ACV Auctions Inc. Q1 FY2025 earnings call

Growth

• Strong execution in dealer wholesale business, gaining market share and expanding dealer partner network with differentiated marketplace experience.
• Record performance in ACV Transport and Capital with strong adoption of value-added dealer solutions.
• Exciting product roadmap execution, expanding TAM and competitive moat.

Innovation

• Leveraging AI across products, services, and operations, with technologies like machine learning and large language models transforming decision-making in automotive.
• AI-enabled marketplace features like condition-enhanced pricing, flexible auction durations, and tailored buying experiences.
• Commercial investments in integrations, damage estimation, and development of a commercial platform for remarketing centers.

Scale

• Focus on delivering strong top-line growth and increased adjusted EBITDA while investing in long-term growth objectives.

Q1 revenue was $183 million, growing 25% year-over-year. Auction and assurance revenue was 58% of total revenue, growing 28% year-over-year with 19% unit growth and auction and assurance ARPU of $500, up 8%. Marketplace services revenue was 37% of total revenue, growing 24% year-over-year, with ACV Transport and ACV Capital achieving record revenue. SaaS and data services comprised 5% of total revenue, growing 5% year-over-year.

• Second quarter revenue expected in the range of $193 million to $198 million, growing 20% to 23% year-over-year. Adjusted EBITDA expected in the range of $18 million to $20 million.
• Full year revenue expected in the range of $765 million to $785 million, growing 20% to 23% year-over-year. Adjusted EBITDA expected in the range of $65 million to $75 million.
• Guidance assumes dealer wholesale volumes will be approximately flat year-over-year for 2025, with conversion rates and wholesale price depreciation following normal seasonal patterns.

Q: You had raised fees in early March. Any signs of customer pushback or needing to incentivize more with ancillary services?

A: Very little pushback on pricing as pricing is fair and there's a great value-added proposition. No pressure from macro elements like tariffs on pricing.

Q: Outline different growth avenues under a tariff backdrop?

A: Growth from supply and demand with great product mix, continuing to take share, and value-added solutions like ClearCar, ACV MAX, ACV Transport, and ACV Capital driving demand.

Q: Have dealers' needs or focus shifted with tariffs? Any feedback on different things they're asking for?

A: Dealers focus on more inventory, interest in new products like ClearCar and updated ACV MAX, and willingness to adopt new tools and processes to buy more cars.

Q: Attach rates for ACV Capital and managing risk?

A: Attach rate well into double digits, target 25% attach rates. Minimize risk with VCIs validating car location and improved risk management capabilities, with bad debt expense down 50% YOY.

Q: Competitive dynamics in the market and feedback from dealers on options?

A: No significant changes, positioned as a neutral partner helping dealers buy more cars from consumers, with dealers using tools for buying from service drive and automated pricing.

Q: Tough compares in 2Q and pricing dynamics?

A: Tougher compares due to market factors, ARPU improved with buy fee increase, and strong execution with continued share taking and financial discipline