ACV Auctions Q2 2025 Earnings Report

ACV Auctions EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.07
• Beat/Miss: N/A
• One Year Ago EPS: $0.02

ACV Auctions Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $196.19 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

ACV Auctions Announcement Details

• Quarter: Q2 2025
• Date: 8/11/2025
• Time: After Market Closes
• Conference Call Date: Monday, August 11, 2025
• Conference Call Time: 5:00PM ET

ACV Auctions (NASDAQ:ACVA) operates a digital marketplace that connects buyers and sellers for the online auction of wholesale vehicles. The company's marketplace platform includes digital marketplace, which connects buyers and sellers by providing online auction, which facilitates real-time transactions of wholesale vehicles; Run List for pre-filtering and pre-screening of vehicles up to 24 hours prior to an auction taking place; ACV transportation service to enable the buyers to see real-time transportation quotes and status reports of the vehicle; ACV capital, a short-term inventory financing services for buyers to purchase vehicles; and Go Green's seller assurance service for against claims related to defects in the vehicle. It also provides remarketing centers, which offers value-added services, such as vehicle reconditioning and storage for dealers and commercial partners. In addition, the company offers data services, including True360 report, which provides cosmetic and structural vehicle assessments integrated into vehicle history reports for dealer to make wholesale and retail transaction decisions on and off the marketplace; ACV market report provides transaction data and condition reports for comparable used vehicles, including pricing data from third-party sources and allows dealers to determine pricing and valuation strategies for used vehicles; and ACV MAX inventory management software enables dealers to manage their inventory and set pricing while turning vehicles. Further, it provides data and technology through inspection, such as condition reports, virtual lift solutions, apex device, and vehicle intelligence platform; and marketplace enablement, comprising MyACV application, private marketplaces, operations automation, live appraisals, and programmatic buying service. ACV Auctions Inc. was incorporated in 2014 and is headquartered in Buffalo, New York.

ACV Auctions Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 revenue hit $194 million, up 21% year-over-year, with adjusted EBITDA of $19 million at midpoint guidance and a 520 bp margin improvement.
• Neutral Sentiment: ACV trimmed 2025 revenue guidance by $5 million to $765–775 million (20–22% growth) due to macro crosscurrents, while maintaining the adjusted EBITDA midpoint.
• Positive Sentiment: ACV’s AI-driven Guaranteed Sales account for 15% of units with a 100% conversion rate, and pilots for Project Viper and VirtualLab 2.0 remain on track for 2026 launch.
• Positive Sentiment: ACV Transportation set records with a 370 bp margin expansion to the low 20s, and ACV Capital revenue grew 60% in Q2.
• Positive Sentiment: Data services traction continues with ClearCar live in over 1,600 rooftops and AC Max bookings rising 50% year-over-year.

Presentation

[Operator]

Greetings, and welcome to the ACV Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Tim Fox, Vice President of Investor Relations. Please go ahead.

[Tim Fox, VP - IR & Strategic Finance at ACV Auctions]

Good afternoon, and thank you for joining ACV's conference call to discuss our second quarter twenty twenty five financial results. With me on the call today are George Chamone, Chief Executive Officer and Bill Zarella, Chief Financial Officer. Before we get started, please note that today's comments include forward looking statements, including statements regarding future financial guidance. These forward looking statements are subject to risks and uncertainties and involve factors that could cause actual results to differ materially from those expressed or implied by such statements. A discussion of the risks and uncertainties related to our business can be found in our SEC filings and in today's press release, both of which can be found on our Investor Relations website.

[Tim Fox, VP - IR & Strategic Finance at ACV Auctions]

During this call, we will discuss both GAAP and non GAAP financial measures. A reconciliation of GAAP to non GAAP financial measures is provided in today's earnings materials, which can also be found on our Investor Relations website. And with that, let me turn the call over to George.

[George Chamoun, CEO & Director at ACV Auctions]

Thanks, Tim. Good afternoon, everyone, and thank you for joining us. We are very pleased with our team's execution in the second quarter, delivering revenue and adjusted EBITDA within our guidance range, despite challenging market conditions in the back half of the quarter. Record revenue and continued cost discipline resulted in adjusted EBITDA margins more than doubling year over year, underscoring the scale in our business model. Our results were driven by three key factors.

[George Chamoun, CEO & Director at ACV Auctions]

First, solid execution in our dealer wholesale business. We continue to gain market share and expand our dealer partner network by delivering a highly differentiated marketplace experience. Second, we had another record quarter for ACV Transport and ACV Capital, along with strong adoption of our value added dealer solutions. And third, we further executed on an exciting product roadmap for our dealer and commercial partners, expanding our TAM and growing our competitive moat. As Bill will detail later, we've updated our 2025 revenue guidance to reflect ongoing cross currents in the broader macro environment and are still expecting to deliver strong top line growth of at least 20% year over year.

[George Chamoun, CEO & Director at ACV Auctions]

Furthermore, we have maintained the midpoint of adjusted EBITDA guidance, reflecting our commitment to deliver significant margin expansion while continuing to invest in our long term growth objectives. We're confident that executing on this profitable growth strategy will create significant long term shareholder value. With that, let's turn to a recap of our results on Slide four. Q2 revenue was $194,000,000 and grew 21% year over year. We sold 210,000 vehicles, which was 13% year over year growth despite the sharp market deceleration throughout the quarter.

[George Chamoun, CEO & Director at ACV Auctions]

Next on Slide five, we will again focus our discussion around the three pillars of our strategy to maximize long term shareholder value, growth, innovation, and scale. I'll begin with growth. On slide seven, we highlight how ACV is leveraging AI across our suite of solutions, beginning with our marketplace. We provide dealers with highly accurate condition adjusted pricing guidance, enabling them to set attractive reserve prices, which increases buyer engagement and conversion. Seller experience is further enhanced with flexible auction durations and scheduling.

[George Chamoun, CEO & Director at ACV Auctions]

And our new in auction tool allows sellers to set their own start price for each vehicle and remove the reserve price, which also drives buyer engagement and conversion. On the demand side, the buying experience is tailored across buyer personas, and we're optimizing the bidding experience by providing AI enabled recommendations informed by dealer preferences and current market factors. Turning to slide eight. Let's review our marketplace service offerings beginning with ACV Transportation. The transportation team had another quarter of strong execution, setting records for both quarterly revenue and transports delivered.

[George Chamoun, CEO & Director at ACV Auctions]

AI optimized pricing continues to drive strong growth and operating efficiency. Revenue margin expanded three seventy basis points year over year in Q2 and was in line with our midterm targets in the low 20s. Lastly, our off platform transportation service continues to gain traction from our dealer partners. These new value added services increase transport network densities and create additional long term growth vectors. Turning to slide nine.

[George Chamoun, CEO & Director at ACV Auctions]

The ACV Capital team also delivered very strong results, with over 60% revenue growth in Q2. This was the third quarter in a row of accelerated growth, which supports our confidence that we continue to scale ACV Capital while managing risk. The ACV Capital team is expanding its TAM by delivering new value added offerings to our dealers, including off platform transactions such as helping them buy vehicles from consumers, creating additional growth levers for our business. Lastly, I'll wrap up the growth section on Slide 10 with data service highlights. Market traction for ClearCar remains strong, with over 1,600 active rooftops as of Q2.

[George Chamoun, CEO & Director at ACV Auctions]

ClearCar service, which enables dealers to provide instant appraisals and offers to consumers in their service lanes, is particularly attractive in the current supply constrained market. One proof point is our success with a top five dealer group that has deployed clear car service at over 150 rooftops with plans to expand nationally this year. The AC Max team delivered another strong quarter, reflecting the investment we've made to advance its features. Through Q2, bookings were up 50 compared to 2024, driven by a number of large competitive displacements. Our strategy to bundle data services with ACV wholesale is gaining traction, creating another exciting long term growth lever for ACV.

[George Chamoun, CEO & Director at ACV Auctions]

Again, this quarter, we're excited to share feedback from one of our dealer partners, Mercedes Benz of Bakersfield, California, which is using ACV's full suite of offerings. We posted a video on our IR website highlighting the significant value they're deriving from ACV solutions. Next on slide 11, I'll address the second element of our strategy to drive long term shareholder value, innovation. Turning to slide 12, let's go deeper into how we leverage ACV AI across our products, services, and operations. Using machine learning, we are fusing inspection and dynamic market data to provide pricing for every vehicle in real time within ACV's pricing platform.

[George Chamoun, CEO & Director at ACV Auctions]

A great example is ACV Guaranty, one of the fastest growing channels on our marketplace, accounting for over 15% of units sold exiting Q2. Our guaranteed sales accelerate better engagement, remove market risk for our sellers, and deliver a 100% conversion rate. We're confident this highly differentiated offering will be another key lever in driving market share gains while maintaining attractive unit economics. We are expanding our competitive edge with AI driven next generation products like Virtual Lift two point zero and Project Viper. On Slide 13, we highlight these next generation products in action at one of our dealer partners.

[George Chamoun, CEO & Director at ACV Auctions]

We kicked off several pilots in Q2 and feedback has been very positive. Today, our dealer partners have run over 10,000 vehicles through Viper. We're leveraging this data to fine tune our hardware and software as we expand our pilots over the next few quarters. We believe we're on track for commercial launch for both Project Viper and VirtualLab two point zero in 2026. On slide 14, we highlight another growth lever powered by ACV AI.

[George Chamoun, CEO & Director at ACV Auctions]

Our AI backed platform is capable of processing trade ins at scale with repeatable guaranteed pricing in under a second. We're taking pricing and guarantee capabilities on our marketplace and by our e commerce partners directly now to our dealer partners. We currently have five of the top 10 dealership groups in The U. S. Leveraging our pricing data to appraise trade ins and acquire vehicles from consumers.

[George Chamoun, CEO & Director at ACV Auctions]

Think of this as pricing as a service, which is another high margin revenue stream to support our growth objective, while expanding our relationship with these major dealer groups. Wrapping up on innovation, let's cover our commercial wholesale strategy on Slide 15. With our initial commercial platform nearing completion, we are excited to announce the upcoming opening of our first greenfield and marketing center located in Houston, Texas. Our commercial platform includes capabilities to receive assignments from auto IMS, conduct commercial inspections, create work orders and repair estimates, and receive consignor approvals. We will leverage our technology by opening up additional greenfield locations to address the large commercial TAM, providing another long term growth lever for ACV.

[George Chamoun, CEO & Director at ACV Auctions]

With that, let me hand it over to Bill to take you through our financial results and how we're driving growth at scale.

[William Zerella, Chief Financial Officer at ACV Auctions]

Thanks, George, and thank you for joining us today. We are pleased with our Q2 financial performance. Along with record revenue, we delivered meaningful margin expansion and adjusted EBITDA growth, demonstrating the strength of our business model. On slide 17, let's begin with a recap of our second quarter results. Revenue of $194,000,000 grew 21% year over year and was within our guidance range, despite challenging market conditions in the back half of the quarter.

[William Zerella, Chief Financial Officer at ACV Auctions]

Adjusted EBITDA of $19,000,000 was at the midpoint of guidance, with margin improving five twenty basis points year over year. Finally, non GAAP net income was also at the midpoint of guidance with margin increasing four thirty basis points year over year. Next on slide 18, let's review additional revenue details. Auction and assurance revenue was 57% of total revenue and grew 20% year over year. This performance reflects 13% unit growth and auction and assurance ARPU of five twenty three dollars which grew 6%.

[William Zerella, Chief Financial Officer at ACV Auctions]

To add some context to unit growth in the quarter, we were pleased with strong listings performance that were in line with our expectations. However, weaker market conditions in the back half of the quarter resulted in lower than expected conversion rates, resulting in an approximate 500 basis point unit growth headwind. Marketplace services revenue was 39% of total revenue and grew 25% year over year, reflecting record revenue for ACV Transport and ACV Capital. Our SaaS and data services products comprise 4% of total revenue, with revenue approximately flat year over year. Next, I'll review Q2 costs on slide 19.

[William Zerella, Chief Financial Officer at ACV Auctions]

Non GAAP cost of revenue as a percentage of revenue decreased approximately 200 basis points year over year. The improvement was driven by Auction and Assurance results and by ACV Transport. Non GAAP operating expense, excluding cost of revenue, as a percentage of revenue decreased 300 basis points year over year. These results reflect our ongoing focus on expense discipline as we optimize and scale our business. Moving to slide 20, I'll frame our investment strategy as we drive profitable growth.

[William Zerella, Chief Financial Officer at ACV Auctions]

In 2025, we expect OpEx growth of approximately 11% to support our remarketing center strategy and commercial platform investments. Even with these growth investments, adjusted EBITDA margin is expected to increase by approximately 500 basis points year over year. Next, I will highlight our strong capital structure on slide 21. We ended Q2 with $3.00 $5,000,000 in cash and cash equivalents and marketable securities and $187,000,000 of debt. Note that our cash balance includes $198,000,000 of marketplace flow.

[William Zerella, Chief Financial Officer at ACV Auctions]

In the figure on the right, we highlight our strong operating cash flow for the 2025, which reflects adjusted EBITDA growth and margin expansion. Now turning to guidance on slide 22. Based on elevated trade retention rates observed in late Q2, we now expect that dealer wholesale volumes will be flat to down modestly year over year in 2025. In terms of conversion rates, we were pleased to see trends improve in July, and we currently expect normal seasonal patterns for the balance of the year. Wholesale price appreciation is also expected to follow normal seasonal patterns.

[William Zerella, Chief Financial Officer at ACV Auctions]

As George mentioned earlier, we are trimming our 2025 revenue guidance by $5,000,000 at the midpoint to reflect the ongoing macro crosscurrents. Revenue is now expected to be in the range of $765,000,000 to $775,000,000 growth of 20% to 22% year over year. At the midpoint of revenue guidance, we continue to expect market share gains in the mid teens, consistent with our midterm target model. We are maintaining the midpoint of adjusted EBITDA guidance with a range of 68,000,000 to $72,000,000 reflecting growth of approximately 150% year over year at the midpoint. We are now expecting non GAAP OpEx, excluding cost of revenue to grow approximately 11% year over year, resulting in a 200 basis point increase in incremental adjusted EBITDA margin versus our previous guidance.

[William Zerella, Chief Financial Officer at ACV Auctions]

For the third quarter, we're expecting revenue in the range of 198,000,000 to $2.00 $3,000,000 growth of 16% to 18% year over year against a tough comparison in Q3 'twenty four, which had revenue growth of 44. Adjusted EBITDA is expected to be in the range of 18,000,000 to $20,000,000 reflecting growth of approximately 70% year over year. And with that, let me turn it back to George.

[George Chamoun, CEO & Director at ACV Auctions]

Thanks, Bill. Before we take your questions, I will summarize. We are pleased with our strong execution in Q2 and especially proud of our ACV teammates that delivered these results. We continue to gain market share by attracting new dealer and commercial partners to our marketplace, while expanding to our addressable market, which positions ACV for attractive growth as market conditions improve. We are delivering on an exciting product roadmap powered by ACV AI to further differentiate ACV and drive operating efficiencies.

[George Chamoun, CEO & Director at ACV Auctions]

We are focused on achieving substantial adjusted EBITDA growth in 2025 and delivering on our midterm targets that we believe will drive significant shareholder value. We are committed to achieving these results while building a world class team to deliver on our goals. With that, I'll turn the call over to the operator to begin the Q and A.

[Operator]

Thank you. We'll now be conducting a question and answer session. Our first question is from Chris Pierce with Needham and Company.

[Chris Pierce, Senior Analyst at Needham & Company]

Hey. Good afternoon, everyone. Could you just kind of parse parse out from Bill's comments, the 500 bp unit growth headwind despite listings being in line with expectations? Does that mean dealers opted Well, does mean deal I'm assuming dealers opted to keep these vehicles because they weren't getting the price they wanted. Is that what you mean by higher retention rates?

[Chris Pierce, Senior Analyst at Needham & Company]

Or is higher retention rates something else, and this is or they're two different things. I just wanna confirm the kind of parse that a little bit.

[George Chamoun, CEO & Director at ACV Auctions]

Yeah. Hey, Chris. Yeah, two separate things, semi related, but let's call them two separate things. One is dealers, when you survey and you talk to dealers right now, they're keeping a higher percentage of cars, keeping more used cars. Need this inventory.

[George Chamoun, CEO & Director at ACV Auctions]

We're still overall, as an industry, as we spoke about coming into this year, working ourselves from a several million unit gap. So that broad industry challenge is going on. The specific headwind that Bill referenced on the call regarding conversion rate was more of, I would say, short term, just a few months with our expectations on what the the sell through rate was going to be the conversion rate on the platform versus what it was. But yes, these two things aren't directly related. Bill, don't if you're adding more.

[William Zerella, Chief Financial Officer at ACV Auctions]

Yeah, I think just to take you through the math, Chris, just so I understand what we're referencing with the 500 basis point headwind. So again, so our listings were consistent with our expectations and what we baked into our modeling. The difference in actual unit growth was attributable to lower conversion rates than we had initially anticipated and modeled through May and then especially in June. But that's the math behind the unit growth versus what our expectation was.

[George Chamoun, CEO & Director at ACV Auctions]

So your question of combining the two makes sense, meaning if you're going to keep some of them versus wholesaling them, some percentage of those lower conversion that they just kept the vehicle. It's not the whole story. But Chris, that is part of the story.

[Chris Pierce, Senior Analyst at Needham & Company]

Okay. And then just lastly, for me, can you talk about dynamics or competitive changes in the marketplace you're seeing? Or should we think of this as eightytwenty macro versus competitive or whatever kind of ratio you might want to put on that? I'd love to hear your thoughts there.

[George Chamoun, CEO & Director at ACV Auctions]

Yeah, I think the things we saw in the quarter was pretty much in line with what the industry saw. We get data from NAAA, AuctionNet and other data. And conversion rates came down the quarter pretty consistently, I would say for us and the competitors. So I would say we probably all saw similar trends, where you saw the pull forward, you saw a lot of activity in the beginning of the quarter, you saw a few different macro headwinds all happening. And so I would say the slight dip in conversion rate made sense now because I say that also confidently that conversion rates did come back up to start this quarter.

[George Chamoun, CEO & Director at ACV Auctions]

I'll think some of that is the market and some of that also could be the things we're doing with our no reserve sale and pushing the guarantee offering. But Chris, we did see the quarter start out stronger from a conversion rate perspective and actually see pretty healthy conversion rates. So, you know, all all good right now.

[Chris Pierce, Senior Analyst at Needham & Company]

Okay. Appreciate the detail. I'll pass it on.

[George Chamoun, CEO & Director at ACV Auctions]

Thank you.

[Operator]

Our next question is from Bob Labick with CJS Securities.

[Analyst]

Hi, this is Will on for Bob. Can you discuss the progress on your pricing engine and the benefits to auction liquidity from being able to have guaranteed pricing?

[George Chamoun, CEO & Director at ACV Auctions]

Yes, certainly. We were making a lot of great progress. Bill mentioned on the call, or I mentioned, one of us mentioned that we exited at around 15%.

[George Chamoun, CEO & Director at ACV Auctions]

And when we when you think about that progress, it's we're really proud of the progress where we're comfortable at the end of the day putting on putting a number on a vehicle that's really, let's call it, give or take within $75 of what the vehicle sells for. That's incredible. You're talking about a vehicle that could be 5,000, $10,000, $20,000, whatever the vehicle is. And our data set that we've trained condition is just the data set we've trained from all the inspections we've done and also the direct integrations we have with our dealers, DMS systems through our ACMAC system. The combination of those two data sets gives us a tremendous competitive edge.

[George Chamoun, CEO & Director at ACV Auctions]

So we think our sale, we hear us refer to it, it's a guarantee to the seller. It's no reserve to the buyer. We think the sale is going to grow pretty substantially over the next few years. Obviously, we're going to take our time doing it in a really smart way, but our confidence is going up. Bill, don't know if there's anything more you want to share that we could share at this point.

[William Zerella, Chief Financial Officer at ACV Auctions]

Yeah, I would just say in terms of the numbers again. So, we exited the quarter at about 15% of our unit volume was no reserve with these guaranteed sales. For the full quarter, though, it worked out to about 11% of volume, which was 200 bps above Q1. So we saw an acceleration exiting the quarter and that kind of continued through so far this quarter.

[Analyst]

Thank you. And what's next after the price guarantee in terms of new tech and data products?

[George Chamoun, CEO & Director at ACV Auctions]

Yeah, have three of the top five dealer groups either live or in beta using our data to help them price cars with consumers. I would say we have one of the largest marketplace companies in the world, Amazon, using our data set as well. It's becoming a true differentiator.

[George Chamoun, CEO & Director at ACV Auctions]

It's a way we think about aligning yourselves with the markets key focus. And the dealers are here to buy cars from consumers here to price them right. We're really nailing this on wholesale. We will move to retail as well. We have in beta today predicting the price of retail, which is also really incredible that with our data set and with the same data science team, we can predict not only what the car is going to sell from wholesale, but we were within the last month, dollars $3.60 prediction within thirty days what a vehicle sold for, which is really incredible.

[George Chamoun, CEO & Director at ACV Auctions]

So think about this data set. It's a way for us to launch new products like no reserve. I mean, the no reserve is guaranteed is going to be a you know, it's going be a big part of the company. But it also comes in time prior to Project Viper coming live where we'll be able to inspect cars within a dealer service drive, start to put a number of automatics in these vehicles and in other capabilities that we'll be launching. So, yeah, we're really proud of the efforts thus far.

[Analyst]

Thank you.

[William Zerella, Chief Financial Officer at ACV Auctions]

Thank you.

[Operator]

Our next question is from Eric Sheridan with Goldman.

[Eric Sheridan, Managing Director at Goldman Sachs]

Thanks so much for taking the questions. Maybe two if I could. We have gotten a number of questions about the Amazon partnership and how to think about that scaling and delivering volume to the platform. Not sure how much you're willing to say or able to say about how to think about the embedded assumptions about what that looks like over the next couple of years. And then, just putting a finer point on some of the AI solutions you talked about in the prepared remarks, how should we be thinking about the geographic expansion of those tools and sort of coverage across your market so we can get a better sense, again, of sort of the travel from point A to point B and think about some of the contributions to growth in the coming years? Thanks so much.

[George Chamoun, CEO & Director at ACV Auctions]

Yeah, certainly, I'll try to tackle both of those questions, Eric. So first, the contributions will come as we roll out these solutions this year. You might like initiatives like Project Viper to your point, your second part of your question will be very small. I mean, we're not baking in a lot of these new capabilities in these sales. What we're doing with Amazon, we can't predict what they're going to do. So you're not going to see us do a forecast. So whether you know, whether it's Amazon, whether it's Project Viper, whether it's these other new initiatives, you're not seeing us bank on a lot of these things this year. Obviously, as we get closer to the end of this year, we'll think about how much we want to bake in for next year. But right now, we're obviously spending the resources. So it's in our R and D budget.

[George Chamoun, CEO & Director at ACV Auctions]

It's in our spend. But we're not expecting a material contribution this year. But I think these are incredible medium to long term benefits that should flow through. So I don't think I can really talk much more about direct partnerships, whether it be about the name you mentioned or others. So I'm not sure there's any else that we can share.

[William Zerella, Chief Financial Officer at ACV Auctions]

Yeah, I would just say this year, frankly, Eric, it's more the case where our P and L is being burdened with the cost to kind of get these platforms scalable going forward, especially Viper. With Amazon, we've built that platform so it's capable of processing trade ins at scale. So the opportunity is really for growth down the road. But Viper especially, we're investing in this year, that's baked into our current modeling in terms of our OpEx spend. So really, opportunity on Viper is really going to materialize next year in terms of revenue and kind of opportunities to sell this overall solution that kind of plays into the guarantee offerings that we have as well.

[Eric Sheridan, Managing Director at Goldman Sachs]

Great. Thank you, guys.

[George Chamoun, CEO & Director at ACV Auctions]

Thank you.

[Operator]

Thank you. Our next question is from John Colantoony with Jefferies.

[Analyst]

Yeah. Hey, thanks for taking the question. This is Vincent on for John at Jefferies. So after consistently delivering roughly mid teens outperformance of industry unit volumes for the last couple of years, it looks like growth relative to the broader dealer to dealer industry may have slowed down a bit in the quarter, but then you expect a return to mid teens gains going forward. So maybe just help us think about the drivers of the deceleration relative to the broader industry, whether you think they're transitory and then just help us think a little bit about the contribution from commercial units in 2Q as well. Thanks.

[George Chamoun, CEO & Director at ACV Auctions]

Yes, I'll start and then Bill can chime in. So first, when you look back at the last several years, looking at these percentages based on a quarterly basis, You know, we don't believe shows the full picture. We still put up a lot of growth. We look at year over year on an absolute basis. But we're, you know, I think when you look at it on an annual basis, it really shows a better picture of and we did that last year.

[George Chamoun, CEO & Director at ACV Auctions]

We did the year before. We plan on doing that this year, too. So I think there's there's no in our mind, no change in our ability to continue to grow share. And to your point, the numbers are getting bigger. So the numbers are bigger.

[George Chamoun, CEO & Director at ACV Auctions]

So we are absolute number does need to grow more. And we, you know, we're not shy about that. But we're we're pretty confident that with all the things you're hearing about here, our broader array of being able to go to market. With this new products, we we do think we've got additional growth ahead. And so really, we're not changing our perspective, Bill, any more on that before I go to the first question?

[William Zerella, Chief Financial Officer at ACV Auctions]

No, I just say again to put to put things in context. So so a few things for this for the second half of the year. So So first, keep in mind that the first half of last year, the market was down. The second half of last year in Q3 growth was 4% and then 6% in Q4. So the compares are a bit different.

[William Zerella, Chief Financial Officer at ACV Auctions]

But the context is we're assuming that the market for the full year ends up being flat to slightly down because of all these potential crosswinds that are out there, right? Hopefully things are better and will perform better. But right now, that's our baseline assumption. And then that sort of gets us back to kind of the mid teens in terms of the math. So just to make sure you guys understand the way the math works and what we've modeled and what's therefore baked into our guidance, understanding, of course, again, as I said on our prepared remarks, that we're maintaining the same midpoint of adjusted EBITDA.

[William Zerella, Chief Financial Officer at ACV Auctions]

So we're actually generating higher incremental margins based on the revenue guidance that we provided for the second half and the full year. Was just some context, or if you want to say anything else.

[George Chamoun, CEO & Director at ACV Auctions]

I think he covered it. Any other questions?

[Tim Fox, VP - IR & Strategic Finance at ACV Auctions]

Commercial contribution.

[George Chamoun, CEO & Director at ACV Auctions]

Oh, commercial. That's right. Thanks. Yeah. Commercial, we're still very early.

[George Chamoun, CEO & Director at ACV Auctions]

I mean, we are wins of the quarter as we we just got our software done for our new platform. We did sell our first car, so it is a it's something to celebrate and not something to go in the earnings script per se. But we sold our first car at our Greenfield location at Houston, which was like a practice run. It worked. Everything worked.

[George Chamoun, CEO & Director at ACV Auctions]

Reconditioning and everything went back and forth. We also sold our first car and our new software that didn't require a Greenfield. So both trials went in place during the quarter. We're ready to go live very soon. The team's working on live dates for both Houston and the ability to start taking a vehicle that's not at one of our locations and still do the whether recon estimates decide whether or we're the right remarketing channel for it or not.

[George Chamoun, CEO & Director at ACV Auctions]

I think more like upstream commercial. So, you know, really proud of what we achieved in the quarter.

[George Chamoun, CEO & Director at ACV Auctions]

It was more software than anything else, but it's always great to sell that first car on a new tech platform. I would call it, you know, the process of going live as we speak.

[Analyst]

Got it. Thanks so much.

[George Chamoun, CEO & Director at ACV Auctions]

Yeah, thank you.

[Operator]

Our next question is from Rajat Gupta with JPMorgan.

[Rajat Gupta, Executive Director - Autos at JP Morgan Chase & Co]

Great. Thanks for the questions. George, Bill, I had a little bit of a philosophical question. You've obviously done a tremendous job historically managing EBITDA, even though, you know, growth has fluctuated a lot, like, on a quarterly basis, share has fluctuated quite a bit. You know, you talked about some of these software development, you know, all gaining traction.

[Rajat Gupta, Executive Director - Autos at JP Morgan Chase & Co]

I'm curious, is this like a resource allocation decision every quarter where like it looks like your sales and marketing expense came down a lot this quarter, but you made all this progress on the software side. I'm curious, is this like a more concerning decision around to take this approach? You know, would you consider, like, investing more on, like, boots on the ground, sales and marketing to maybe accelerate share, even if it could come at the loss of some EBITDA in the near term. Just curious how you're thinking about this or is the focus, Tori, on managing to your guidance on the dollars and EBITDA? I have a quick follow-up. Thanks.

[George Chamoun, CEO & Director at ACV Auctions]

Yeah, I think in a way your summary also was a good representation of how we're thinking about, like, first and foremost, we always protect in our annual budget, a pretty significant product and technology spend. So think about that's like core because at the end of the day, obviously, we got to get through these quarter by quarter calls. But five years from now, ten years from now, we're going to talk about ACV being the global way cars are priced and sold. We're going to talk about ACV, you know, sort of like how we think about Kleenex today. Right?

[George Chamoun, CEO & Director at ACV Auctions]

Like, what's the ACV on a vehicle? What's the actual cash value like that? That's how we're going to think about the brand. We'll never get there if we don't invest in the product and tech. So look at it as we approach our budget.

[George Chamoun, CEO & Director at ACV Auctions]

We never lose sight of it. At the end of the day, building the tech stack here that's going to create less friction in the marketplace, wherever the vehicle is upstream in the consumer's driveway, at a greenfield location for a bank, wherever the vehicle is, first and foremost in The US, eventually globally. So that part of the budget, it's worth spending at least X. And then we kind of have a, if we do well, we might even spend a little more. Like we have like our first order of that from an R and D perspective.

[George Chamoun, CEO & Director at ACV Auctions]

And the next part is inspectors. We never ever will allow our budgeting or EBITDA quarter by quarter affect us hiring inspectors. To your point, boots on the ground is important. Everyone here knows that. Hiring inspectors is a core part.

[George Chamoun, CEO & Director at ACV Auctions]

At times you need a little bit more on one location, a little less than another location, but the team won't hold back. Soon as we need more, we need actually right now about 30 more inspectors across the country was my last readout I saw. Those 30 inspectors we need are in the process of being hired wherever they are in that process. And it just happens. It's like we don't really look at it as relates to EBITDA.

[George Chamoun, CEO & Director at ACV Auctions]

Like, it's there, but it's its own machine. And I would say generally broadly sales We have a lot of sales team. So I don't think we need boots on the ground for sales selling any more than we have today. We've got well over 100. I think it's somewhere around 150 ish teammates out in the field. And we have another team of like 20 So that are majors and strategics. And we have another team. So we've got a really healthy sized sales team that's already kind of built into the budget. So hopefully that kind of gives you how we think about prioritization. Go ahead, Bill.

[William Zerella, Chief Financial Officer at ACV Auctions]

Yeah, and then I would just add

[William Zerella, Chief Financial Officer at ACV Auctions]

Rajat. Look, we're still a relatively young company. And we're still maturing a lot internally and operationally. And we know that over time in order to hit our financial targets, we need to continue to just optimize operationally. And that's kind of a daily and weekly process.

[William Zerella, Chief Financial Officer at ACV Auctions]

So we're always looking at ways that we can optimize and streamline the way we operate internally. And that's frankly probably never going to change. And continuing to leverage technology, not just in terms of the products that we offer our customers, but also how we can leverage technology internally from an operational standpoint. So what you're seeing is just the continual effort to continue to do that. But to George's point, we're really not looking to sacrifice the investments that we need to make to drive future growth on the product and tech side.

[William Zerella, Chief Financial Officer at ACV Auctions]

Because at the end of the day, that's really our core DNA is product and technology. And how do we leverage and invest in order to drive more value for our customers and continue to drive growth.

[Rajat Gupta, Executive Director - Autos at JP Morgan Chase & Co]

Understood. Thanks the answer there. And just on your market outlook commentary, it looks like July was another, like, decent month for the industry. So it does imply, like, a pretty material slowing in the remaining five months. Curious, like, is it just primarily tariffs related and the impact it might have on just new car sales?

[Rajat Gupta, Executive Director - Autos at JP Morgan Chase & Co]

Is there some presumption around worsening wholesale to trade ratio? I'm just curious what's guiding that outlook or the pretty material worsening in outlook here for the remainder of the year?

[George Chamoun, CEO & Director at ACV Auctions]

Yeah, Richard, as you know, July was strong. It was strong from retail, it was strong from wholesale. It was a good it was a really good month. We also saw in the prior quarter what happens when there's a little bit of a pull forward, right, where you got one strong month, and then you kind of have a few months after that that aren't as strong. So I'll answer it saying this, we've been reading your reports, and you don't seem so bullish.

[George Chamoun, CEO & Director at ACV Auctions]

No, I'm half serious, half joking. You do have a lot of data on this. Yes, we've read it all. But there's quite a few analysts out there. And when you speak to the dealers themselves, you're not hearing the most bullish back of the year.

[George Chamoun, CEO & Director at ACV Auctions]

Then also it's a tougher compare. When you got the tougher compare and also not as much bullishness going on, that's why we're trying to be thoughtful. Bill, anybody want to add to that?

[William Zerella, Chief Financial Officer at ACV Auctions]

I mean, what I would add is, you know, kind of trade retention rates are pretty key in terms of the wholesale market. And what we did see is data that support the fact that in Q2, trade retention rates increased about 300 bps year on year, so earlier in the year versus earlier in the year rather. So the potential trend, and we'll have to wait and see how this plays out, is dealers could be keeping more trades for retail purposes in the event that consumers shift their buying preferences depending upon what happens with tariffs and how it affects new car pricing. And therefore, potentially there could be more demand and potentially higher pricing for used cars. So there's just a lot of puts and takes here and we're just trying to do our best to try to handicap this and be prudent in terms of how the second half could play out.

[William Zerella, Chief Financial Officer at ACV Auctions]

So, to George's point, you've probably been studying this more than we have. And what again, we've been reading a lot of your material. So, you might have more perspective than we do, but that's the basis for our modeling.

[Rajat Gupta, Executive Director - Autos at JP Morgan Chase & Co]

Understood. Fair enough. Thanks for all the color and good luck.

[George Chamoun, CEO & Director at ACV Auctions]

Thank you.

[Operator]

Our next question is from Ron Josey with Citigroup.

[Jamesmichael Sherman-Lewis, Equity Research Analyst at Citigroup]

Hi, George and Bill. James Michael on for Ron here. Two questions, please. First, given the challenging macro, curious how dealer conversations around your value prop have evolved over the last twelve months, particularly regarding appetite for cross sell and upsell of offerings like ACV MAX. And then second, on ClearCar specifically with its 1,600 active roofs, can you update us on the go to market and the success you're seeing in supply constrained markets? Thank you.

[George Chamoun, CEO & Director at ACV Auctions]

Yeah, certainly. We mentioned in the prepared remarks that we had one of our best bookings yet at ACM Max. Granted, it's a smaller revenue stream for us. I don't want to oversell it, but it's great to still break records. We brought on more dealers.

[George Chamoun, CEO & Director at ACV Auctions]

As we mentioned to you, both ClearCar and Max, we're really not we're focused on selling these things at a reasonable rate to dealers, but more of our focus is on long term differentiation on the wholesale side. So we tend to approach these products as a partnership where we're giving Max and ClearCar for really extremely low prices at times to create that partnership. If we help them buy more cars from consumers, help them price it right, become their long term wholesale partner, it's really a win win for both us and our dealer partners. So, yeah, record bookings for Max, ClearCars making great strides. I'll dive in a little bit more.

[George Chamoun, CEO & Director at ACV Auctions]

Probably the most recent trends have been the biggest success they've had are buying cars out of their service drive, which I think getting dealers to buy more cars from their website is still going to take us more months and more work to really help them do the right marketing, get to the consumer. Just kind of look at this in phases. It's like a phase one, phase two. Phase one, they already have consumers coming. They're there to change their oil.

[George Chamoun, CEO & Director at ACV Auctions]

They're there to rotate their tires. We have some dealers buying three to five cars a day right out of their service truck. Now, trade retention wise, they're keeping a higher percentage of those, a lot of them. But but in time, as they get their inventory to be right, it will mean we will eventually get back to historical wholesale trade ratio. So, so far so good.

[George Chamoun, CEO & Director at ACV Auctions]

That's going really, really well. We are about to take our guarantee offering and combine it as a feature with both ClearCar and Max. But we are just about to launch that. So think about that's probably more like Q4, Q1. It's technically in beta right now.

[George Chamoun, CEO & Director at ACV Auctions]

So more to come. We're helping these dealers. We're helping them put the right price in cars and it gives us a differentiator and really a longer term partnership outlook with these dealers. Any other questions?

[Operator]

Our next question is from Alex Potter with Piper Sandler.

[Alexander Potter, MD & Senior Research Analyst at Piper Sandler Companies]

Perfect. Thanks very much, guys. So I hate to beat on this revenue guidance thing because it was a relatively minor adjustment at the end of the day. But just to put a finer point on this, you're primarily, what you're talking about here is market wide changes to your own expectations. You've got these puts and takes with conversion rates and things like this.

[Alexander Potter, MD & Senior Research Analyst at Piper Sandler Companies]

There's nothing fundamentally changing with regard to your own market share or competitive dynamic or anything like that. This is purely just a reassessment of the way the market is functioning. Is that correct?

[William Zerella, Chief Financial Officer at ACV Auctions]

Hey, Alex. Yes, it is. So if you remember coming into the year, we said we were assuming that the market could be flat, which meant it could be up a little bit, could be down a little bit. Now, our assessment is, at least for the full year, the market potentially is going to be flat to down. And we'll see how that actually plays out.

[William Zerella, Chief Financial Officer at ACV Auctions]

But that's what we assumed based on just some of the trends that we were seeing, especially exiting Q2. Again, there's all these cross currents and macro signals that are kind of pointing in different directions. There's a lot of uncertainty on tariffs. I just talked earlier about how trade retention rates were up 300 bps in Q2. So, we kind of plug all that in, and our conclusion was, what we should probably be a little more conservative in terms of what the back end is going to look like, and therefore the full year, while we're still able to maintain our EBITDA guidance, which was kind of meeting our commitment to investors.

[William Zerella, Chief Financial Officer at ACV Auctions]

So I wouldn't say that there's anything more than that. We're pretty excited about all the things that we've been doing. We talked about the guaranteed sales, we talked about Project Viper, watching our first greenfield, which is George mentioned, we're testing the software so far so good. So there's a lot of reasons for us to be excited about the future, but we're just trying to level set a little bit and be a little more conservative for the second half. And that's why it's just a small trim in terms of adjusting the midpoint down for revenue by $5,000,000

[Alexander Potter, MD & Senior Research Analyst at Piper Sandler Companies]

Perfect. That's very helpful. Then maybe one other question. I think earlier Rajat I think mentioned sort of dialing up OpEx spend as a way to or dialing it down as a way to manage EBITDA. Pricing is another lever that you guys have historically had sort of in your back pocket.

[Alexander Potter, MD & Senior Research Analyst at Piper Sandler Companies]

What's the outlook just just based on, you know, the fees that you're charging for for auctions? You know, what's the outlook there? What's the recent trends? And any ability to or intention, I guess, to take price at all in the coming several months or quarters? Thanks.

[George Chamoun, CEO & Director at ACV Auctions]

Yeah, listen, we're always looking at this. On the supply side. We basically reduce the price if we get volume. That's how we handle the supply side commitments to our sellers. Think we've been doing that since 2016.

[George Chamoun, CEO & Director at ACV Auctions]

Give us more cars. We charge you less. So it's it's pretty, pretty simple. On the on the buy side, we've got an array of features. You know, the you know, the opportunity here isn't just by fees like you've seen us historically.

[George Chamoun, CEO & Director at ACV Auctions]

It's also adding new products where buyers can get additional insurance and other capabilities, which we're starting to get a little bit of take for these newer offerings. So we're always dialing in here and trying to find that right balance of the right the right product mix and the right assurance. So we do have some more room. Our fees are still a bit lower than the traditional physical auctions. But we're we're always looking at it, but we don't have any timing expectations to talk about today.

[William Zerella, Chief Financial Officer at ACV Auctions]

And that's and that's not baked into our our guidance. Now, is going to be, call it, five or 6% increase in ARPU just based on the buy fee increase that we passed through earlier this year. But other than that, we assume any other fee increases per se in our modeling.

[George Chamoun, CEO & Director at ACV Auctions]

The the take of some of these assurance products and other things that we're saying.

[William Zerella, Chief Financial Officer at ACV Auctions]

But that's yeah.

[Alexander Potter, MD & Senior Research Analyst at Piper Sandler Companies]

Perfect. Thank you very much, guys.

[George Chamoun, CEO & Director at ACV Auctions]

Sure. Thank you.

[Operator]

Our next question is from Naved Khan with B. Riley Securities.

[Naved Khan, Managing Director at B. Riley Securities]

Great. Thank you very much. Hey, guys. Just, you know, last year you did a couple of well, more than a couple, but I think I think a few tuck in acquisitions. And I'm wondering what the growth rate looks like if we strip out the ones that were acquired in the back half of last year, what the organic growth would be?

[Naved Khan, Managing Director at B. Riley Securities]

And then just on the sort of commercial topic and the build out of physical, are you seeing more opportunities to acquire some locations around the country? How are you thinking about it for this year? Thank you.

[William Zerella, Chief Financial Officer at ACV Auctions]

So I'll handle the first part. I don't see what I can comment on the second part. But yeah, we did an acquisition last year. It was a location that was primarily a commercial location in Indiana. And if we look at the impact on the dealer unit growth, it added about 1% to dealer unit growth in the quarter.

[William Zerella, Chief Financial Officer at ACV Auctions]

So that was from that acquisition. But all the other acquisitions were prior to Q2 of last year. So that was the only one that affected organic versus inorganic growth.

[George Chamoun, CEO & Director at ACV Auctions]

And then your second question, we're always here to talk to the owners of the current options. And so we're always willing to get into active engagement. But our focus has been a little bit more on these greenfields. We're really excited about this. Our first one going live in Houston.

[George Chamoun, CEO & Director at ACV Auctions]

We'll have our second one go live early next year sometime. We'll come back and tell you the location of that one. We're already at the contracting phase for that one. So we're we're feeling really good about this strategy. I'm not ready to give you a ramping of that yet.

[George Chamoun, CEO & Director at ACV Auctions]

But when you think about our 40 locations, we said we'd like to have we haven't yet given you how many that will be will be M and A versus Greenfields. But as we get a little bit more confident on the Greenfield side, we'll update you all more as we see how fast we can grow these Greenfield locations. So we will have multiple growth lever opportunities here. In addition, we can also look at M and A in certain geos. There are some great little business out there that we'd love for them to be part of the AC family at the right price.

[George Chamoun, CEO & Director at ACV Auctions]

So, we shall see, but at the end of the day, we're going to really bank on the Greenfields, our core strategy. And if we happen to have some M and A opportunities come along the way, but more of a focus on Greenfields.

[William Zerella, Chief Financial Officer at ACV Auctions]

Well, and just a reminder with Greenfields, so we would have some OpEx upfront, but the total capital consumption obviously would be dramatically lower for those cases where we can launch a greenfield instead of acquiring an auction. So as George said, we're kind of open to both, but greenfields certainly potentially offer a much more efficient way to grow our business. And we'll see how the first one goes. When we have a I think we already publicly said that we have a second greenfield that we'll be launching in Q1 of next year with a location to be announced.

[Naved Khan, Managing Director at B. Riley Securities]

Got it. Thank you, Bill. Thank you, George.

[William Zerella, Chief Financial Officer at ACV Auctions]

Thank you.

[Operator]

Our next question is from Josh Peck with Raymond James.

[Josh Beck, Managing Director at Raymond James]

Thank you for taking the question. You know, this is a little bit more of a go forward look. So it's early, so I totally appreciate, the caveats and the like. But it seems like for '25, you know, the visibility has probably gone down a little bit with the slight, kind of reduction in the market growth from flat to flat to down. It sounds very, you know, conversion and retention, not really listed oriented.

[Josh Beck, Managing Director at Raymond James]

But, you know, it also seems like things are just kind of somewhat hot and cool by the month because of the macro. So, I guess when you start to think about '26, you know, it's obviously too early for that. But what are going to be some of the key, I guess, that you're looking for as we close out this year to help kind of better inform maybe what '26 could look like from a market point of view?

[George Chamoun, CEO & Director at ACV Auctions]

I think at the end of the day, obviously, all want consistency. But I think we're seeing dealers at the end of the day, they're buying more vehicles. They're not going to be as reliant on just trades. We're seeing a lot happen at once. We're seeing the OEMs parse out all this tariff stuff and really, we're seeing OEMs focus on moving products.

[George Chamoun, CEO & Director at ACV Auctions]

So I think at the end of day, what we all want to see is we want to see new cars continue to, you know, continue to develop, of get through these sort of pretty significant pull forward and then drag type like situations we've seen get through that. Meanwhile, what we'll see is off lease will start to come back in '26. Used car inventory will start to come back in '26. So it does feel like '26 should be a much healthier time for us for the whole industry, not just the ACV, but the whole industry. So you want

[William Zerella, Chief Financial Officer at ACV Auctions]

Yeah, I would say there's two other variables for us all to think about. Right. Hopefully, by the time we get into '26, all these tariffs and trade deals are behind us, which will certainly eliminate a lot of uncertainty that a lot of dealers and even consumers are dealing with. So that would certainly provide a lot of stability. And then hopefully, interest rates will also come down, which would improve consumer affordability, which I think would just of raise all boats and help us and everybody in our industry.

[William Zerella, Chief Financial Officer at ACV Auctions]

So I think it's a hopefully it's a safe bet that the tariffs will be behind us by then. I think certainly it seems that way. That's going in the right direction, at least. And interest rates, we'll see what the Fed does, but at least there seems to be increased an increased consensus out there that the Fed will start reducing rates and what the rate will be, who knows and how often, but but at least if they start reducing rates further, it'll move us in the right direction.

[Josh Beck, Managing Director at Raymond James]

Okay, that's super helpful. And then I think, you know, Bill, maybe going back to some of your, earlier comments about, you know, you've been relatively young company and there's still opportunities to unlock, operational efficiency. It certainly seems like that's an area you're excited about. Is short there list of a couple of initiatives that really kind of rise to the top? Is it maybe more related to the adoption of some of these newer initiatives that would would help usher that in just any other talking points there that we should be considering?

[William Zerella, Chief Financial Officer at ACV Auctions]

Yeah, I I can't give you anything specific. I mean, it's just, I would just say in general, we're always looking across the company for operational efficiencies and everything that we do. So it's hard for me to call out one thing specifically, it's, you know, we've got now 3,000 employees, we've got a pretty big company and growing. I don't want to be specific at this point, as things kind of play out over time, and we can talk specifics, we will in the future.

[George Chamoun, CEO & Director at ACV Auctions]

I would say no different than any other larger scale company. We're using data to help us understand where are we efficient, where are we not, where are opportunities to grow. As we all see AI mature, we're really starting to see how can we actually increase our customer satisfaction by getting back to customers faster, not always need a phone call or could be a text, it could be a faster way to get back. We're looking at it across the whole business. We're looking at ways for dealers to be a they want to move forward and have self-service faster.

[George Chamoun, CEO & Director at ACV Auctions]

They can do it. As Bill mentioned, there's not one thing. There's not like one area of the business where we're both improving our customer satisfaction and also making ourselves more efficient. But it's more built into our DNA, built into how we're capturing our data, built into how we really look at the entire business.

[Josh Beck, Managing Director at Raymond James]

Super helpful. Thank you, guys.

[George Chamoun, CEO & Director at ACV Auctions]

Thank you.

[Operator]

Thank you. This concludes our question and answer session. I would like to hand the floor back over to Tim Fox for any closing comments.

[Tim Fox, VP - IR & Strategic Finance at ACV Auctions]

Thank you, Paul. We appreciate everybody joining us this afternoon and evening on the call and look forward to hopefully seeing you on the conference circuit this quarter. Again, thank you for your interest in ACV, and I hope everyone has a great evening. Bye now.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Tim Fox, VP - IR & Strategic Finance
• George Chamoun, CEO & Director
• William Zerella, Chief Financial Officer

Analysts

• Chris Pierce, Senior Analyst at Needham & Company
• Analyst
• Eric Sheridan, Managing Director at Goldman Sachs
• Rajat Gupta, Executive Director - Autos at JP Morgan Chase & Co
• Jamesmichael Sherman-Lewis, Equity Research Analyst at Citigroup
• Alexander Potter, MD & Senior Research Analyst at Piper Sandler Companies
• Naved Khan, Managing Director at B. Riley Securities
• Josh Beck, Managing Director at Raymond James