ACV Auctions Inc. Q3 FY2024 earnings call

• George Chamoun noted the company had record revenue and adjusted EBITDA in Q3, exceeding guidance, with strong market share gains in dealer wholesale and record performance for ACV transport and capital. They are raising full-year guidance.
• William Zerella highlighted Q3 financial results with revenue above guidance, adjusted EBITDA above high end, and margin improvements. Auction and assurance revenue grew 52%, marketplace services revenue grew 39%.
• Operational highlights: ACV Transportation had record revenue, 95% lane coverage via AI, and 20% margin. ACV Capital is piloting a new financing offering. Investments in marketplace engagement, commercial tech, ACV MAX suite, and ClearCar are driving growth and innovation.

Revenue for the third quarter was $171 million, growing 44% year-over-year. They sold 198,000 vehicles, a 32% year-over-year increase. GMV grew 17% year-over-year. ACV Transportation delivered record revenue in Q3 with 108,000 deliveries, 95% lane coverage via AI, 27% volume growth, and a 20% revenue margin (a record, expanding 170 basis points year-over-year). ACV Capital saw solid growth. Auction and assurance revenue was 59% of total revenue, growing 52% year-over-year with 32% unit growth and an ARPU of $506, up 15% year-over-year. Marketplace services revenue was 37% of total revenue, growing 39% year-over-year. SaaS and data services made up 5% of total revenue with positive growth.

• Fourth quarter guidance: Revenue expected to be in the range of $152 million to $156 million (28%-32% year-over-year growth), adjusted EBITDA in the range of $2 million to $4 million, with approximately $2 million revenue and $1 million EBITDA impact from hurricanes in the Southeastern regions.
• Full-year 2024 guidance: Revenue raised to $630 million to $634 million (31%-32% year-over-year growth), adjusted EBITDA raised to $25 million to $27 million, driven by strong Q3 performance and organic growth.

• Used vehicle shortages remain a material headwind for the dealer wholesale market as dealers retain a higher percentage of trades for retail.
• Forward-looking statements are subject to risks and uncertainties detailed in SEC filings and the press release.
• Impact of hurricanes on revenue and EBITDA in the fourth quarter.

Q: Chris Pierce asked about auction and assurance ARPU and how the business compares to larger players like Carvana.

A: William Zerella said not to read too much into ARPU segregation and George Chamoun stated ACV is building technology to empower independent dealers against larger players.

Q: Nick Jones asked about pricing and midterm targets, and interest rates.

A: George Chamoun discussed pricing progress towards competitive levels and midterm target of ~$500 ARPU, and George Chamoun talked about market conditions and potential tailwinds in 2026.

Q: Bob Labick asked about organic growth drivers and learnings from acquisitions.

A: William Zerella cited share gains, better-than-expected conversion rates, and strong marketplace services; George Chamoun discussed learning from commercial consignor locations and planned technology implementations.

Q: Rajat Gupta asked about incremental margins and market share acceleration.

A: William Zerella discussed normalized organic target of 40% incremental EBITDA and George Chamoun talked about seasonality impacting conversion rates in Q4.

Q: Michael Graham asked about commercial wholesale market depth and profitability.

A: George Chamoun said commercial volume is over 5% of total business, with progress in repos and rental, and EBITDA per unit similar to dealer wholesale.

Q: Naved Khan asked about conversion rates and transportation margin sequential change.

A: George Chamoun said conversion rates benefited from market conditions and technology enhancements, and transportation margin improvement was due to AI pricing and bundling.

Q: Steven McDermott asked about market share vs wallet share and AV impact.

A: George Chamoun talked about regional and national market share gains and AVs as part of the commercial fleet category.

Q: John Healy asked about commercial buckets and international expansion.

A: George Chamoun said most commercial volume is from repos and rental, and ACV is in early stages of international expansion, starting with Europe.

Q: Glenn Shell asked about trade to wholesale mix.

A: George Chamoun said trade to wholesale mix improved marginally in Q3 but will take time to normalize with used car supply recovery.

Q: John Colantuoni asked about market expansion and Canada plans.

A: George Chamoun discussed market expansion in Texas and other regions, and early stages of international expansion, starting with Europe.