ACV Auctions Inc. Q4 FY2024 earnings call

• Strong execution in 2024 with Q4 revenue and adjusted EBITDA exceeding guidance, resulting in 32% full year revenue growth and first full year of adjusted EBITDA profitability.
• Gaining market share in the dealer wholesale business with over half of U.S. dealers transacting on the marketplace.
• Record performance in ACV Transportation and ACV Capital, along with growth of the dealer solutions suite.
• Executing on an AI-powered product roadmap to enhance competitive moat and expand TAM, with new AI features in ACV MAX for accurate pricing.
• Focus on 2025 to drive strong top-line growth, meaningful adjusted EBITDA expansion, and continue investing in long-term growth objectives.

Dealer Wholesale: Q4 revenue was $160 million, with full year revenue growth of 32%. GMV was nearly $10 billion in 2024, and 743,000 vehicles were sold in 2024, a 24% growth. ACV Transportation: Delivered over 30% revenue growth in 2024 with 410,000 deliveries. Revenue margin expanded 300 basis points, exceeding the midterm target of high teens. ACV Capital: Achieved accelerated year-over-year revenue growth in Q4 and full year revenue growth of 26%.

• First quarter 2025 revenue expected in the range of $180 million to $185 million, growth of 24% to 27% year-over-year; adjusted EBITDA expected in the range of $9 million to $11 million.
• Full year 2025 revenue expected in the range of $765 million to $785 million, growth of 20% to 23% year-over-year; adjusted EBITDA expected in the range of $65 million to $75 million.
• Assume dealer wholesale volumes will be approximately flat year-over-year in 2025, expect conversion rates and wholesale price depreciation to follow normal seasonal patterns, and revenue growth to exceed non-GAAP OpEx growth excluding cost of revenue and depreciation and amortization by approximately 500 basis points.

• Market conditions and competition pose uncertainties that could impact business performance. For example, the used-vehicle market's challenges and competitive landscape with other auction and marketplace companies.

Q: Talk about market share gains embedded in forward forecast and EBITDA balance between investment and growth.

A: George Chamoun noted assuming same consistent market share gains with a flattish wholesale market, and William Zerella discussed balancing investment for future growth while driving earnings improvement.

Q: Thoughts on flat market volumes and January's strong performance.

A: George Chamoun explained the range in guidance to account for mixed market data, with January being strong but February showing challenges, and predicting a flattish market for prudence.

Q: Advantages of recon network and acquisition plans.

A: George Chamoun highlighted broader TAM, data service offerings, technology for efficiency, and broader marketplace reach, with plans for greenfield locations and potential M&A.

Q: Pricing, stickiness of businesses, and competitive front.

A: George Chamoun mentioned room for price increases, strong retention with early customers and growing share, and confidence in partnership and differentiation against competitors.

Q: ACV MAX, ClearCar combo, and growth levers.

A: George Chamoun discussed partnership-building with data services, and plans to gradually expand off-platform financing and transportation services.

Q: Conversion rate, transportation margin.

A: George Chamoun noted Q4 conversion rates were slightly up, and transportation margins improved due to bundling and early stages of growth.

Q: Margin shape, wholesale volumes, and tariff scenarios.

A: William Zerella explained Q1 margin differences due to seasonality and investments, George Chamoun discussed assumptions on flat wholesale volumes and uncertainties around tariff impacts.