ACVA - Earnings call transcript Q1 2022

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the ACV First Quarter Conference Call. [Operator Instructions]. I would now like to turn the call over to Tim Fox, ACV's Vice President of Investor Relations. Please go ahead.

Timothy Fox

thank first joining quarter and to conference everyone, our discuss financial afternoon, you ACV's for call Good results. Zerella, With are me Financial Bill George today Officer. Chief Chamoun, Chief on Executive Officer; the call and

note related release, please of those regarding from actual our to results expressed could statements guidance. filings risks started, such get by be risks uncertainties financial in business our we to that or be uncertainties comments involve found statements. statements, future are include A statements can forward-looking materially cause on the and to today's These and differ including forward-looking and subject and that Before discussion Relations in which implied our found website. Investor SEC today's can press factors

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

George Chamoun

Thanks, despite used afternoon, line within guidance retail industry for delivered softening our ACV delivered results We while constraints above for key solid range you Tim. and joining expansion our in everyone. and persistent on the guidance growth top supply demand weighing automotive to Good EBITDA range continuing vehicles. the us. Thank invest technology initiatives.

ability with that, the transparency me I the enable positioned the ACV and and challenges dealer and efficiency. part X. underpin highlights our be sell critical embraced to ecosystem. who them vehicles macro partners, Dealers long-term is automotive greater digital to and earlier transformation, manage have to continue to our turn quarter Slide their improve have are source, well on to to Automotive first our and a let broaden With increasingly dealers also opportunities. with We resilient that of proven faced relationships deepen growth they referenced

an billion transacted a XX% of we are very XX% X% of XXX,XXX and million; a customer in Our of marketplace, suite ACV services. with quarter revenue year-over-year execution of growing team $XXX X-year We and of sold continued We market on our increase momentum increase year-over-year. XX% continued adoption year-over-year. in pleased strong $X.X growth, the of vehicles by with GMV, digital the first basis. our Overall, growth

Slide will to of discussion pillars our rest frame X. we focus innovation To long-term growth, begin Turning on drive growth. shareholder the to today, with X scale. of I value, strategy and will the our

Slide X. Moving to

wholesale the facing Given automotive industry, dealer broader are in relation the the retail we headwinds to market. automotive context continued market the on providing

demand used First, side we provided to wholesale understand the data of pricing and transactions trends. overall our market, car on

XX% in retail experienced see QX chart a QX versus about performance sales wholesale high quarter a QX in historically how supply purchasing throughout not on wholesale typically consumer during because demand vehicle illustrates mirror prices which chart a the a wholesale on in used but vehicles right patterns. the XXXX, year-over-year over was historical declined can the impacted After you prices key down seasonal prices. have trade-in. the for strong does driver typical first of very QX in Consumer 'XX. the consumers is demand improvement vehicles The demand sequential seasonal used modified and As left, experiencing used of

more in vehicles across resulted increasingly the became in industry price-sensitive I buying this while the deflation wholesale market. as price dealers describe conversion in later, As to compression will detail more rates

to Slide Now turning X.

Let's supply look picture. the at

shows at QX historically the XX% light averages right, reflected the year-over-year supply New low. vehicle remain supply challenges in we're franchise vehicle due in and of on the remained about well the sales impacting vehicles down is below production. which to ongoing historical This dealerships chart

wholesale the resulting purchases entering contraction new our has is of the acute important declined, input supply vehicle wholesale volume market. a the in at With inventories business are trades new because consumer we for vehicle trade-ins serve. in a near-term market to levels, into New these significant the market

While may unclear, in is to ongoing positions clear growth is for in resulting metrics to differentiated recovery wholesale ACV and market. be exact to the from our that historic return what timing the products investment supply the benefit

of So and what marketplace. business. left additional adoption. in gives us On in marketplace our quarterly a on our into strong we Think the position. listings market X, as insights shows our chart listings confidence provided dealer measure growth Slide of The

can quarter-over-quarter a the pressures the XXXX. notable 'XX growth you in QX have of supply industry. second exception pandemic moderated half the see, of in As with consistently Listing's the as listings of grown beginning mounted

and QX are penetration and growing dealer becoming reflection to the also on just the significantly points decline consistent, vehicles. marketplace by higher-priced the as in behavior on driven I were see conversion pre-COVID execution and X back rates cautious including listings resulting expansion, First, wholesale 'XX, the softening can nicely, a incrementally This you year-over-year, vehicle in earlier; recovered as levels. increased, XX% variance takeaways: wallet the conversion changing strong varying marketplace is began provided third, from territory conversion COVID the figure a right, pricing quarterly I dealers of 'XX, However, growth, rates percentage QX of vehicles. covered segment our sentiment are factors share prices hit, In increasingly There average; mentioned, in the more willing key few wholesale further pre-COVID, the of quite conversion. normal we've rates second, in reflecting to buying supply, to once demand,

help but benefited rates, from assessing price dealers year-over-year the manage our unit was Obviously, unit the believe data rates increase in year, rates products platform We continue will our conversion year-over-year in For conversion to the we in context, as when future invest to 'XX. in industry conversion macro high important 'XX our the XX,XXX and change historically QX experienced context QX environment, it's the growth. last headwind versus a expectations. in we

to XX. Turning Slide

a growth units growth unit resulting and XX% in XX% X-year broader You to on of compared vehicles from marketplace. grew 'XX basis. XX% QX see prices, mix GMV a wholesale despite that softening can $X.X X% And unit to year-over-year our billion, grew

Slide Moving Based analysis, was XX% dealers our on quarter-over-quarter retail estimate wholesale contracted U.S. year-over-year. on flattish from TAM internal around the XX. but we that to

continue it, industry So we share gain headwinds, to and market dealers despite access marketplace. ongoing attract our new to

X% year-over-year. in market QX and XX% share Given unit this our market XX%, year-over-year of growth an would ACV by contraction grew imply estimated

with Next, highlights the our I value-added would growth to wrap section like on services. up

partners to driving while also by highly continue invest ACV the delivering Transportation resources to These Capital. and services buyers both to deliver ACV. Transportation enabler Slide for top strong the On you XX, creating remains see attracting market new that for in and line and our technology ACV of and strong platform. growth are to key efficiency We scale results a investments can the ACV continues differentiated to

rates, in dispatched, growing and transports of times efficiency exceeding our resulted Our number attach drove which with in in once partner over XX% XX% again, cycle transport fast XX% were of QX, the transports growing QX, our more automatically network carrier year-over-year. In operations.

recently attract an app, expansion Dispatch and efficiently carriers marketplace We transfer launched to ACV for and element strategy. deliveries. vehicle is is new like digital and efficiencies, their drive a overall app the tool Auto margin which just also help manage Carrier which Carrier to important Technologies pickups carriers of Transportation our the ACV's

now Slide to Turning XX.

increase have than XX% volume ACV Capital our year-over-year, XXX% QX. in The transacted with resulted execution pleased in Capital in more in in per loan and the of Attach offerings business. are doubled rates a increased with resulting higher-priced growth. our ACV marketplace, We mix in along vehicles capital loan new revenue

capital Capital business equips seamless improve We drive and are also dealer our with a share. to solution. powering new profit aligns to investing Portal with forward. drive going being dealer Online technology will The Capital solution leveraging believe by further enhanced which and additional and This enable ACV dealers financing transparency we platform important in engagement, post-auction and the growth commitment wallet partners ACV's driver adoption will easy-to-use for deliver technology ACV

long-term our second the to value, innovation. strategy element to drive shareholder Turning of

to effective our 'XX delivering Live consumer our XX. to contributed the continues unit The drive Live Appraisal this Now 'XX. sell ACV's in Live dealer vehicles unique I partners. we're category to once strong inventory. in source and was just first to their like Slide marketplace our contributed in innovations enable dealer would and be is a offering to partners way to growth that highlight high again single-digit and beginning. QX for units consumers to Appraisal percentage Appraisal through a the our of our

are front, which vehicle for comprehensive an to able we pricing for our and learning consumer the acquisitions more increase and our solution dealers of evaluation. acquisition dealer a is tool provides consumer's a of appraisal condition is adjusted create integrated a consumer wholesale. engine, Drivably, the share our which wallet end-to-end powered ACV Drivably Digital, believe car. MAX With on will machine model we Monk seamless experience the This experience selling buying provides by for

to because offers ability the for supply. vehicle enables which deliver which turn provide expensive their Our proprietary drives more trusted attractive data more to customers our to sourcing of wholesale means dealership, dealers for valuation consumers, in

We imaging that device, their further a own self-inspection from to which AI-driven also consumers mobile will right plan technology price to consumers. can inform leverage offer dealers Monk's enable do to

wallet early in ACV. and about new share an attractive of excited this are on launching the consumer sourcing, We for stages and are expansion we very dealers platform, TAM opportunity

Moving to XX. Slide

all we business. together our power of wholesale amassed MAX has make dealer and SaaS products. intelligence market offerings It traction wholesale services history will our is both ability in with can seeing retail in has insights and both the and creates powerful? data-enabled ACV by retail and data moat of the dealer-specific significant ACV a synergies localized help and The side with volume pleased Merging retail data, wholesale the better very dealers. all long so its to growing outcomes of particular insights Leveraging key recommendations automotive. volume the and dealer. for and Why are drive that for personalized MAX huge drives MAX for MAX data are from data Digital a that ACV it we're the created automotive. our and of of as a this is combination suite combination. We

Moving update to I buying our advanced to Slide an shared including to programmatic XX. goes. share pleased tools, am the previously fire

driver Smart under presence, as a notifications tools SAM, and Manager. of creating platform, an SAM, growth price acronym already to as initiative. unit introduction will understand we driving specific X% of buying over vehicle intelligent the cases about us quarterly a it By conversion believe for for our pricing. needs use pricing bidding, for and and increase contributing are powering our also been never go-to-market easier. broad every and and complementing And help including SAM. Acquisition is algorithms an realization to for to in offered well will capabilities. and brand, brand We engine demand Simply auto we be our our now big has brings ACV the marketplace Thanks SAM our its be SAM informs the as dealers expand sellers. dealer relevant put, These SAM volume, persistent

are solutions let and at it data-enabled So creates results to value wrap our growing we're technology road through competitive growth drive financial more to expands to on long-term up about dealer our that, even driving of and take we moat, how very you partners With scale. and our over innovation, for Bill me that hand suite our sustainable excited growth. map

William Zerella

us for and everyone, today. thank you, joining George, Thanks,

outlined the QX challenging We EBITDA upside performance. revenue We are on adjusted our guidance with within despite George delivered to pleased our guidance our the macro call. factors with range earlier financial

of was revenue Slide of as $XX XX.X% guidance loss versus a or growth EBITDA above range, with detail $XXX in of Turning guidance negatively the but XX% Adjusted quarter impacted strong the million high our to Revenue QX generated first results. will headwinds. cost within of later, I'll of was of and year-over-year revenue review by end 'XX. our million results XX, was I begin of

believe Turning revenue, due strong higher driven sold CAGR providing XX% with unit assurance our Analyst George and we on our total increase total The the to revenue. of as more cover was mix will Slide a biasing revenue, GMV investors platform aligns XX% year-over-year that our I of vehicles additional and Day XX. strong we provides we this and and in the revenue that of which revenue, million Marketplace ARPU strong had of Note detail revenue XX% year-over-year presentation into ARPU. growth auction Auction of last trends. December. Total instituted XX% QX by XX% services XX% of of to adoption was reflecting growth the $XXX growth with on outlined and by are some assurance 'XX. line auction since which revenue, earlier. impressive was reflecting fidelity capital business represented grew product transport year-over-year that

of and data of MAX XX% the had comprised Our very reflecting Digital from total revenue X% products services year-over-year growth SaaS and strong revenue primarily acquisition.

to Slide a review expectation. basis the of year-over-year points percentage The XX. costs revenue was increased Turning quarter. now was of in Cost and X increase will revenue driven I by our above XXX approximately factors. as

to George to our described, partners QX First, incentives dealer our help that due softening the still conditions our increased while acquire in market EBITDA guidance. vehicles delivering on we

As market improve headwind and less back pull expect of conditions we expectations and a seller in buyer these converge, and incentives will QX. on

impacting costs. factor arbitration of second The cost revenue was

staying shifts, achieving during automotive in our practices. has and parts more our EBITDA costs apply do within approach arbitration so varying increased market while this degrees guidance. While labor, our liberal inflation envelope for We rising also and were but cost we to

we can't impact were we we our the of results XXX perspective, to an positive mitigate on overall as leverage pressures. revenue control While taking obviously our business. inflationary operating the points, cost offsetting in are by From steps approximately basis increased cost pressures, QX

Moving XX. to Slide

our context to on strategy, leverage path profitability. me operating investment provide Let further and

our of year XXXX competitive at to Investment in investment. a Analyst technology as outlined the growth and we As moat. Day, extend in our

remain flat increase and to year-over-year, margin growth driving expect expense. EBITDA profitable However, we our despite be XX% in a committed operating to

committed achieving exiting We to breakeven also remain EBITDA XXXX.

on based represent the EBITDA XXXX, of we for quarter. our that peak fact, believe QX will outlook loss In the balance

away balance million fluctuate Slide QX meaningfully $XXX ended with of to by the finance XX. with our in highlight X to We QX float $XX $XXX which and quarter. and cash our The I financing on We debt on business of our trends million balance ACV the amount driven will off equivalents growing million our in moving securities, significant in portfolio. this leases capital rapidly Capital of growth final reflects sheet due structure marketplace. business from of strong long-term ended auction of the our each marketable business, can sheet our Next, float

Slide Now I'll on guidance turn to XX.

quarter the revenue this a $XXX $XXX to are put to that expecting growth second it's in year-over-year. context, XX% rate range of growth For of important revenue million, of million XXXX, the QX XX% to we remember into To 'XX QX the expected growth. expected was range with million On XXX%. X-year a a 'XX basis, in Adjusted is be revenue be very revenue growth of a quarter is to our million. strong to $XX XXX% to EBITDA loss $XX

and XXXX, For of million the guidance guidance. is to range XX% raising expected be of rate growth Adjusted the XX% $XX of we the full midpoint are year-over-year. range the year a low end of to expect still a to of a or revenue XX% now at million million of $XX EBITDA $XXX million, revenue to in loss $XXX

in and business guidance. believe therefore, multiple As achieve revenue levers our vehicle continue it have multiple XXXX supply our although difficult we demand predict, paths to XXXX trends to relates to used to our we guidance, and remain model

wrap XXXX by targets. XX our financial Slide up on Let reviewing me

execution proven in that, to to We pleased And our has we and million our of back with $X.X with George. EBITDA billion to it in very remain turn XXXX. be achieve are challenging a macro very revenue ability what $XXX me let confident of in And environment.

George Chamoun

Thanks, Bill.

let your Before we summarize. questions, me take

execution times while our navigating strong with in industry. continued We are pleased very our through unprecedented

ACV are team proud has especially that results. our these We of delivered

ACV base, our gaining growth. share and customer We share which to our wallet strong market attracting by continue dealers new gain by within to for positions existing marketplace

executing expansion on territory our are We plans.

very gaining emerging promising and see are in from synergies growth and services. SaaS some Our the data-enabled offerings our marketplace traction market

road our and map exciting product expand an addressable ACV delivering further market. differentiate that are We

over on We value. margins $X are with shareholder that believe will revenue billion our to track attractive we in business model generate through proven significant drive

Lastly, the operator our to to build I'll to deliver the we turn on team begin committed remain With a to continuing over to goals. world-class call the Q&A. that,

Operator

[Operator Instructions].

from Our question JPMorgan. with comes Rajat of the Gupta first line

Rajat Gupta

on recent of the one first industry. in the the Just developments some

to we platforms. to that other First, have OEMs looking of they're announce Carvana's switch acquisition ADESA, many seen

our And Manheim. looking named already many some alternatives. dealers including also survey have suggested work Some for are of own that

already what And it So ground? some guide? And impact of a customers? Have you these give quarter I capture the first you're did you could quarter follow-up. sense started the on of second to a have results seeing the or

George Chamoun

Rajat, good to hear from you.

listings So a a grown on we bunch market basis. suggests are smaller our of sort But obviously we provided of yes, that was year-over-year -- data tremendously. that the have quarterly

obviously, And these our are so from, -- our growth growth, listings customer coming competitors.

we earnings look sort And we're you things -- the our whether basically these mentioned you on the a on, still today's at others, share. in and share. out or we we're going provided the going It's amongst of one providing the be things So data investors when to automotive, macro it taking it in you backdrop of to right? call, all demonstrating reason, all that for we're there taking

parties part folks part auctions. ADESA, sure dealers to it -- other of probably sort the were I'm contributes that you want are the all mentioned are of And of part using growth. our of but also So we that

Rajat Gupta

did it. has customer the interactions you those those past in in of any the Or see increased it steady you've just in of more terms as recently? seen But engagement? change velocity been Got

George Chamoun

is, speak a Yes, what more think we're specifically about share number yes, in broadly, winning competitors. we're of from from I lean But don't trying to think suggest to think we're I ready we're share where today. I winning and

as we're only you we're There's see from. it's taking than research, where industry think I them. -- the also in more others not you'll all do that share your likely

Rajat Gupta

one follow-up maybe inspectors. terms in staffing just levels, And it. Got your Great. of

what obviously in a of continues the back earlier seeing little Or what maybe like you in position for share, gaining pulling versus staffing industry to talked overall the yourself market. terms whenever lot but in bit this auction hire to choppiness the as so you are year Are you in to there to levels? recovers? you're continuing general, just you're Given a remain market of the

George Chamoun

every -- dialed -- a in to a And from in country in hiring. we're year every years not in Rajat, advance. months hire inspectors of X we're like we're we're go-to-market of trying generally, across It's number hiring month, a in really perspective, or you're territory advance. couple the the advance and

managers internal growth processes territory our things then we're basically up their customers how to, open So and we the rate, forecast the work talking their is the like on hires. provides

EBITDA something have inspector now our roles right that we hiring. that see hiring for, reason. because new we're getting We're If hiring these XXX a We need more right, like growth, right? always is suggests open we're new going you'll website, over guidance. listings, which we're We're enter we're but anyone, on the this within we're managing inspectors, we our you believe hiring and recruiting to take growth these that see for to in feedback customers, we're

been And of in for controls where you're to decisions. have business been us. like number us extremely -- an it asset-like this place, business in you're investing great and a people, investing of so we And disciplined to right make help but new is a years. ours, the when take this we've specific We've doing you none can metrics within

Operator

Our question Faghri line comes of with next Guggenheim. from Ali

Ali Faghri

sequentially headwinds suggest a will sizable at or that the normalizing? any like into car provided. should the signs conversion on It But headwind supply that you is to the looking macro the quarter, chart are car year-over-year you demand side seeing quarter? at be improve looking outlook are you the used volumes seems are second your continue anything new going So seeing volume second to the into

George Chamoun

their you for dealers Bill, which QX. started, to -- QX. The to new -- why, this a today we I not the on and trades. willing say to not quarter the it is, all think word be bit from can and stronger we're really there's little use trying reasons to are more like started just if less is We're more than One car you in stabilized, is lean one, the quarter as hang would. to on would But sales. But theme how we going macro quarter relates

they're they look But themes, year, term shouldn't new There much older they going car have everything time a back the a new dealers there this, because was, So spend in going of if on called car. new reconditioning the makes obviously. make right? They that to you almost different industry kept. it consumer supplies kept to at a out which all was sense, kept no last even kept was so where we're things not means car everything, of ton demand, yet is car to in but which

and has part going come going there's changed. of to all of environment sales, car the Yes, think the I of the be not right? used going car trade-ins little dealers new So are more on, current keep returned conscientious levels. to total has they back And to were to But yet be that macro sort aren't careful. supply a new multiple before. going more bit as those Dealers factors prior sales, like with inventory and they're the car that

So any helps bit those want think to to the a if puts macro know sort add Bill, about more of that? you of like think environment. I are takes don't I and little you

William Zerella

Ali, would XX% and add, in April is year-on-year. backdrop data again, quarter-on-quarter recent the some here were sales I Yes. The XX% What is retail down published.

QX. So see this recall in strong to into QX. out XX%. George referring dynamic growth QX, continued solid we really is that But that's we there's to. And a obviously environment start the that macro had did in And there listings yes,

as we start So we growth QX, see benefit in for passed reduction even well. we're as very that really forward incentives with a of some environment going the about some seeing though still tight, think in ARPU and there supply you I very, to And strong in the our us, we'll couple through marketplace. -- think is that

revenue So year all the of those guidance as guide and kind to QX combine us well. get full our to

Ali Faghri

still mentioned that looks competitors have but December auction, increasing It continue know the since competitors these in fees physical your this guess following X then main your you see I And digital color. took changes? below increases helpful like fee an also at a you do fee good of recently. and of relatively to implemented segue you time? price priced to your fee relative over I you're increases. you digital That's how all opportunity point are

George Chamoun

Yes, I think picture year. them. we're We probably bigger or lower right I in feel of competitive still our We're them. be of might than of now. things, good X about X But higher one the than this pricing for

we've I to they're that folks in in think like, an you priced job share number a in where, value the we're years, our to these I years, a in effective price help And great us, an and price sellers a And it's something pricing product we're lot this but doing norm. is feel especially growth also got think see in way, will us exceptional it's take about incredible And me where going over will to talk that both me, constantly in to to the economics, unit way. for way continue buyers getting marketplace. share of heard be more like copy ACV. gain a you just like

that, of you providing as always marketplace confidence go sort sort You're value, leader we're in guys see we always we upstream right. every of position. of sort There's show and right, that

Operator

Our the with from comes Securities. question Naved line next of Khan Truist

Naved Khan

traffic? you the the of the then guide? what's there? from of territory in terms on plan the go-to-market And initiative? high your expansions, it approach in, baking consumer just -- end your secondarily, your drive annual What's the consumer outlook, about And end and low was sourcing what to are Curious

George Chamoun

your just I'll I questions. I'll sort it. So your and question I'll because -- but to my answer I of understood answer best the just I do think ask question,

the parallel from So the what continue doing X I there? and side events on what across vehicles like let's come is help are the leverage and mentioned could more first resourcing week. where would been That to of say, with car. the think appraise. and our of It's It's X. scheduling part is just consumers part just of them the the who resourcing they'll We'll consumers be playbook efforts. our to dealers day go-to-market equation, We dealerships which it's to per on Saturday add we're also our we one, sort in se. a is at how Appraisal, doesn't go-to-market -- One, Live their in the the consumer have, event country auction that a the inspectors of come really throughout --

additional territory. I So look really one second sales team. wouldn't expenses as I at and when look in sort question more as at it the resourcing to like of any the that like field at about it leveraging broadly looking resourcing, we're inspection our believe comes was our how

managing these territories. of the part XX sales There's as at folks. regional have plan managers XXX around already we territory directors the So across country. look We as about the U.S.

say, just current was may Below only that, the mature which and part more we the inspectors, spending to what Rajat's territory, the goes are of about inspectors. the a you might In be X or earlier month. all we have mature or over or already territory, XX XX and a that's month. signing let's So plan. question cars inspectors, have, a may XXX and cars X X,XXX inspectors be And selling last we might dozens

So hire which we're part dealers, in And more mature maturity part just on almost of here, rinse go-to-market. model the as more repeat. new our about like bringing that it's our is inspectors as markets, less think we of

you inspectors. what go hire our a cohort bring And more it's sort other at then we few data at -- recently gave and inspectors you at sellers, strong went hiring public the other of we why all economics. we look of some industries, on analogy plan proven look We we kind do. you with Day, all of when in, unit Analyst help is a more we sellers. we If just We on bring

Operator

Our Sachs. comes the Sheridan Eric Goldman from line with next of

Eric Sheridan

medium the lot how you platform tech as on mixture display put should improve 'XX A I Day platform term? to over efficiencies revisit 'XX? you investments And the you of investments how and the of of side couple reframe Analyst at term. making productivity over investors and that tech to wanted you're has the months see the the and long back as Can and supply/demand come on be efficiency already can on and and mission of maybe critical a those ago, the some the asked, to driving broadly really lot been a volume long investments medium about in of thinking but

George Chamoun

Yes, Eric. thanks,

important. that's really I think

start obviously, the business, brand, just when you and trust. transparency look and our essence So the with inspection of ACV because I'll broadly, the is side of

So no the internal to just between applications. start and a platform We single of platform dealers, us particular inspection type that but Private built transaction various order, essence. brand wholesale it's sort into off-lease to plugs our we universal inspection Marketplace inspection with this I'll whether and allow -- inspection built

market. et example, -- as be For folks next us introduced already IoT dealers Virtual in is are we APEX online, great this announcing R&D and transparency more get formally -- APEX. go we throughout will the Lift are year the of we that helping us to know this arbitration, is AMP that one reduce device year many cetera. The about of we industry many the X as more -- items helping

samples of approach. -- we has next -- issues. only getting at where trust. be this in in going not to Analyst tech But requires here before we're week go we we was We're but always lives. early into a actually not it the investment. side transparency sort to field, start measured that whether broadly just we're finishing so that smell data going up save get see our we're inspection now understand Now factor to going able Day mentioned We able It's with or the vehicle going to to vibration. to be whole on We're going -- digital the is the any to and listen to engine, were and

create our the get -- us of but what want not you've initial at less want As you digitally, to friction. Dealers you as they look the tech you see to but with competitors, only this transact stuff see And with right happens, when you some don't have surprises. all got there, right.

one was about. that talked we area So big

visual out the with walk car Another Monk big Monk. area consumer we we Drivably way It's unbelievable an later self-inspection the year. launch their challenges for answering leverage platform detect will be dealer's bought websites. Drivably questions. a any with that the for Paris. was AI talked It'll where is and of Drivably integrated with vehicle, on to this a around we about consumer be

examples XX% couple XX%. or That keep, only us more much retail the X% wholesale consumers. the investment saw cars That acquire drives You more that tools. car are today. my they'll And our dealers from buy retailers say, their by The in consumers customers with crazy. They're XX% let's way. we dealer XX% consumers. and retail whole And of then area for that turning to for to a saying, the with to cars from XX% they'll is The from acquires of as our to the of transactions large want it as do curve. of help average a used of slides profit,

ACV, number area, more broadly you private on asking want So now now acquisition, of bringing have we using in products to automotive compete management both dealers a our acquisition. we're look consumer we and Marketplace. When your of private and at the marketplace. the in customer from We're inventory, We delivering. Private public that launched they're

this even So and aside, should or we Digital, group the they're helping a Private Marketplace what within with And further your the and wholesale. decision. through this MAX actually belongs make them do go This retail. that. you it to helps it on of specific the consumers margin matter products should should is fact, not you say, And vehicle, tools this and you your store, buying leveraging what our stay car. from car should this it's store. like step one wholesale. cars take you A they they're This

a are the way whole spend want the to the cars, I better merchandising dealers we call. cars, So whether sourcing it's don't managing simple the because It's the partner. cars,

that And into unique. pulls and that level We a partnership in digital us improve help them are here to execute quite is world. this

Operator

Our from Pierce line Needham. comes the of next with Chris

Christopher Pierce

have to even hit if you levers you Bill, unfriendly. the revenue question. stays to Quick XXXX the said pull guidance macro

data there? Just of to and services marketplace talking penetration services and we're increased confirm, and kind SaaS about

William Zerella

of supply, it's we will supply a up the QX, than saw dynamic prices previously came even it's expected. held and higher No, Yes. car though used actually and more that, the less So bit, we that actually prices down between prices, in certainly the And better the right? they higher Chris. remain.

down but -- ARPU, further. higher So with potentially the supply tight top even by potentially supply lower as Conversely, improves, at units offset comes funnel, prices of the though. come that's

at ARPU. got dynamic, units So a lower in expected higher than that you've

So the that last quarters what several other. to each these offset is tend observed we

reduction terms December one. in fees kind Number the year, in last we GMV So mitigating of and a that's in any resulting also of two, factor our that's in ARPU. increased number since buy of downdraft

related but they're in units the those ARPU. resulting the to and other and are -- each much levers, of terms very So X

Christopher Pierce

part of you Because it's Perfect. a thinking and gross to bid aren't having for pull around in a that versus Okay. can of is there feeling that Is that can are it thing conversion they're of And something kind then prices feeling right, on being drive I'm the levers higher drive that's margin, that? my conversion? if it forget what to certain programmatic set marketplace? of more dilutive type based higher about kind someone

George Chamoun

areas. of the help will you at l X Look, conversion is different Yes. kind maybe look

be So engaged SAM, you allows think the one or Acquisition specific activity bids dealer getting more unit. these it and demand the Smart side, automated more a the is, alerts right, ACV to like question is putting I going getting better where were by just with with products with on on Manager,

because biggest but rate any more the get of part of we've lots side. than this it's already But Used your dealers over X this seller, your way, to fighting honeymoon understand data demand vehicle The is big I in a nice more we seller demand a can historically to So didn't that cars incremental a asset. had But -- in say point have year, retail the yes, car. we And help. of the got and right? over one the more depreciate, of conversion they leverage over. fighting we X is expectation say will dealers how do demand appreciate, that, There's infinite -- really to others. the to we demand tipping our last is that And appreciated basically, car, okay? -- help that's had amount the We right?

vehicles dealers data our You're a you okay, the market you've more over seller number and products our you going more but And price. out, had no longer one got asset, see data then this appreciate. understand, ask it fighting of helps demand, helps, our to the

next you retail because If better wholesale want going it to depreciate it, to more really now to versus trying month. it's just

conversion. products the and think side of our demand the supply our So help and side on to both data execution the help about

Operator

Our next question Colantuoni comes John line Jefferies. of from with the

John Colantuoni

back are thinking the talk recent that It start have conversion we What for in conversion guardrails with to Wanted And rates. think the just pre-pandemic cadence some like we levels to you you looks they've of year? about? -- conversion should first weeks? rates and about months in how quarter. rates trended gone about Can should how be how the

George Chamoun

like we're here? perspective. guidance follow So off I'll about Or off don't to to because me Bill, -- how talking make do how kind sure want want kick and a really behind Why from of to you want start kick I you? you you do to

William Zerella

sure, John. Yes,

they So deck, norms, closer the typically how At charts bumped showed come So far that back at is month. end you they've we to kind bit March certainly on have the of the of that conversion a of beginning in strong right? And saw the mean, a up been based the -- look, I rates coming down down. see happen QX, historical they in March. QX. we actually can And

get do tax refunds. You

back in it kind of In modeling a see although again, hovers we're then kind of in guidance and norms But the tighter most year, around right, certainly for the there unit we're for historical starts the was rest rest a and sell-through. in our huge last forward. through down down increase in We're huge huge higher QX, we're assuming that bit historic moderates of just we volume. quarter. saw the So closer And growth and the it in versus activity, for to to which back sell-through. a pretty did range part, that month the an going was drove our of volatility April we it a move So conversion bit, the strong increases right? assuming year, norms, assuming,

is starting more that based seeing. look little a the this we're I to So normalized on trends say would

George Chamoun

got be more broad little color. maybe bit different would you've these A like on more little Bill, segments. for And a color starting. that Thanks, averages, ASP behind

make of helps guidance. deeper right? mentioned about want kind this, our really I want and are go, mentioned and do inform to or sell just were rid high the And buyers it? cars side higher-priced there's I just They that have that have product Each to of you like, valuation. we the I new I guide conversion. help story sort these now conversion segments dealers this on seller's the products development lower-priced helped to you to perspective, conversion. the to right still really like the So the them. getting Then where SAM, these just Do now, would sort it dealers seller And lower retail right with do trying a to what products, -- improvements, the things, in areas price are want data ones behind other okay, bit demand -- of asset? that conversion, say, can have I whether last earlier, that And what from deciding help right? the they're kind generally sell but our it? from earlier very can decision. of high of the year, marketplace our guide at whether about had Do be high a conversion of retail look of wholesale, then do seller think assets, I our little those lower very decide have we

they Hopefully, So helpful. sort or all really conversion, of work that's towards supply influencing the whether demand you're sort of side. the

John Colantuoni

at give little quarters. units directionally way a each whether full increased second playing guidance there's I for around the you that's I us for the your puts of is on the quarter came and a to of revenue should bit guidance. about thinking year of kind the And you was one of the year. directionally, the takes This the sequentially back conclusion be around it on if per Could high-level with helpful. in X that guidance? any sort can we least at or very -- the that help guardrails implies That's least second cadence of sense to Yes. And that and guidance unit ask just give wanted kind

William Zerella

Yes. sure. Sure,

we and I'll -- guide as to know, color much you as try give as you don't can. but units, I to So

longer our year, in guidance for I potentially the prices quarter-on-quarter, through expected QX not assuming seem right, as tell chain rest we to grow potentially that we of much year. you thought we they'll to through will persist would rest certainly are the will continue you would staying because is and assuming, such We that to which appear that since the directionally of the ARPU expect. as units are what assume be be car what down, used the elevated originally come supply that we for issues than

we've we our a come modulated there, that time. but bit assumptions over are assuming kind of ARPU So will down

science, to earlier, back to we basis understanding So you this try I units correlated right, is, a can unit as and use as know, assumption, ARPU not are again, into to each that precise as a a said other.

versa. the So you say assuming rest down year. again, guidance, higher, lower a to to is vice ARPU of than giving is through one to specific stop the comes extent we other I we certainly go as beyond QX the are that other of want the But bit short

Operator

Labick of from question comes Robert the CJS with Next line Securities.

Unidentified Analyst

John for Bob. It's on

long come. first Does as this pretty market like to the markets change identified later? vehicles it's looking to off-lease markets previously be international an priorities many But area won't then the for incremental really expansion a time of opportunity. off-lease and in You've back your maybe there go off-lease

George Chamoun

thanks for question. the John, Yes.

sell And if directly them all then companies us about study they that year. their most then commercial car dealers to I category, in from We've try tend a the way. you'll maybe sell can't, towards they the hear a product. be what -- interesting first, rental not built vehicles been TAM. companies prioritized we've That where sectors, and it, car you physical call use them, as that of dealer. leaning So they rental to auction. as but would out a an would strategy to primary we've talk not They this And directly the objective, like historical a first to end of car would product the are of

where believe a You'll companies. we product we hear talk us car have great rental strategy for

they're -- data You're We too whether leverage machine. dealer, steady data. so this we're decisions, kept helping not your providing map inspecting about them don't our like going. like much, to -- I just the and pretty a seller informed through Instead to right? that road at make things a cyclical sell to and these we a And and changing think it whereas as of looking the marketplace, going vehicle directly simple, all

market an a as go And example. helps you'll year now other new of then, after say, then example, fleet, it let's be of fleet come parts then that commercial after by market, into so might the also sort And the say, first it us now, see rental, let's for next back. from

new We kept We're about We launch thinking going working we efforts. to next So data in on instead some stopped going couple that over like those kept capabilities area. the inspection. of on services of actually months. on

get a wins And those in back actually the I that to and weeks. take go to X a we're we'll commercial, task, learned, And think capabilities. to TAM broad start technically, them of comes in think, part lessons And go few next X commercial the will we'll we'll one those this spot. the in then be when a launching of I year. great

helps, that your at least first there. hopefully, So question with

Unidentified Analyst

how of new rate you're wondering is the It color what's there? with Maybe I the if does. could early us on it right performing seeing that give customers adopters now? more And was then the buying. And programmatic second, you sign-ups of

George Chamoun

Yes, certainly.

us hungry. interesting They anything year, this inventory point. So say, were say are say to I so let's going screaming early still But willing do gone looking tried, they tried the fantastic. were is and there, weren't they an bit towards would a for of for, things is you you you're to big were seeing, market in I the hey, And they because and as alert we've -- vehicles have little And to condition that you're we've first where, of platform. cautious, okay? last move they buy dealers of the the sort okay? dealers people may great year from need weeks, to gotten it's so for then have programmatic, dealers couple programmatic and industry. stuck more into would you give a working some programmatic on other right might the let what now is, see Because -- can a of

if think baby others want tried can trust We can condition, our it trying you what's here. So about a make as they've really you to ours. trust like on especially before going step, sure

still the in still days, early We're we're days. -- the So right? in early

sort few month of coming or hundred month approximately? like the what's are it's dealers a think hundred platform. I couple a Yes, dealers a to of on a

early guys a heads our always we'll we months, yet. to days. the even to work this And a The to. sort about dealer. still little not name which I to the you the X but had name dealers right call, even next an In give we'll launch campaign what up of with in But even So then didn't is to month up own we're talk little each to or of going how next hoping Like And mentioned to towards sort SAM we're on and a to into more I'm going I've fun of is my investors, leverage that word this happy. yet. so do. I say then so year to year. help launch a the of end early We of done brand think haven't even SAM still days be have I you. tool internal brand, very programmatic

transparence point. on you give SAM can all the much pretty that's at So I this

Operator

of next with the Stephens. question Our Daniel from Imbro line is

Daniel Imbro

balance the to still want Cash Bill, of support start on cash a I sheet. strong, reserves lot to growth.

important I done there risk on if reach is out avenue. just guys in you But backdrop, deploy kind any M&A cash growth volume then Or deals feel the when backdrop capital then inspection targets an on And Bill? think about breakeven investors few side? M&A for Curious, right there you've are long-term of you flow that George's some I we point as specific given, want you think capabilities are the it's there to to those curious would and you've everything space the now? years, earlier, in remains anything this last assessing challenged how than mean more now? do longer towards

William Zerella

the respond So the And first. then maybe terms targets. take to could I'll you question first second M&A George, of question in

we in say EBITDA to still breakeven, elevated. demand. terms as macroeconomic get prices is slightly that. to far conditions of confident be very environment if year so can are if And feel challenging, will by very very we in probably and targets all obviously, our I being committed we the we That breakeven So the car this our continues changing way of towards consumer that yes not said, other to keep Again, how of somewhat -- I But as EBITDA would goalpost about And out. growth terms as mind, be that P&L potentially to are obviously, depending are profitable. think managing play modify the levers, next we hit is should investors remain could like manage and we of is upon year. there next end exiting thinking the in things OpEx concerned. supply used that that the along the wildcard, to go implies not we

think wouldn't necessarily us I So of commitment. backing of that off

George Chamoun

question. It's Daniel. your on first George,

obviously, strong. balance So our sheet is

really But assets. We're rush So extending obviously, the business I a be And we where unit time. always an We've we and sheet great have we various products. we're you're being dedicated steward see don't anything, say reviewing us this on I is capital. I And you'll your doing on always ways this always the at into in perspective, a great question got We've Our also always value-added can product We're think we're but know We're go-to-market. and team go balance this. capabilities us what diligence. economics. from who's can where of some I looking seeing expand But market, else strong. to at M&A how great be to smart our got here. right? brought a market. M&A, not great our looking that's say suite on all our at can always We've

Daniel Imbro

Got it. the George, And strategy. then just on one, growth

I think at this the we're markets. all in point,

a in more just public of space, Some obviously competitive private. game. Curious seeing you're So digital the your and wallet changes? peers are it's share of if lot investing a any both

a your digital change against you you salesperson maturity in level your really themselves curious they're what How dealer-to-dealer or standpoint, on when from is And So mean, the are to I you're how versus pitching going peers, if market of seeing or operational going? penetration the the any guys? points dealers then sales ground? rooftop highlight of differentiation is to kind

George Chamoun

Daniel. Sure, Yes.

physical not cars. using of Digital. start start of lower And they We've getting, that X or higher the cars, different started end selling then with only the product. end different not start our start where X current cars sold We sort and let's we our may ways, need or cars. may a being their example, let's Drivably. may start MAX or We with journey. journey that with we with say, might our month ACV, X is. sort with journey incumbent So may We we lower journey company we start in Appraisal. be So we partnership. might when but journey dealers our their keep whoever yet auction higher-end on start start We Live replace, and auction start a but they We okay? don't cars We product, with our might with say, our might begun journey for X, selling journey X our or end dealer,

might start they're using used journey by start a one we're group. each as relationship out relationship with private with the a hey, the group, a group then Private starting a example, these a manager saying, ACV rooftop And marketplace, by Marketplace. dealer with right for relationships, going our exchanging or now or and for cars you're us with large with of car a principal, so the And group, they our whether dealer dealer for

cars at more can we either sell or look how Let's more buy cars. help

different have we ways So we start.

have these decision. the to Our report help the is differentiation #X process in inspection the support right make we believe world-class with condition and dealers the data industry, we technology, how team can best with

an a got customized that that that's area day, And So then single store this. whether dealer at we've goals. them whether different are it's their of on products a of differentiation the it's the these that all of end backs helps group, achieve

Operator

of and time, Graham line Ladies gentlemen, the Michael with to due Canaccord. of interest comes our final question the from

Michael Graham

Squeezing in here.

the your back when unfolding? to because time start model comment newer older selling with you -- territories some were versus just how on hard come ones. of just you're on quick two in these the you but to between to if market wanted thinking you're dealers lag what's One Just come is when true? some going as and your going predict, about to do And that's anticipating. used coming promotional wondering And is could how the and when market -- necessarily it that market other dynamics you I you of that's the see new or new car of to what to of like And sort the trends like the these precursor the of lag, car seems definitely is that I'm of back model sort then that? some just a car just is normalization ask see you territories happens not sort and

George Chamoun

So George. Michael, it's

So we on things, like one -- here. on the incentive there's we going many thing try side, not

by let's sort and XX for to our cars a might say, we do. So example example, XX incentive through getting a for only incentive may a give be we'll types or a we're be whether cars of mature be and of kind one seller competitor, the volume have of type might example, mature, the incentive more high-level type commitments with us, going will of of a be, those less But as incentive. XX do there cars we'll program, way, an things in it at That of been always you part of a example take month an of market a hey, or model.

help move incentive move this $XX Another reduction And saying, something a type specific be like this car let's a basis, that $X or we'll okay, of on now, move car. make to do whatever transaction vehicle. right is it if specific we would and a

more specific these dealer hey, So to maybe on. on, these other we them to move along I all along and unit X would on, a a strong incentive based let's trying like, this, and position come of them help of, give of some some little program decision economics got we're their are did with okay, this making, our you buyers. We a run are nudge think again, as more, say, and I

in and of all things the of we're say bit to frame part new little doing So Michael, just I that that and just a we bunch markets our it's less for trying guidance. the would I'm intelligence in part than -- mature plan EBITDA our a more it's markets. some have approach where a the like like programmatic -- little was of overall about

what's cars I'm got we've numbers do as basically that. going basically right, what do. over you all And you proud it here, on, We've we're matter ship where He grow, here's here's gives over team, here. here. you telling can of an got and And runs out So that range. but cars EBITDA no all, a can Bill see, pretty discipline that really go the tight around hit within to discipline. the

Michael, there's types doing been me? of part on yes, the for so it's those -- late. sort And It's -- the We've Sorry, getting just was aren't that it's some of going but years. our of of things behind operating scenes, remind plan. second question that new.

Michael Graham

the just comes used much you Like like new about way coming comes your and units think up to going was market that? lag the and time back, long I like pricing you're down when starts model what's I talking market -- the there? elapses time have how wholesale know. with unfolding and do until the car things wondering back that

George Chamoun

So I sort a sure of a with we things believe I'm gain going we shared believe but we to not quarter-over-quarter if -- had iterative. this Tim, we're in was the I shared one is it besides -- of be listings. X%

So deck. we shared slide that in the

William Zerella

it share didn't the We in slides, but...

George Chamoun

shared just okay. it, I

up. that dealer okay? even come example. a a a more, all a listing trend. And to X% see like Michael, number, look in quarter-over-quarter, So fact willing of a I per a not on to trend less, more the bit we're supply just sort like dealer at back. this But That's an sort a meaning it gain of not me right, to is that it's a of we And to we're see that as before adds starting all X%. had wholesale starting little basis, is huge

They're going to So trades, Michael, are climb this They're like they're should at different uphill once be starting dealers know the it's is I'm picturing not take get ones in largest to should this look going to how wholesale quarter. going are here. to How I'm this car -- marketplaces all ones coming. as the the at no it to X be they what keep and going wholesaling. retail, than to inventories they're And used smarter. going to they going like

of If largest the supply, you retail used right? they get marketplaces, some, car make some, wholesale look right enough once the wholesale they they So some at decision. they

at the look will helps, to dealers retail, hopefully consumer the make I starts supply change wholesale. Michael, that franchise what throughout changes, to So what as as that demand iterative on us decisions more but year to right

Operator

I this Tim over At call for back closing the turn remarks. like to time, to would

Timothy Fox

thanks, you, call the Thank Great. joining and today. everybody, for

this over conferences a be will of at quarter. number on next road the We

our can You find those IR on all details website.

seeing evening. look again on we Have in interest if road. for ACV. great you forward to do And we you, So thank the your do a

George Chamoun

Thanks so much.

William Zerella

everybody. Thanks,

Operator

today's conference your concludes and call. this participation. you Thank for Ladies gentlemen,

may now You disconnect.

ACV Auctions (ACVA) 12 May 222022 Q1 Earnings call transcript