ACVA - Earnings call transcript Q1 2021

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Operator

Good day, and thank you for standing by. Welcome to the ACV First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Tim Fox, Vice President of Investor Relations. Please go ahead.

Tim Fox

thank first joining quarter and to conference everyone, our discuss XXXX afternoon, you ACV's for call Good financial results.

today Chief call and the are Chief Chamoun, On Executive Bill Zerella, Financial Officer. George Officer;

including and an Relations the Investor earnings statements page and Form to expansion, XXXX started, available XX, XXXX please available forward-looking of The in ago. SEC. comparable actual final website A in filed quarter our expansion. that and X issued XX-Q during uncertainties subject Form growth exhibit measures a months risks the today's Also, be GAAP to forward-looking our and for XXXX, should and time by the earnings Before today's measures. to we we the in and expressed that results the financial for SEC incorporate and our guidance to involve XX, release, discussion is remarks report margin in Reconciliations statements by addressable call, for March present are be may directly statements. most uncertainties These GAAP note avenues market our factors ended get XXXX, regarding following total short or of during we year prospectus information opportunities financial our reference. financial X-K call, to considered is both this will with non-GAAP quarterly could as this comments included March which filed differ this earnings for on discussion the the that furnished such and release those risks contained are include cause full of with these materially statements, on our and second the long-term from is on implied the SEC

George. find me you our Lastly, the call earnings And today, posted to let that, be over turn can we referencing our with which presentation website. on will IR

George Chamoun

afternoon, first of Good build IPO and great joining on for a our to Tim. all step a of through again by was Thanks, efficient our public I ACV's my marketplace you in work and digital many us as trusted It's call. talk everyone, lot earnings now want this you achieving significant a we vehicles, thank ACV to the to accomplished company. hard to this journey people. for for most teammates milestone. and thank used

XXXX, We proud are how success and look very ACV far to on come in forward in was we've ahead. of years since building our launched we the

GMV let our on today, by providing discuss the then and $XXX to briefly deliver context strategy revenue, long-term finally, first our touch quarter growth. story me we shareholder by For begin in nearly XXX,XXX $X This on billion million and some XXXX, highlights, marketplace. transacted year-over-year our over value. produced our ACV In over recapping of call XX% a XXXX digital vehicles results on

million, which you digital can continued in year-over-year nearly revenue we of first on generated marketplace. and As $X.X we XX% of And delivered where $XX vehicles XXX,XXX GMV XXXX, over the transacted quarter of see, our billion strong momentum growth. our

adoption within share driven gained and our performance existing the our customers. into of by was quarter dealers as ecosystem continued Our new attracted wallet platform in dealership we our

favorable used our Similar strong on engagement drove benefited suite saw further of seamless to vehicle from adoption dealers. for also experience we a and market favorable continued our companies our unit sector, which other conditions, We of solutions that the pricing. enable marketplace in customer

growth headwind less despite the significant franchise vehicle been face, fewer have supply able that to selling dealers used our having new vehicles We drive and supply.

we all and focusing operating about X TAM transformation market our as Bill marketplace and leading by complex discuss our of of platform. product let frame digital addressable serve platform. investments later, large growth data-driven robust to our our and to differentiating this strategy top digital growth, our level and a will market. long-term And Turning strategy: the is value, ramping dealer drive me capturing now share the expansion, shareholder are elements on market further the scale. wholesale with to We Marketplace continue

expand our market with growth dealer into over Next, and strategy that products margin TAM. new economics operating creating to This model markets we has we're proven and our can ACV. very growth time. over deliver exciting operating scale attractive time, vectors expansion expanding a that market expanding is international innovative is and with domestic last our includes believe suite continuing business leverage can and, new we The services at total delivering element scale. an believe that entering addressable the for significant of structural significantly of unit ACV delivering yield wholesale

is getting it call in many overview. me I'd with details know ACV, company. over will for just turning to who more to discuss to guidance, a the background ACV Before mission. company let listeners on who bit and the ACV's this provide Bill have to financial a on our like we that, are time newer first are our together, quarter spend begin Since With to I those

people. used at mission ACV comprehensive data and investment our previously marketplace vehicles was not with buying digital the Our most without for to and and is trusted enable that transparency and build technology efficient in possible selling and

industry imagine of a are and diamond our active vehicles participants analogy. our XXXX, previously forever vehicle depends Exiting complex, clarity technology carat a weight. on cut, value the and of across U.S. the had in used ACV buying heard Cs without fundamentally you people. and color, marketplace over Basically, has the XX,XXX of also digital on extremely operating condition. territories in of Some my XXX Used the the used knowing have the X investment fundamentally diamond changed Internet because vehicle

made are investing active achieving year-end. we first in aggressively progress XXX we earlier, mentioned towards growth, in I the by goal quarter As and of our territories great

which extremely today operate market Turning complex in and we is now to fragmented. automotive, the

over Auctions, This annually. units sold accounts million Our commercial includes market, targets million units from XX product, X million XX and dealer ACV wholesale flagship wholesale. the from for which wholesale units

million nearly units TrueXXX sell the expand retail opportunity positioned XX significant Our to consumers. serve this TrueXXX offers that dealers data see given retail product transparency offering. buyers, And unparalleled we is the that to to

In addition, sell vehicles that dealers. commercial serve million X offering the accounts TrueXXX our to

segment, let's approximately billion an Today, estimate some which around U.S. numbers runway. offer. other in XXXX in transactions opportunity. earned market, opportunity. core a million we of we in just Now value-added on our This the our we dealer current $XXX investing multiyear addressable the market commercial our our put small behind marketplace. focus the The for $XXX transportation would and from per include the now fee fees of market opportunities. of unit, are terms primarily represents significant $XX the of fraction and to be wholesale the wholesale We has commitment. majority At and wholesale average TAM opportunity, in come long-term we view near-term services we The a

services, beyond long and continue over growth. from line, to term, opportunity for expand we we outside data to U.S., used in as approximately and our on And we trade of including the opportunity vehicles. to purchase developing to have a help transparency vehicles XX will dealer-to-consumer we platform we vehicles, such and address the Bottom significant opportunity believe also commercial-to-dealer. the approach plan resonate have million TrueXXX, products see the believe dealers term, untapped Additionally, our Longer consumers.

ACV's Now let's dig into auction experience.

where conveniently from XX-minute their they The of launch their and to consumer dealers is XXX can of at wherever powered team condition a we similar go them tool send ACV'S notification in reason informed customization data a Our needs. a vehicles value-added with services, can like inspectors by is The transaction auction. a over efficiency. Every vehicle link and drives to our sell have then be, so journey trust, any vehicles vehicle they our the because to We searches, which the Transportation by which ACV when their us inspect notifications pricing technology, filters, ACV favorite into we including buyers' platform dealerships view and enables transaction profile step to to match then our Capital. vehicles. quickly transparency get Dealers vehicles to report condition their may and purchase market or proprietary include driveway. finalize vehicle's our guidance

to now technology. our Turning

digital sell data our the and buy, data leverages to data and efficiency. and technology confidence comprised value and technology ACV which to underpinned digital platform Our our by our services, are of ACV's power marketplace vehicles and data products is enabling and and products, service partners with our commercial platform. dealers platform marketplace

efforts our learning enable machine back-end to and operational post-transaction which technology Additionally, reduce efficiency. to leverages continues greater manual processing,

our that front entire to marketplace dealers product, consumer Within vehicles is transact to against providing comprehensive help provides are without facility, dealers showroom, We've help translate the dealers is stickiness GO by process. wholesale liquidity the a instant delivering seller consumer's claims marketplace. a XX in becoming assurance our vehicle a into marketplace does finally, a transaction day. buying And consumer's bringing we report. used by partner any dealers assess This a Appraisal transaction. which the which We and of of ACV manage vehicle the are prior of risk. owning remove the With minutes, and efficiency can first vehicles. market's the the not taking the independent quickly Capital, vehicle a door disclosed dealer during by we Thousands facilitates value defects our for GREEN in and our how challenge and to seamless condition to for to all dealer. dealer flagship traditional deliver suite trust the digital ACV integral auction a GO Auctions, of GREEN, customers while experience journey is wholesale our includes guarantee creating with Transportation, is Live both vehicles an a every create the products to pioneered service. wholesale ACV So this face a of our transactions seller our of credit offering? in which

services. services insights in We use of both cosmetic a on enables retail report, including we Moving market, used bring detailed off dealer some offer marketplace. to provide value commercial for and into the vehicles, groups TrueXXX. U.S. condition partners products to of the With dealer largest our our are data and vehicle on our dealer and starting to the and the our TrueXXX, that transparency reach assessment. TrueXXX to and us structural of the data and spend

website into providers. Our reports and are leading included history vehicle the dealer within report integrated

their also details vehicle. and value used to of for better And value sell help used are and Market we to inventory. determine partners detailed their reports pricing vehicles provide to commercial transaction tool data TrueXXX through vehicles. of the dealers another Our condition This assess Report, their inspection leveraging understand ACV dealers our the gives strategies

at look our now technology of network significant the data and Let's power effects. how marketplace, combines

marketplace while continue with more us drives our we in provide we this continuously by collect from Capital, we ACV. greater participants experience, further which services customers, leading data greater for participants a for our growth. greater gaining penetrating In XXX% is scale. long-term ancillary and ACV of to long in new join market But a turn, there's share attracting better believe introducing efficiency Ultimately, flywheel greater in improve some reinforcing bringing of and will territory our and these runway to our and platform, Within These mature and longest-running and to attractive our customers. and territory avenues made growth marketplace growth to efficiency, Transport investment like more more their economics. already our existing customers. territory by marketplace, We've enables traffic through data, more vehicle see see As our our liquidity, can in opportunities strides U.S. continued demonstrated we that in greater drive digital and ACV products. have This, our dealers effects be wallet up With areas. additional more. driven liquidity we significant our greater drive and services the of new technology scale adding our to people, wholesale unit

On helping And opportunity in extends transparency services and dealers think more represents providing incremental used by service for partners. the we're focused on trust opportunity automotive this landscape our side, navigate the and data need value to commercial digital the they we're we provide internationally. to Everything world. dealer and compete doing

all this Lastly, to that objectives. find M&A accelerant of businesses be can our if match an we

founded across Let ACV our me principle wrap with We technology up people of in team. core and leadership vehicle ACV to the trust used market. bring the and with entire investing transparency

over have background of the it talented me that, broad let excited section We by Bill. have them and teammates to a I'm journey. on unique with blend turn we continue and my a experience, to as of With ACV side

William Zerella

our call. results. extend I'll me review welcome George. a begin first to Thanks, let with quarter our my also And first of earnings

over expense performance or basis XX% a a revenue. of driven We revenue generated pleased year-over-year million, our mix expenses, Total revenue $XX operating percentage We primarily growth which loss auction delivered XX% EBITDA delivered are Adjusted points revenue, in very $XX increased with SG&A our percentage cost million, the in year-over-year a operating of growth, 'XX growth, XX%. was again in X,XXX improved underscores Cost our of quarter. expense improvement of This year-over-year, marketplace our significant was by performance strong as by our the which by revenue, by model. revenue was marketplace leverage basis of total improved of significantly approximately revenue model. outpacing of as revenue QX excluding of on inherent high-margin an our leverage driven the results. growth, which approximately flat business this points. business once we of To highlighting context, essentially revenue growth put in strong X,XXX

Let's additional detail on revenue. turn to some

mix diverse services. products a and of have We

business very business strength of And George the auction revenue auction deliver We offering This assurance year-over-year marketplace of driven up strong pricing strong to very in half our the customer growth Our highlighted with today, our unit and core revenue attractive other profitability. XX% by performance was about combination and value-added his this strong services environment, our revenue. with remarks. comprises in our a continued marketplace growth. emerging had half our of revenue making

on some operating additional Moving to results.

performance. deliver Our dynamics of of it's over model, our GMV. view business and despite illustrate growth unit impressive growth some efficiency to strong historical larger the marketplace model and our business the growth delivered to To has time territory underlying and, useful today, help scale business our continues

business, model, territories. the This see reaching for third our we're mature significant and is leverage the benefited the first significant positive breakeven drove typically room margin. newer we're vehicles or finer a had our growth X point operating in in the believe our This very second As historical And first still the here put units as in quarter adjusted EBITDA year used mature, classic chart, in there X. outpaced and we've is then our showing as XXXX, on efficiencies customers the in strong you and experienced a In To our unit in EBITDA in as leverage we cost land-and-expand territories model. illustrate supply. our quarter operating can our exponentially. grows and in territories and demand leverage, production significantly innings early sold, to we grow chart, operating gain from business we on significant adjusted we

impact investments my guidance As our course, which ramping discuss in I this commentary, will adjusted growth margins. will, of and are we technology our EBITDA year,

that can produce we margin our operating model business expansion. However, recognize underlying over in believe, significant we the to important think it's leverage time,

turn I'll guidance. to Now

million, $XX $XX are year-over-year XXXX, adjusted million growth and $XX For expecting to of million. an to to quarter $XX XX% revenue million of rate XX% a the of loss EBITDA second of we

For are of to $XXX the XX% of adjusted year $XXX and million of $XX full EBITDA revenue a an growth expecting million loss XX% million, XXXX, to million. to we $XX year-over-year rate

structure. operating XX% full our guidance, my to higher the wrap and prudent, are XXXX. my driving environment continue that earlier XX% normalized strong plans, to market a And capital expense up demand let on be assumes expecting point assumed XXXX. the we guidance of unit To the later dynamics me year Our investment term, strong growth highlight in in comments, about finally total to favorable will more near prices our but we've for

long-term ended Following business. our that the cash and recent with float quarter Please IPO, in our of million in associated equivalents we cash of is auction and first with $XXX note $XX million $X million the debt.

from XXXX. fluctuate of can by quarter. our it sheet float of turn operations $XX our increase XX, million million the to that, on back float on driven X of the generated The me $XX meaningfully, With due George. amount each flow since marketplace final weeks trends of in the to balance business quarter in Specifically, we cash an during let December

George Chamoun

Thanks, Bill.

me we let take questions, your summarize. Before

extremely opportunities the new as the priority to the and advantage pleased a market. momentum exciting in that platform. are and market, early seeing we're can a the core execution quarter, deliver number meaningfully first we in of market have which redefining our with progress our We our remain to expand still services the believe we in but digital and technology strategic leading significant growth will our made we we're innings. vehicle illustrates market. the for We've in addressable is And enhanced Data wholesale

attractive drive call We we have economics can Q&A. With model operating that proven and the the significant to leverage begin to the that that, structural value. over growth with a deliver scalable business will turn operator I'll unit believe shareholder

Operator

Securities. Ron first with muted, Canaccord. Graham unmute. will Our Michael question from Ron, your if come question next line please Instructions] comes from the JMP with [Operator Josey is And

Michael Graham

in bit kind more appreciate is all into then is X I balanced, that the tracking against new economics wanted be on and has I but call mature go territory ask congrats One I color your to questions, to a -- guess, of territories, are have territories, improving the when you I economics the compressed. and you well, the expansion quarter. little your if could. on

expect to factors? wanted share thing like to Capital talk any could balance and ACV is just about those of just second the between So plans there? sort ask milestones you regarding you And just X I can then the

George Chamoun

Thanks, kind Yes. remarks. Michael. the Appreciate

up and expansion relates it territory to the the on building how teams. First,

and X When you we mind, in a we have a this, at hire playbook. customers as territory, vehicle first but opened condition we we been obviously, So have know, for we've years, are -- first, up we don't any keep over inspectors. our

at very in the all base are in got later, the selling essence, your a while cost, example that your market. of point, you're When just years as you've up that X cars and month at you point you plus Michael, let's know, So time, fast getting sudden, forward, X,XXX inspectors and say, customer or for you're a opening you're efficient. building up purposes,

ACV first buying business, transacting used for pretty of determine vehicle, side fintech We're various and capital. The what on capital the the attach -- adoption road how days, a until where out, we first love models less quite -- getting traditional really dealer And efficient second that's in You're We're with cost X, Capital. our to see all the the early years trying dealers were to significant a quarter question. On and about We sort very few answers model scales. fees in question, the model actually when dealer this if that you're it's you described our efficient become going described what go the Capital a -- know basically while once to from your dealer is them you and per that. stop. from an vehicles and ACV a per through it meaning you're we went cost little why focusing it's show would, your between goals achieved the with -- for X we you excited they a model. product extremely bringing Hopefully, rates. complicated territory transparency of

Our model transparent. very is

you're and bidding you. you costing car, buying what while While it's a you're know

You also service broader the model. ACV get

as up QX both coming exceeded we so or excited answered Hopefully, good, ACV for related what's I far, very and Michael, goals next. Capital so actually So, and questions. it our to achieved about

Operator

America. Nat Our next of Bank with Schindler from question comes

Nat Schindler

don't in first market. alluded come a to concerns your cars that George, We've of Congratulations not quarter wanting the new on to of used their company. in public replace to your you have heard new enough from with. them challenges because dealers off cars competitors sell they off-line as just macro the

But and given through lot, on fewer you -- on auction. will they the that and this you guys what So happening walk evolve but has not much your affecting been thus, can think have coming results that's their the us Obviously, side really cars space results. until hearing of how to year? specifically, macro XXXX, accelerating how into Just manufacturers new up aren't this we're until to year? up course be levels of production so the to when that cars the be over supply you evolving into so going the would QX, previous later even is probably see over likely the not you

George Chamoun

Yes, dealers last This comes for so Thanks to our Thank kind try the in sort describe you are appreciated. trend, from the of looking which you. of at I'll this the regards. obviously, for Much today way dealers. this, certainly, Nat. much supply majority By new sales. I less new less would car coming cars, QX started they now in dealers, selling are new for our really of say, less car selling year. had selling franchise new less trades those Generally, in dealers our cars, cars.

Some for up of some made increase used car for any total sales others, dealership. by with one not but in dealers cars meaning that was the the

new at them because they lower used, look fact new of been You the that sold cars. of for some less may have plus

up Some used Either made they've side. had by trades. it less way, the car

your cars been decided So traditionally point, wholesale. have some with keep of to trades, the that some of would to them less have

already was mix of this last QX was us It in year. of year. QX to happening happening that Now in already

while And is have the of So -- you've you've seen these increase. more growth also market our really tremendous seeing also this what change franchise the of we're us dealers in inventory. GMV seen sort facing needing

need you has partially If in they increased platform are because buying also our segment, ASP dealers vehicles. look it at franchise that now because

We've dealers. I the on would spot really in so these demand both it's So yes, because been on question, your we're challenges supply and say have first great been the a part the interesting. for of side.

it going, helps in supply. things macro are these as So sometimes

cars. thinking next When car either to through Sometimes of very it able is by -- trends -- QX sooner, it supplies being it or whether this you'll of out, look up been being what We've this hear we're significantly. of up new year. year how on about overall and we be cars the the about more having the how more face think really using think Auctions supply -- cars the will think used on you as should challenges will they in demand to to way. helps next as consider We back with inventory, grow ACV And QX value we we're of we dealers pricing in ends vehicle. because Whether it year. normal QX going from prudent the ends year, new return relates ACV, know we of to our

making You're any the vehicle. not on guesses

spot that we these in to them these So of these think with we're a Nat? values. in with changes. car each good a in benefit help we're macro to question, great fluctuations used Does really But answer from really your cases, spot

Nat Schindler

were Yes, partially. things forward, macro to So price That also, increase well, these units on neutral? be looking more are one it that used more than to causing that's levered auction higher kind of though of clear auction is it at if or as well. pricing well. prices? the you volume to your you or But helps And your changes would going as alluded getting cars, better as getting

George Chamoun

buying marketplace, obviously having really reflected marketplace -- to gives become on expanding cars. more and you on cars also sell having GMV gets right? less more by theoretically you currently It's the ACV. being a are the an selling in dealers benefit cars they're a because The higher opportunity supply types basically of the So equalizer,

about during $XX,XXX our we amount Nat, benefit one dealers a both got on the few buying QX where of GMV future, little is things we a about ACV. road one really range things that's of talked now. interesting getting and is, show, are the the the from glimpse years selling that's $XX,XXX fascinating of And So broader a to the inventory of to

the and I or So the starts GMV term, the would the to in say if benefit less supply of We're we're by tick supply, by rate We're inspected. sell-through rate car up, factors. next year, other benefiting platform. or end effective more at in benefiting early year in Whereas this benefiting. current we'll cars used having having in

both pros Hopefully, your sides. answers question. really So there's and to cons that

Nat Schindler

more feel does. It he quick so Bill just one just doesn't And out. for left

William Zerella

Nat. Thanks,

Nat Schindler

Bill, about is like it incrementally looks of going prosaic, though more you side from about million you're that public a to just investment. be cost your Obviously, QX something increased guidance, to losses. at like more about EBITDA million something in revenue, difference but of of the looking $X said How being QX incrementally much spending company? $X

William Zerella

so a Nat, of things. couple

So first, just to question little a your on get give volume. back context you more unit previous versus to pricing to

So and is in revenues if X/X our about revenue increase is the assurance we look auction in plus total, of volume-based X/X at pricing-based.

you So unit that gives of side versus the pricing a volume. little bit context the on

QX value going vast of is our I revenue, of of we're being obviously, we in spend of look And sequentially, across quarter-on-quarter forward, we our gains. kind So and the So cost mode $XX know, to business okay? increased as little million excluding majority year by our to this the this volume you right? share unit as a growth long-term market is in north -- investment just drive cover growth, operating investments So want revenue driven that, okay? so in terms of

at tilted increasing again we're slightly towards costs a investments in a OpEx our some wouldn't but So that, increase SG&A directionally most spend, continuing be tech, to and on absolute in of similar QX, basically looking spend, and about to We've increase part okay, for the in product talked past evenly in the make distributed. but do consider in All the to previously continuing anticipated. driver. go-to-market those I course, frankly, footprint were significant we're is There, which public company side.

dramatic expected $X of terms of we into since expected acquisition the OpEx of year tracking of if the with what year there. OpEx our the the guidance. though gives fast through previously. from as the talent and in we our color in of pretty flowing terms full you internal baked about possible we QX envelope, really for consistent in go-forward about we're as that we're than Obviously, So changes. little QX and and we're view guidance, what rest even benefit think There's bit resources was it's our lower million terms a ramping we well But no hopefully,

Operator

comes from next question Our Ali with Guggenheim. Faghri

Ali-Ahmad Faghri

as like I dynamics to So supply it the a you're sounds follow-up the trends, the last the quarter to your market to in but tailwind guess side GMV. headwind question volumes a on were on a describing the

this your to near about per in you and about talking term in market later you GMV the revenue guidance, when Are before unit? continuing tailwinds specifically So dynamics favorable talked normalizing year.

George Chamoun

QX is look QX right the of GMV. we're say unit, of and to be would of it as schedule now I one relates -- primary it as we differences to at per we revenue as ahead are thinking and schedule that relates first, about ahead would QX,

So not, seems at know like add stay at it moment, it makes this lasts or really to being that. us for this prudent if a little to don't we're, on Whether more point, I it Bill, it. to prudent. just yes, sense you longer want

William Zerella

kind No. I mean guys QX trying would I the the both say, kind terms sense year. that day, the came out. at headwinds and positive but just mean in you're and to for in guide of of you of we QX, that. we're there was right, the out tailwinds, Ali, we be on is what kind of The rest side some numbers I in of of balanced the bear how of end

in about things So balanced we're from terms think perspective. we how a just guidance trying be to of

Ali-Ahmad Faghri

follow-up sense. makes a here. just And Okay. That

a like label, are the off-lease the of cars, the untapped which talked investments Most by particularly the OEM side big seems on the those cars, sold digital and commercial largely fincos. for private opportunity You've company. of utilized auction websites on market, about

platform. commercial incumbents target your to category So market, to Can yourself about you products hoping maybe you're current off-lease that developing a it's a from than largely differentiate market is that bit different the business you're specifically how already bit within and the wholesale dealer talk given the digital?

George Chamoun

the Yes, understand our one was a another short that I'll the we certainly. the major an announcements know, off-lease category and platform. of this -- over high relates our inspection frame, to upcoming first, as it acquired business do integrity investment maybe describe some the level it structural, as Within because inspection you we product also next areas in inspection the elements. term. of have strategy is in our acquired at we to But other vehicle business platform, helping

understand that from commercial at help and very believe the pricing #X them is commercial about will a we of help their specific year. to asset. what inspection towards assets, hard they want investment. us do we're this platform that end with and that product we're and partners understand And be for help It the So really the decide work, partners, condition perspective what released excited creating will

So on side. that's inspection the

the are, but side and more products S-X dealer On out would that will marketplace of not do their coming marketed the this create later our we've marketplace There'll have sort we partners have because in we come we be commercial that year. capabilities have we partners mentioned upcoming that of private to out like to coming products marketplace things, what broadly private topic for both enable that own a on constituents.

that on topic. more So come to

Operator

JMP Securities. with comes question Ron from Josey next Our

Ronald Josey

talked bit you're Clearly, Apologies on a dealers and little it a to but and or more Can or I as things X earlier. or as wouldn't be so reason reason a picture, what please. please, George. us why you just Maybe Bill, then if investments, just more just great join working you sign-ups. might maybe dealer you I quarter the remind inertia, platform? know talk don't #X seeing the ramping walk bigger fine? top I about about Or well. Is heard that, through talked And know that are the before,

touch could Canada. you if Just

things there's on missed. Just to wanted updates might really any I And if have I well. Canada seem be to going that see

George Chamoun

Yes. Thank Ron. you,

we're growing really planned. we as First,

us, last there's we've are growing consistently. Quarter-after-quarter, to -- took X the when you entire using years, sell traditional that we across share took back significant why we saw wouldn't the even about whether you Dealers auctions. a the These market And whether it wholesale, sector. if historically long-term be be think So wholesaler, dealer look a you over been be ways have it very their relationships. relationships.

their we is dealer our quarter adoption wallet XXX% cars. keep we consistent. over to wholesale. up traditional ACV dealers. growing arbitration ourselves. We trusted relationships. a at And very the cars And product, and so it care of get a We GREEN what dealer point that We field very what by to giving partners. dealer any build few ways metrics time their the as tend and X selling transparent of extremely dealer, at for And a them. or not right, dealer go more these they We becomes period vehicles the where get do And earn the to and our then pace, pace, into way we'll of share. we the over buying we prove becomes platform for it market. that up take just our from in focus the end their for their years, the as this that efficient of on show the long hook efficient us really for really them seeing after will we're here, to quarter, dealership. issues. in been any growth of We just very any and and at helping buy GO last move sort They're inspect is we've We out more We

think by I I after sort your consistent seeing quarter we've Before what exceptional And done relationships, Does Canada the country, had to quarter. across growth community answer -- really of been and question. building first you're we've that dealer. we've that dealer after the community question? So is go

Ronald Josey

it's totally helpful strategy, hear and I It is. to yes. Yes, mean, the land-and-expand that. get I

George Chamoun

with in before Canada, come Great. on alluded a strategy updates year-end On our of no plan. S-X this that yet We the we've year. really

obviously, we so back -- this a all, to early to more you to come. So would come little be

market year. by to for come of is to end goal a with Our the the Canada strategy

now. sticking of sort I'm say with would I that So for

Operator

Colantuoni Our with next from question comes John Jefferies.

John Colantuoni

It revenue dig bit guidance to the to quarters, year little like wanted into full I more from least flowing numbers. our at a looks guidance. upside through according first X primarily is

remain we're the expecting elevated market pricing XXXX. in to until wholesale So

maybe the sphere. second in the for envision half and expectations growth takes in can ACV's the you I have digital key within how trends progressing share follow-up. market of a and And about So your the you puts talk context of industry broader

George Chamoun

then you I'll And go go do first Bill, second. one? to on this Good. want

William Zerella

start then Yes. can I'll George. you add and Yes, in,

my as higher out QX see to yes, we're remarks, in the if in versus at in you at the said we year-on-year. And play right? assuming at prepared near continue our XX% talking I dynamics John, we're growth term, guidance about the end, market, look QX So current the high

guidance, does just results. And second right? then it market that can not For going in -- the And these business. how of drivers with differently, persist of right? today. the continue the we're the And out balanced. persist, assumptions Now assume current be that that we've right? out half benefit, the the same we But trying generate we're -- We're second to I assuming dynamics kind in trends market our we're in if for already second moderate prudent we're of obviously, play terms we just assuming again, different necessarily we're the more were again, to seeing to kind to just potentially, the model doesn't half, obviously, half, that underlying proven extent the

if little So that, of you George, on like. I'll let you that -- add on more top of color a kind

George Chamoun

question. thanks I guess, the first, John, Yes. for

look these tend method, And X out -- last kind don't see our predictable that's to do. happen you culture you been when the us years at of at this always quarters. know And ACV to back moving to look parts. we We We've all with yet us about historical company. what just If data. our what's we really going is think learned very and help

can predict then on for trends data Is historical could favorable? the market at what firm on market now, that like see we the very how your be out? rely Now are what to the point. And look we'll case. helpful that's we more is That And that be the predicting. But seems that much our future.

John Colantuoni

I wholesale frequency to X trends. could that enter acquired territory the started months? retention and turn that talk engagement them wholesale those once market Yes. customer the you market a wanted just to and gives Absolutely. Can -- you you you've confidence about little and help second customers since about how to dealership engagement that Maybe retain of customers in in you new uncharted normalize what to you compare And last bit of the half? that starts the can gives you confidence

George Chamoun

certainly. Yes,

excited we bringing We the In opened, with very We in excited we're cars. seller are results. that success new high and the our new selling territories and is just on state, units we example, say of buying I'll for territories, don't about how just -- of the territories all both dealers, point, very plan. -- growing. a we newest the team seeing not very We're acquisition, disclose data, this ahead our we've are obviously, went We our we're our expectations on at internal the number plan from for internal opened. but our into

providing you So confidence and to very in us seller very, exciting. our obviously, we're the that's and very because it retention be very predictable. remains very all the and model gives strong And to acquisition look out confident

well. very seller the it's side, going on So

whether On would hard work buys ACV, buy a It's Buyers car they're buyer we ensure in do Where sector. in transparent. ahead -- fairly, prefer very buyers the more then dealer versus reflects by every our single others and when the only in side, NPS car, to transport, treated et to continues not NPS are in to to car, we ACV. the climb cetera. our of itself it's in those willing ACV a by platforms. more increasing car think our pay customer car but That car buying, satisfaction, other for

are that we're buyers or buying pleased with more of So far frontline-ready we're quarter, last as term very so of on franchise dealers buying on sort over these the selling. -- from that the new results the you'll well And buyers. as our pleased also of number both typically sellers became hear sellers perspective -- the vehicles with acquisition an

So all all, excited. in very we're

and forecast QX, exceptional you're market quarters. next really over out a had us several the additional we so seeing gains And share

Operator

question Rajat JPMorgan. comes with next Our Gupta from

Rajat Gupta

first just your public start on had a to Congrats wanted question. I I OpEx. quarter a just company. off Great. with the as

the The than first expected. leverage absolute an expenses Probably had was better quarter much what basis, on looks strong. we were pretty it like

like OpEx year couple the the that need plan? first the over tracked if as I tracking a spread this out there curious quarter a you feel is at what to per if with And change -- happen do as some as thought in curious or maybe before? expectations? mean of catch-up you Or have full is spending you're XX%, here like that years? spend, your I probably do Just less later? like is And to that to in to the follow-up. line had looking to like there -- Just you to

William Zerella

Bill. Rajat, Yes. it's

So a couple of things.

were the year. So QX. basically kind we've a $X less in flowed about we yes, we the and modeling, that million came did side than of to lot full OpEx in We through originally on at leverage see more

full favorable the incorporates OpEx So year QX. actually ranges that in are -- performance

Even So all what model track well of our we year. we we in we're QX, below had of assuming in continue targets. of the to that is rest through though the on still our basically came -- planned the below that tracking we're internal kind

we're investments our making, QX in efforts to up bring in really beyond. recruiting people operational in QX, of more go-to-market in kind ramp continuing of terms in of we brought lot we're tracking side, tech a side, talent the and and product to well we're the and executing well. And On really and that

that, our end -- So of the executing originally internal for modeled what for our at say I OpEx. we'll just total expectations, the we're much we on at year, current pretty the up, But good track. pretty against based would -- But on despite end the below we full end year feel objectives. about

profitability leverage more P&L returning and set you But up we believe this deleveraging time result. year I continue a to a next us believe be is to us to approach as some and we and going business. our for And kind of and in -- it's for for beyond grow beyond. as back invest year We as there'll scale mean So is as know, reminder, us. and an investment now just the our into get

Rajat Gupta

to on Got capital? were stuff That's it. you like penetration the could front? of rates any don't you really know give some color I then but bring color. this quarter, in that every of -- ancillary transportation, like a Any plan sense sense And us can out provide helpful you the what of

William Zerella

just tracking of terms would rates, planned. in attach say Well, I as we're

the of our in kind Capital digits. business rates, attach single low grow which by objectives essentially Our -- our ACV been increasing have are to are

early nice in there. still in QX. we're a the as So mentioned, George improvement saw days But we

IPO So gain ultimately rates put we're Transport, road or to us us give better certainly more a sellers. in will side. We've improvement time order during internal on increasing against over talked transport targets. our tracking position scale, we our will our Plus delivers attach ACV well. which margin which SLA about show in Transport believe, the as side -- our a generate that to some to on

strategic. So it's very

say would on I both really slightly plan. So fronts, planned, ahead we're tracking as of if not

Rajat Gupta

it. Got it. Got

you there. what's George. the I like -- trying -- of Just Maybe label opportunity on just brand like side follow-up understand Like the about to for business. one commercial just private the mentioned last the

is that we drill, unit or -- or so. top test obviously, like how like as in have versus Because auction that penetrate their once OPENLANE, dealer-dealer revenue with roughly like you channel? there's and And mean change I what auction Just that. your that $XXX ancillary then know, channel ARPU currently of you does per on like the services

is it channels, economics the penetrate meaningful? just like the those if just So you does into as curious more to how once change or ARPU change,

George Chamoun

Yes, certainly.

is sector, But what or expansion. we're go making an those at the to I market unit. kind the And about private there's think as kind way a and second this look it on it So revenue about sort unit a auction think we growth. then opportunity. from how you really TAM marketplace could And revenue on sale of Rajat, the an the come is the extension, per marketplace the at everyone typically include of product TAM I and doesn't, looking per commercial we'd think would how at same we've as help all point, think open current as back we're this market categories. and to revenue to today in open product is new -- of guided and about way see you the is

buy I the And where unit getting constituent, cloud be competitors, an as car not private we're just from high-margin you look a unit anyone From what per sale, revenue even some say, tends the to can private than of like a know, our cloud the a a higher and service, service. today. revenue would auction open per might more very

the products I high really mean building we're with market go fantastic product. gross margin. to start product. out. see So almost that getting we're that We'll in. you're to are be to We'll just done have started. going very to to roll But These

go transportation, to you start to of We're over year start next once Act X and bring X share. around best once out over Capital, product look up the that, products share. us where and the But TrueXXX. out the this our of speaking the there got for -- next we'll So the as now expansion. to addition, TAM to going then of TAM right in our what be guided that market, product products at is and to like products -- come start to additional really, to we will sort to much core years. next ACV just grow and X maybe we've year Act the or how then Look And size comfortable will We're think in in related X at going marketplace. the and year, is take X about market we've And all we're products Act and back continue that we're years. grow the we're there into future. to to attach company going auction expansion the and revenue those to to And to product, going future like the proven. expectations this for continue rates are our business We've -- believe come to few

Operator

Sandler. Our next question comes from Alex Potter with Piper

Alex Potter

Okay. Great.

question. there's them. regions ask I levels to maturity now. guess I each So Obviously, you're wanted a of in XXX of varying within

first inspectors out to curve aggressively, you're them, just up now, of hiring looking your very hiring there. get Some the coming

do employment I quantify this difficult the sort is to not then would on don't it if time possible And this if sort aggressively what work, the any we're follow-up other right environment of at it's revenue spectrum. percentage be just least to on a of that indication, say you out there I'm having those of mean people are like in in but And XXX hiring the finding the end be any them are it now, way, would might know goofy bodies? you to the bottom some front. you're of of that but sounds the in growth trying in regions you having to that the line interested add challenges I

George Chamoun

Yes, Alex, you. thank

As -- of talking our one teammates know, the you I many most. topics of my love is leading one the of about

territories been -- the to ways hiring question. that the still have a appreciate in hiring and for in the we're of in We're channel. additional we're selling we majority I go these I the believe, So territories fully in of operational -- teammates. got our of we've are cars X our talented a -- hiring, mature. We're all, provider some we're But None years markets, lot if #X the dealer-to-dealer not even across, territories. of still

And not territory territory We're people. but hiring I'm continue. that would far it's I majority of So sure the will say our if month, every right this now.

and And the modeling America. second question, best work company our be the really to places part your so of are one -- we of in to

to We additional used team really team. in care care beyond. take their of most we're to really we and provide education But mean be yes, think that's buy the here word to across provide salaries, out. So I wholesale, them culture we're gets then over-the-top. cars want transparent when a and We the we build competitive of sort way of important options. to health help team, you addition, coverage I trusted of training where happens because stock your take benefits, to And retail what really provide and learn.

better. to there recruiting thousands applicants. we're out And ones, doing and others and right there across and recruiting interviewing time having doing doing we're just better we're training would teammates country. thousands and perspective. sure probably talent. we're I hiring from getting the then hard and those a We're doing amazing a from of -- and But best a in get We yes, we're say training our are well well We're So well. getting the make

the So your questions. very answers proud to X of that team's efforts. Hopefully,

Alex Potter

Thanks Yes, was congrats. yes. and That perfect.

George Chamoun

Thanks. Appreciate it.

Operator

back Thank you. over turn would I to call question-and-answer concludes Fox the closing This like for now to session. remarks. the Tim

Tim Fox

and you, joining everybody, thank call Thank for us the you, on today.

participating a in this quarter. virtual be So up will number coming investor of events ACV

So coming conference hope for the look Thank again, in website the We on evening. your coming in circuit on you. our a IR forward thank seeing great for months. details to weeks. you you look I have interest And ACV. you in the

George Chamoun

night. Thanks, all. Have a good

William Zerella

you. Thank

Operator

conference This concludes Thank participating. call. today's you for

disconnect. now may You

ACV Auctions (ACVA) 14 May 212021 Q1 Earnings call transcript