LIQUIDITY SERVICES INC Q3 FY2025 earnings call

• Delivered record GMV, strong adjusted EBITDA and adjusted EPS growth due to differentiated positioning as leading circular economy e-commerce marketplace and asset-light business model.
• GovDeals segment set new records in GMV, revenue, and direct profit margin, added new sellers and buyers.
• CAG segment had double-digit organic growth in GMV and direct profit, heavy equipment category saw rapid growth.
• RSCG segment expanded relationships, added new clients, and established online B2C auctions in Columbus.
• Machinio & Software Solutions business segment continued to grow share with over 5,000 paying customers.
• Technology and product teams integrating machine learning, data analytics, and AI assisted tools into marketplace platform.

GovDeals segment: GMV up 1%, revenue up 8%, direct profit margin up 7%, each setting a new quarterly record. CAG segment: GMV up 12%, revenue up 6%, direct profit up 14%, heavy equipment category GMV more than doubled year-over-year. RSCG segment: double-digit year-over-year growth in direct profit, added several new clients. Machinio & Software Solutions business segment: revenue up 27%, segment direct profit up 23%, over 5,000 paying customers in over 100 countries.

• Expect GMV in Q4 fiscal year 2025 to be in the range of $355 million to $390 million.
• GAAP net income expected in the range of $5 million to $8 million with corresponding GAAP diluted earnings per share ranging from $0.15 to $0.25 a share.
• Non-GAAP adjusted diluted earnings per share estimated in the range of $0.24 to $0.34 per share.
• Non-GAAP adjusted EBITDA estimated to range from $13 million to $16 million.

• Economic uncertainty related to tariff policies and higher interest rates.
• Some assets experiencing softer prices or delays due to tariffs, affecting certain verticals like biopharma, semiconductor, and machine tools.

Q: Discuss tariff impacts.

A: Regarding international activity, daily or weekly changing commentary in international markets may require buyers to hit the pause button to assess the total landed cost of used equipment in certain verticals. There was a few blips in Canada that seemed to have normalized. Vehicle prices have been soft, yet we're getting record assets listed and sold on the marketplace.

Q: Give more detail on e-commerce program in Columbus.

A: Made an acquisition of Auction Software in January, and we're piloting a consumer auction experience in the Columbus, Ohio market. We know there's a huge opportunity selling value priced goods to consumers, and our Auction Software platform addresses that. We'll be able to control the flows of goods there to confirm recovery rates, and with the rollout of the software and a brand that will be announced later in the quarter.

Q: When do new business development wins start impacting?

A: Depending upon who the client is and the breadth of what they want to do, there can be a lag anywhere from a few months to 4, 5 months. But a lot of this MVD is showing up right now, especially in the heavy equipment vertical. You'll see more vehicles flowing from places like New York City, Buffalo, New York, general services out of Albany, New York, as we move through the remainder of calendar 2025.

Q: Is the Columbus e-commerce program the first foray into B2C?

A: Correct. This would be the first deployment of our consumer auction software through the acquisition of a business called Auction Software and allows us to create a vibrant the direct-to-consumer channel.

Q: Is the Columbus program targeted to specialty items like wine?

A: It cross pollinates nicely with a range of products that have a higher retail value per unit and have relatively good condition characteristics. And the testing shows that it's accretive to our direct profit and EBITDA margins by presenting these items in a scalable consumer auction online channel to the direct user and removing a leg of transportation in the process.