September 30, 2025 and nine months ended September 30, 2024.
Interest Income
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Interest income | $ | 6,259 | $ | 7,410 | $ | (1,151) | (16) | % | |||||||||||||||
The decrease was primarily driven by a lower average balance in our marketable securities portfolio as we used the proceeds from sales and maturities of marketable securities to support acquisition activity in the prior year. In addition, a lower average interest rate during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 contributed to the decrease.
Interest Expense
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Interest expense | $ | (6,679) | $ | (2,218) | $ | (4,461) | 201 | % | |||||||||||||||
The increase was primarily driven by the interest and fees related to the Warehouse facility which was entered into on June 20, 2024. The increase in interest expense on the Warehouse facility during the nine months ended September 30, 2025 was due to a higher average balance on the Warehouse facility borrowing as we did not draw on our Warehouse facility until late in the third quarter of 2024.
Provision for Income Taxes
| Nine months ended September 30, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Provision for income taxes | $ | 817 | $ | 448 | $ | 369 | 82 | % | |||||||||||||||
Our effective tax rate was approximately (2%) and (1%) for the nine months ended September 30, 2025 and 2024, respectively. The principal differences between the federal statutory rate and the effective tax rate are related to state taxes, foreign taxes and credits and the non-recognition of tax benefits for certain entities in a loss position for which a full valuation allowance has been recorded.
Non-GAAP Financial Measures
Adjusted EBITDA
We report our financial results in accordance with GAAP. However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our performance.
Adjusted EBITDA is a financial measure that is not presented in accordance with GAAP. We believe that Adjusted EBITDA, when taken together with our financial results presented in accordance with GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of Adjusted EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business and evaluating our operating performance, as well as for internal planning and forecasting purposes.
Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not properly reflect capital commitments to be paid in the future; (ii)
although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (iii) it does not consider the impact of stock-based compensation expense; (iv) it does not reflect other non-operating income and expenses, including interest income and expense; (v) it does not consider the impact of any contingent consideration liability valuation adjustments; (vi) it does not reflect tax payments that may represent a reduction in cash available to us; (vii) it does not include the amortization of acquired intangible assets but it does include the revenue that these acquired intangible assets contribute to the enterprise; and (viii) it does not reflect other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net loss and other results stated in accordance with GAAP.
The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure stated in accordance with GAAP, for the periods presented:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income (loss) | $ | (24,465) | $ | (16,029) | $ | (46,580) | $ | (53,563) | |||||||||||||||
| Depreciation and amortization | 10,976 | 9,769 | 32,426 | 26,451 | |||||||||||||||||||
| Stock-based compensation | 11,303 | 18,260 | 43,331 | 48,055 | |||||||||||||||||||
| Interest expense (income), net | 265 | (973) | 420 | (5,192) | |||||||||||||||||||
| Provision for income taxes | 483 | (137) | 817 | 448 | |||||||||||||||||||
| Acquisition-related costs | - | 214 | 403 | 3,520 | |||||||||||||||||||
|
Litigation-related costs (1)
|
- | - | 1,100 | 1,553 | |||||||||||||||||||
|
Tricolor bankruptcy losses (2)
|
18,711 | - | 18,711 | - | |||||||||||||||||||
| Other | 1,378 | 66 | 508 | 1,246 | |||||||||||||||||||
| Adjusted EBITDA | $ | 18,651 | $ | 11,170 | $ | 51,136 | $ | 22,518 | |||||||||||||||
|
(1) Litigation-related costs are related to an anti-competition case which we do not consider to be representative of our ongoing operating performance
|
|||||||||||||||||||||||
|
(2) Operating expenses are related to the bankruptcy of an ACV Capital customer which we do not consider to be representative of our ongoing operating performance
|
|||||||||||||||||||||||
Non-GAAP Net income (loss)
We report our financial results in accordance with GAAP. However, management believes that Non-GAAP Net income (loss), a financial measure that is not presented in accordance with GAAP, provides investors with additional useful information to measure operating performance and current and future liquidity when taken together with our financial results presented in accordance with GAAP. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our continuing operations.
We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period. We exclude amortization of acquired intangible assets from the calculation of Non-GAAP Net income (loss). We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the underlying intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.
We exclude contingent consideration liability valuation adjustments associated with the purchase consideration of transactions accounted for as business combinations. We also exclude certain other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses, because we do not consider such amounts to be part of our ongoing operations nor are they comparable to prior periods nor predictive of future results.
Non-GAAP Net income (loss) is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in
accordance with GAAP. Some of these limitations include that: (i) it does not consider the impact of stock-based compensation expense; (ii) although amortization is a non-cash charge, the underlying assets may need to be replaced and Non-GAAP Net income (loss) does not reflect these capital expenditures; (iii) it does not consider the impact of any contingent consideration liability valuation adjustments; (iv) it does not include the amortization of acquired intangible assets but it does include the revenue that these acquired intangible assets contribute to the enterprise; and (v) it does not consider the impact of other one-time charges, such as acquisition-related and restructuring expenses, which could be material to the results of our operations. In addition, our use of Non-GAAP Net income (loss) may not be comparable to similarly titled measures of other companies because they may not calculate Non-GAAP Net income (loss) in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Non-GAAP Net income (loss) alongside other financial measures, including our net loss and other results stated in accordance with GAAP.
The following table presents a reconciliation of Non-GAAP Net income (loss) to net loss, the most directly comparable financial measure stated in accordance with GAAP, for the periods presented:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income (loss) | $ | (24,465) | $ | (16,029) | $ | (46,580) | $ | (53,563) | |||||||||||||||
| Stock-based compensation | 11,303 | 18,260 | 43,331 | 48,055 | |||||||||||||||||||
| Amortization of acquired intangible assets | 2,595 | 3,390 | 7,959 | 8,616 | |||||||||||||||||||
| Amortization of capitalized stock based compensation | 1,626 | 1,247 | 4,593 | 3,155 | |||||||||||||||||||
| Acquisition-related costs | - | 214 | 403 | 3,520 | |||||||||||||||||||
|
Litigation-related costs (1)
|
- | - | 1,100 | 1,553 | |||||||||||||||||||
| Other | 1,409 | 547 | 1,409 | 783 | |||||||||||||||||||
|
Tricolor bankruptcy losses (2)
|
18,711 | - | 18,711 | - | |||||||||||||||||||
| Non-GAAP Net income (loss) | $ | 11,179 | $ | 7,629 | $ | 30,926 | $ | 12,119 | |||||||||||||||
|
(1) Litigation-related costs are related to an anti-competition case which we do not consider to be representative of our ongoing operating performance
|
|||||||||||||||||||||||
|
(2) Operating expenses are related to the bankruptcy of an ACV Capital customer which we do not consider to be representative of our ongoing operating performance
|
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Liquidity and Capital Resources
We have financed operations since our inception primarily through our marketplace revenue, proceeds from sales of equity securities, and debt facilities.
As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents totaling $265.3 million, and investments in marketable securities totaling $50.7 million. We believe that our existing cash and cash equivalents, marketable securities, and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months and for the long-term. Our future capital requirements over the long-term will depend on many factors, including volume of sales with existing customers, expansion of sales and marketing activities to acquire new customers, timing and extent of spending to support development efforts and introduction of new and enhanced services. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations and financial condition.
As of September 30, 2025, our principal commitments primarily consist of long-term debt and leases for facilities. We have $4.5 million of lease obligations due within a year, and an additional $37.2 million of lease obligations due at various dates through 2039.
In order to compete successfully and sustain operations at current levels over the next 12 months, we will be required to devote a significant amount of operating cash flow to our human capital in the form of salaries and wages.
Additionally, we enter into purchase commitments for goods and services made in the ordinary course of business. These purchase commitments include goods and services received and recorded as liabilities as of September 30, 2025 as well as goods and services which have not yet been delivered or performed and have, therefore, not been reflected in our unaudited Condensed Consolidated Balance Sheets and unaudited Condensed Consolidated Statements of Operations. These commitments typically become due after the delivery and completion of such goods or services.
We settle transactions among buyers and sellers using the marketplace and, as a result, the value of the vehicles passes through our balance sheet. Because our receivables typically have been, on average, settled faster than our payables, our cash position at each balance sheet date has been bolstered by marketplace float. Changes in working capital vary from quarter-to-quarter as a result of Marketplace GMV and the timing of collections and disbursements of funds related to auctions completed near period end.
Our Debt Arrangements
2021 Revolver
On August 24, 2021, ACV entered into a revolving credit facility (the "2021 Revolver"). The Revolver was established to provide general financing to us and is secured by substantially all of our assets except for certain finance receivables. As of September 30, 2025, the maximum borrowing capacity under the Revolver is $250.0 million and includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time. Through June 26, 2025, the interest rate on the Revolver was, at our option, either (a) the Secured Overnight Financing Rate ("SOFR") (or a replacement rate established in accordance with the terms of the credit agreement for the 2021 Revolver) subject to a 0.00% SOFR floor, plus a margin of 2.75% per annum plus an additional credit spread adjustment of 0.11% for daily and one-month terms, 0.26% for three-month terms and 0.43% for six-month terms or (b) the Alternate Base Rate plus a margin of 1.75% per annum. The Alternate Base Rate was defined as the highest of (a) the Wall Street Journal prime rate, (b) the NYFRB rate plus 0.5% and (c) 1.00% plus the adjusted SOFR rate for a one-month interest period.
On June 26, 2025, we entered into Amendment No. 4 (the " Fourth Amendment") to the 2021 Revolver which modifies the credit agreement (i) to increase the committed amount of our revolving credit facility thereunder from $160 million to $250 million, (ii) to extend the maturity date thereof from August 24, 2026 to June 26, 2030, (iii) to modify our minimum total revenue financial covenant to take into account such maturity date extension, (iv) to include a new maximum total net leverage ratio that will be effective as of the earlier of five business days after our election and July 30, 2027, as more particularly described in the Revolving Credit Agreement, as amended (the "Covenant Conversion Date"), after which our minimum liquidity and minimum total revenue financial covenants will no longer be applicable, (v) to provide for more favorable pricing of the loans on and after the Covenant Conversion Date, and (vi) to amend certain other items in connection with the foregoing. Borrowings under the 2021 Revolver will continue to bear interest, at our option, at either the Term SOFR Rate, subject to a 0.00% floor, or the Alternate Base Rate plus a margin equal to the Applicable Rate. Pursuant to the Fourth Amendment, the Applicable Rate is (x) 2.75% prior to the Covenant Conversion Date and 2.500% thereafter for loans accruing interest at the Term SOFR Rate and (y) 1.750% prior to the Covenant Conversion Date and 1.500% thereafter for loans accruing interest at the Alternate Base Rate, in each case, subject to the terms of the Credit Agreement.
From and after the Covenant Conversion Date, we will be subject to a maximum total net leverage ratio covenant of (i) 4.0 to 1.0 for any measurement period ending on or prior to the second fiscal quarter following June 30, 2027 and (ii) 3.5 to 1.0 thereafter.
As of September 30, 2025, $100.0 million was drawn under the 2021 Revolver with an interest rate of 9.00%, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.3 million.
Warehouse Facility
On June 20, 2024, we entered into a revolving credit and security agreement with CitiBank, NA, providing for a revolving warehouse facility (the "Warehouse Facility") with a maximum principal amount of $125.0 million. The revolving feature on the facility ends on June 20, 2026 and the facility matures twelve months later, unless sooner terminated or extended in accordance with its terms. The Warehouse Facility was established to provide liquidity to fund new originations of auto floorplan loans by ACV Capital. The facility is secured by all assets of ACV Funding, including the auto floorplan loans owned by it.
Advances under the Warehouse Facility funded by asset-backed commercial paper conduit through the issuance of commercial paper notes will bear interest generally at a rate equivalent to the weighted average annual rate of all commercial paper notes issued by the commercial paper conduit to fund its advances, plus a margin of 3.00%. Advances funded by lenders that are not commercial paper conduits, or by commercial paper conduits funded through means other than the issuance of commercial paper notes, will bear interest generally at a rate equal to (i) Term SOFR for a period of one-month (subject to a 0.00% floor), plus 0.11448% or, in certain circumstances, the Alternate Base Rate, plus (ii) a margin of 3.00%. The Alternate Base Rate is the highest of (a) the prime rate quoted in the Wall Street Journal, (b) the NYFRB rate plus 0.50% and (c)(i) 1.00% plus (ii) the Term SOFR rate for a one-month interest period. The interest rate may be increased under certain circumstances, including upon the occurrence of an early amortization event or event of default under the warehouse documentation. ACV Funding must also pay upfront any unused fees in connection with the facility. As of September 30, 2025 borrowings under the Warehouse Facility were $120.0 million with an interest rate of 7.32%.
We were in compliance with all such applicable covenants as of September 30, 2025, and believe we are in compliance as of the date of this Quarterly Report on Form 10-Q.
Cash Flows from Operating, Investing, and Financing Activities
The following table shows a summary of our cash flows for the periods presented:
| Nine months ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by operating activities | $ | 90,592 | $ | 68,616 | |||||||
| Net cash (used in) provided by investing activities | (124,770) | 12,314 | |||||||||
| Net cash provided by (used in) financing activities | 75,215 | (10,927) | |||||||||
| Effect of exchange rate changes | 241 | (50) | |||||||||
| Net increase in cash, cash equivalents, and restricted cash | $ | 41,278 | $ | 69,953 | |||||||
Operating Activities
Our largest source of operating cash is cash collection from fees earned on our marketplace. Our primary uses of cash from operating activities are for personnel expenses, sales and marketing expenses and overhead expenses.
In the nine months ended September 30, 2025 and 2024, net cash provided by operating activities was $90.6 million and $68.6 million, respectively. Net cash provided by operating activities during the nine months ended September 30, 2025 and 2024 consisted primarily of an increase in accounts payable to sellers partially offset by an increase in accounts receivable from buyers. The increase in cash provided by operating activities during the nine months ended September 30, 2025 relative to the nine months ended September 30, 2024 is primarily due to a higher volume of transactions and the timing of collections and disbursements of funds related to auctions completed near period end.
Investing Activities
In the nine months ended September 30, 2025, net cash (used in) provided by investing activities was $(124.8) million and $12.3 million during the nine months ended September 30, 2024. Net cash used in investing activities during the nine months ended September 30, 2025 was primarily related to the increase in finance receivables and capitalized software development. Net cash provided by investing activities during the nine months ended September 30, 2024 was
primarily related to the sales/maturities of a portion of our marketable securities portfolio to support our business acquisition transactions, partially offset by cash paid for business acquisitions and capitalized software development.
The increase in net cash used in investing activities during the nine months ended September 30, 2025 relative to the nine months ended September 30, 2024 was primarily driven by an increase in our finance receivables portfolio and a decrease in the sales/maturities of marketable securities, partially offset by a decrease in acquisition activity.
Financing Activities
In the nine months ended September 30, 2025 and 2024, net cash provided by (used in) financing activities was $75.2 million and $(10.9) million, respectively. Net cash provided by financing activities during the nine months ended September 30, 2025 relates to proceeds, net of repayments, from long term debt, partially offset by payments of RSU tax withholding in exchange for common shares surrendered by RSU holders. Net cash used in financing activities during the nine months ended September 30, 2024 primarily related to payments of RSU tax withholding in exchange for common shares surrendered by RSU holders which was partially offset by proceeds from the exercise of stock options.
The increase in net cash provided by financing activities during the nine months ended September 30, 2025 relative to the nine months ended September 30, 2024 was primarily the result of increased net borrowings of long-term debt during the period.
Seasonality
The volume of vehicles sold through our auctions generally fluctuates from quarter to quarter. This seasonality is caused by several factors, including holidays, weather, the seasonality of the retail market for used vehicles and the timing of federal tax returns, which affects the demand side of the auction industry. As a result, revenue and operating expenses related to volume will fluctuate accordingly on a quarterly basis. In the fourth quarter, we typically experience lower used vehicle auction volume as well as additional costs associated with the holidays. Seasonally depressed used vehicle auction volume typically continues during the winter months through the first quarter. Typical seasonality trends may not be observed in periods where other external factors more significantly impact the industry.
Critical Accounting Estimates
Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe are reasonable under the circumstances, however, our actual results could differ from these estimates.
There have been no material changes to our critical accounting estimates as compared to those disclosed in the Annual Report.
ACV Auctions Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 22:10 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]