ACVA - Earnings call transcript Q2 2022

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. And welcome to the ACV Second Quarter Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following the presentation, the call will be open for questions. I would now like to turn the call over to Tim Fox, ACV's Vice President of Investor Relations. ahead go Please,

Tim Fox

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

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

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

George Chamoun

Thanks, Tim. for thank and us. Good everyone, joining afternoon, you

on again a four. exceeding dealer our are and strong both We performance, slide team that, let guidance. With delivered partners. second challenging in once highlights with The to with quarter results macro quarter EBITDA, environment ACV our revenue very second pleased for turn me

QX year-over-year modest we increase QX $XXX digital set QX Our the sold from supply wholesale resulting in weakening on are on unit remained softened quarter, of retail continued have We strong performance XXXX. Overall, initiatives. delivered in Market assumed of conditions sequential execution also $X.X XXXX. in marketplace, depreciation. key volumes X% we XX% decline record our increased million, market challenges, versus record price have growth wholesale June, of a record billion vehicle year-over-year. challenging momentum our half from very conditions We market vehicles in that second prudent, versus and in results results GMV progress and QX And continued the and despite XX% in a our strategic with and revenue demand back XXXX. a constrained new XXX,XXX of strong in QX. that with pleased very remain in will

reflects macro Our guidance cautious dealer impacting market. now of more this view the wholesale factors the

reflects also while commitment guidance ensuring on investing focused our growth, squarely Our profitability. we in to our path remain to

for we later, expense market detail our have account to headwinds. plans will Bill As expected operating adjusted

growth, market We tailwinds are focused profitable when on into headwinds for drive ACV. turn improving to our foundation

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

relation wholesale in to Moving the provide broader seven. context retail on again slide dealer market market. to the automotive I'll

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

vehicles strong see As you chart QX year-over-year performance on used the declined and in XXXX. can XX% about left, sales sequentially declined of from retail versus the QX in

during wholesale in After driver been high of key prices demand in have reaching continued consumers illustrates consumer wholesale trending As QX, XXXX, typically quarter, a prices. have impacted demand of down a historically but purchasing declined wholesale on recovered June. softening how has vehicle right levels first early the Chart since a used trade-in. vehicles supply, for reminder, and demand the is consumer because a

buying price sensitive has last have when become to discussed quarter, vehicles rate as we across wholesale conversion As price market. industry, the more in contributed the compression dealers deflation

Now turning Slide to X.

look Let's the at supply picture.

supply purchases are weigh due input on serve. new chart the challenges remains vehicles new the into XX% in chain which the production. shows continue about wholesale of market, right, ongoing the the well and on that we New to historical vehicle year-over-year sales reflected This averages QX, supply a remained vehicle trade-ins below down impacting is market supply were to low, significant the for historically consumer issues in because

have our XXXX issues marketplace OEMs in shows in QX, this our chart listing this our insight quarterly opportunities. on and adoption. confidence volume mounted, growth second of turned not year, in and production and business long-term increased After later growth auto which signals of is The moderating regarding While the On additional marketplace, there QX. dealer market we as X, left supply listings have a from improvements positive that ACV's into measure underpins a the positive then XXXX again in half been Slide provided few assumed outlook. position in we our

For wallet share the on and listings half penetration grew of XXXX, year-over-year, growth. execution XX% dealer strong first reflecting

In provided an updated fact, view volumes increased once In which for dealers year-over-year positions growth QX, in variance listings we on XX% conversion. in strong recover. figure the number ACV of the the the wholesale right marketplace quarterly of

Then rates range. tight significantly pandemic-related our very this vehicle and in demand to were returning in rates drove conversion consumer conversion engagement. in marketplace wholesale in moderated prices factors in demand quarter ticking we rates beginning a As cautious year, normal levels. Then pre-COVID QX first conversion with pre-COVID supply the resulted last down marketplace quarter-over-quarter. discussed increased pricing This and strong trend as buying behavior continued as quarter, pretty

in and platform We a year-over-year dealers new XXXX. environment expectations QX manage normalizes QX as resulted rate with help headwind in rates price the macro conversion increase XX,XXX when context, will future the believe solutions. the versus in unit change data-enabled For we in in conversion our

of prudent balance of we depreciating wholesale at based ranges data prices, sentiment, the believe lower the for the latest However, the XXXX. will on consumer conversion showing historical end remain weakening it's rates to assume and market

Turning XX. Slide to

other prices reflecting, broader to $X.X the marketplace. vehicles year-over-year About grew half GMV the mix sequentially XX% higher a QX record a driven growth, in from with two was record to a year by of growth year-over-year You XX%, modestly billion. declined unit that Unit of basis. see units half compared XXXX. QX on our can was wholesale year-over-year, and grew performance high on

below Moving internal volumes, we normalized share to market we gain to analysis, on XX% Slide new contracted in remains continue backdrop, execute, Based around and marketplace. US our Despite market and dealers that macro XX. the QX. attract well dealer our this estimate to year-over-year wholesale

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

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

driving results. deliver and partners can Transportation ACV growth XX, resources, see scale in both Transportation top-line you and and Capital, On strong Our also to ACV creating Slide while are efficiencies investments that our for the ACV. technology for strong continues to ACV

and were an resulted growing from attach with in The again XX% app, carriers once are times, dispatched, exceeding partner XX% carrier QX, XX% in network we and fast attracting In rates of growing marketplace QX, increase driving our Transportation transports QX. new automatically year-over-year. in cycle over points percentage of our Our transport making like technologies efficiencies. investment Carrier our are to Auto operating and XX Dispatch revenue

our a margins positive key fact, business in with QX, the milestone had revenue in In transfer mid-single-digits.

margin financial As a XXXX revenue reminder, assume of XX%. our targets transport

to a So XXXX path us achieving on puts target. hitting mid-single-digits QX the this in strong

to Slide now Turning XX.

more execution in than attach XXX% growth. our ACV are Capital very the Capital loan over pleased We rates in QX, doubled volume resulting with year-over-year in business.

in in of dealers, this strong adoption financing active with Portal our paying QX, leveraging technology has and solution. to value-added, now XX% power investment Capital is ACV Capital business dividends. Our been launched post-auction ACV's Capital

going up growth We drive forward. to sales in also and an ACV Capital enable driver which our engagemen,t ramped dealer investment further profit adoption Capital important ACV capacity, will be and to

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

in innovations in Appraisal the have Turning for listings unique category, our our way provides enable Slide our to XX% in a one offerings the dealer consumers their Live dealer ACV's Appraisal consumers in our to delivering to Live one Live vehicles by offerings market now XX. partners. our offering category, would gaining. and unique dealer provides year-over-year this QX highlight this of for of is to partners. consumer-sourced a we're Appraisal first sold grew was drive by like ACV's partners, highlighting way sold marketplace, I vehicles was in and to their inventory. this to traction have marketplace first

able promising number the with our offer more a initial by for condition-adjusted reception in now from model In been MAX consumer The market very developing of and set addition QX. to technology Digital. dealers seamless to the Drivably, a has buying of experience Monk powered Live are Drivably Appraisal for valuation. Dealers solutions we launched, engine doubling for comprehensive leveraging dealers quarter-over-quarter our vehicle pricing are ACV

further are we do a self-inspection working to which AI-driven from ahead, device mobile dealers to can Monk's inform Looking own offer imaging enable the price technology right to their consumers will consumers. leverage

for about cost excited infecting on are consumer because and early TAM ACV stages the technology new We and unit to strong are of prior of dealers offers by it expansion the incurring very offerings economics leveraging these launching sourcing, vehicles. in attractive

XX, slide am last to an which buyer to update month. to our Moving I solution share launched formally SAM was advanced pleased

our bidding As creates a only enhances notifications ultimately demand for it with SAM sellers. platform, specific persistent auto our SAM capabilities. in reminder, and and buyer intelligent price provides and not conversion relevant the dealers higher experience realization also

with we that inspection online. comprehensive condition vehicle's update vibration understanding in leads as a launch an APEX buying has the deployment more and On use which while and a is capabilities our powertrain and believe, engine in by on today wrap-up big at XX, to This capabilities. markets and We July confidence we in upgraded adoption including provides better QX. displacement efficiency introduced driver Day. APEX year. expands its also capture dealers dealer audio our for our this later and for our I'll sensor XXX next-generation incorporating a is select operating APEX experience March will accelerated expand marketplace. better audio the single planned a increased with SAM SAM existing our of increases with us over ultrasonics. detection This set, on in inspection dealer broad growth collection of new device on Analyst wireless its data data application be AMS technology integrated quality Following teammates with cases device leveraging ACV's slide innovation and live

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

Bill Zerella

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

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

versus XX, strong basis above guidance revenue range of $XXX end approximately points million and begin Revenue slide Turning results. loss quarter or guidance and in was versus our second EBITDA QX of of XX% of XXXX. results with growth margin million generated year-over-year our sequentially XX% $XX high I'll XXXX. to of improved XXX a QX of review EBITDA Adjusted the beat

Turning XX% which grew of of GMV services cover total in XX% and on revenue, assurance was ARPU to of December. slide outlined to sold increase continued the XX, revenue, I revenue, XXXX. we which revenue, QX X% some of by the growth XXXX XX% mix total due revenue. capital vehicles transport Total versus $XXX driven and detail was that revenue and earlier. of very year-over-year, CAGR year-over-year platform of million instituted QX George was of on adoption the higher nearly last biasing since reflecting XX% represented our XXX%. grew growth XX% strong Marketplace Auction a will strong additional Year-over-year

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

by first, incentives on acquire QX these our that in in QX our three increased help review We decreased basis QX driven XXX as slide executed I'm on in Note will of call. Turning in points The incentives was XX. revenue pulling QX, vehicles results percentage weaken. discussed earnings as costs our factors; XXXX the back that results. cost this QX dealers successfully recall a as of to improvement we quarter-over-quarter. now conditions to to on QX I slide, quarter. comparing revenue approximately market

factor factor from improvement reiterate in improvements comments positive training third margin business, second transport. I'll our for The the about key revenue costs earlier driving this was lower transport process George's which revenue milestone and delivered arbitration margin. enabling resulting And was technology. a

indicator in excluding Operating Also recorded cost overall approximately assume as a XX% points business. QX To Therefore, margin trended achieve profitability leverage gross impact by XXX has in transport. margins. targets margins outsized financial of a our costs of XXXX are also quarter-over-quarter. basis. on XXXX basis for positively improvement revenue digits our of we an a our Our reminder blended increased strong on mid-single QX long-term revenue transport the is revenues this

provide leverage XX, slide to profitability. context Moving path let regarding operating strategy, to investment me and our

market market addressable investing and our leading ACV's on remained competitive and technology. have extending position differentiated growth with in Given moat large opportunity, we focused

have investing We ensure a prudently focused to also clear remained to on profitability. equally path

our plans We're stronger while and steps commitments specifically, our efficiency. rate go-to-market run XXXX and year-over-year improve. below point the heading be outlook we ACV and a conditions to Exiting of ensure the we to in More spending have lowering breakeven these our revised percentage investments non-GAAP growth better Given key XXXX XXXX, this QX an reduced for expense taken guidance. technology our we're doing and has This this to $XX full market also to XXXX XX%, reprioritize approximately effect operational into have operating balance preserving accelerate of our even revenue our position when ACV positioning XXXX than million initial lower our EBITDA OpEx original year, expecting achieve breakeven. guidance. XX to annualized revenue is points

structure XX. auction securities that cash finance of marketable ended cash ACV capital long-term slide $XXX and $XX We million QX equivalents on QX balance business. Next, million Note of includes business. our strong and highlight to million growing our in $XXX I'll with debt rapidly float in our our and capital

has final corresponding the previously, impact fluctuate weeks quarter, meaningfully on each balance operating a float discussed business in sheet trends and we of it cash of the As on flow. based can our on amount two

operations For for half $XX sequential flow outlook are to was EBITDA used by flow million, of the $XX cash from be was example, the million XXXX. expected we flow in losses, marginally to relative first XXXX, the of to operations cash of driven used QX. expected increase decline with Based QX in in flat to lower along our which half change expecting back and current on

guidance to on I'll Now turn slide XX.

XXXX, to The XX% of approximately the range rate XX%. to are EBITDA be is growth million, of of quarter growth to year-over-year. Adjusted to $XX third in XX% two-year is the our revenue revenue in million a $XXX $XXX range to expecting expected expected $XX a basis, we million of On million. QX be a loss

our EBITDA to expected in of at $XX factors our impacting this Despite to to $XX full revenue the to now XX% at be a For a the XXXX, due to growth view earlier. midpoint we midpoint loss more now the EBITDA guidance is cautious efforts rate Adjusted X% loss cost year increase the are I lower be is a reduction to Revenue of revenue of lowering the market. expected to in to million million macro outlook, the is $XXX range million expected outlined or XX% $X adjusted just range reflect revenue. at volumes of million our approximately XX%. million, XX% wholesale of to $XXX

in relates conversion remain through are of macro range, the to impacting rates end to factors we addition persist or market historical assuming it As current conditions therefore, that lower second the the below our wholesale volumes, at and XXXX half. our guidance,

we're non-GAAP of Finally, year-over-year, points and at grow to our is now the expenses approximately guidance previous below year. which beginning XX operating expecting percentage XX% the below guidance

with We're And me EBITDA back what macro million our our in challenging proven confident that, up we George. wrap turn reviewing billion revenue be and me has a to very to XX $X.X our execution of achieve $XXX on in with pleased financial by ability targets. XXXX let XXXX. remain very Let and of it to slide in environment

George Chamoun

Bill. Thanks,

your questions, let we summarize. Before me take

through execution, our while in we navigating And very We times unprecedented our proud these our with pleased especially are industry. has delivered continued team of ACV results. strong are

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

We plans. are penetration territory on executing our

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

are addressable product exciting our roadmap ACV market. further We differentiate expand on an to delivering and

$X track will operator to to to We goals. With a with our begin world-class committed margins shareholder billion We to the on build model we to I'll team deliver the turn significant a in through proven remain revenue value. attractive continuing business call believe that, are drive over that generate the Q&A. on to over

Operator

Instructions] Thank you. the [Operator proceed. with of Jefferies. Our first line comes question John from Colantuoni Please

George Chamoun

John. Hey

John Colantuoni

Thanks for taking my questions.

of you a last geographic year. So, ramp big throughout most had

dimension us could markets? you what newer addition would how engagement if I you expanded comparison give and markets helpful quarter year? just the trended your in you your you to have been in the for has just think if a maybe could last into it And in that be older units customer excluded geographies second in retention sense would

George Chamoun

coming Hey for on Thanks question. board the John George. and it's asking

we're So, new between markets. markets I we to think notable don't differences -- and anything have existing report on

prepared So, our our to I anything strong. really have in early data. say But standout would like I'm in what markets not general, strength is any report remained

the strong do have higher other more remained sell-through. of have pockets across stronger listings love areas. would than a we has country conversion remained and where So, to areas We across country. We the

really pockets. markets. would there differential answer anything markets say general, there or on early substantial But have I some that So, I are is don't to in slated

John Colantuoni

-- tempering the Okay, so great. but the full And just expectations, quick a exceeded outlook. second year your The follow-up. quarter you're

backdrop Maybe of And should progressed months? what wholesale worsening isn't for more just the in comfort past to looking Thanks. there's sort to has deterioration few or market industry could recent KPIs how we a that be you been So, that operating environment. implies points the data talk the the further? over get

George Chamoun

John. certainly Yes,

of growth very with about we've year-over-year. many these territories. up penetrate to in the were the across listing growth We've been XX% excited we the yes, year, very able half pleased our first So, of been

the lot been we've shift negatively. at retail the across more of the demand a we data the the dealerships as sort consumer you've end at start of weakening. and did see sure data seen, However, quarter, year-over-year of, to following I'm sort industry of,

more the based And eye are being trying our And trade. so is on keep do We're what like already -- this we back overall assumption things else the our we of trying We've of now to eye the to on everyone prudent year, as keep thought on market year. half we're materially. to down. that? we our to improve and to -- conditions back right the year, really anything retail on add is economy. about And go see persist want really that's sort you sort assuming this of the not current throughout retail of started half Bill,

Bill Zerella

think I year. what we're No, the through just of it. we're far that so of describes rest quarter that John, perpetuate third seeing the kind assuming the

John Colantuoni

so Thanks much.

Bill Zerella

Thank you.

Operator

for moment question, our One next please.

Our next proceed. Please Ali from Guggenheim question with Partners. is Faghri

George Chamoun

Hey, Ali.

Ali Faghri

George. Hey, Good Thanks taking question. day, for everyone. my

So for conversion we're like headwinds deflation the on that's which probably price by citing, you're the the seems recent future. being foreseeable seeing it driven continues

normalize So the and seller yet? to and expectations buyer what to this get causes convert headwind

George Chamoun

Yes.

core are that just they start price. question. think see value. getting look buy -- when your to you pay, the careful. price lean to then the you How really, And car the has clearing get consumers to work cars, -- to to right? that and consumer willing car overpriced. dealers too less going seeing is are we're saying -- is to back used really to up of we're a what more are be this that So not are now and it's follow all starting pay to starting Every way I right? back see the the start to There's what dealers consumers prices your we're then do believe as you end high. They're in what to And at dealers

see we're that come at Maybe see down to rate yet. we are where to decline starting This decline the we least we as we've to new modest car conversion see price. will small okay, slow in But starting to has also happening, I starting And we're We think prices matter. bought which to they see mentioned is some predict the out? this in signs are So starting and see GMV. can't we're starting slow is the realize, least the call, starting dealers leveled to decline at the really behaviors to almost improvement. whatever see that doesn't that starting

see not half -- would us to comfortable So that, that trends in say, the Ali, make think year. trends go going and I up back to we're starting I it's think any materially at see the yes, have gotten leveled I And on. to come the to where more But you we've to them off. want back we that? to add now they to Bill, start least point of

Bill Zerella

No.

Ali Faghri

I second And but understand as for Thanks, George. appreciate follow-up a That then marketplace help guide expecting to don't you volumes, you here, us makes half can what sense. maybe you're units.

guiding and model you're that Does the quarter-over-quarter no supply fourth in quarter? improve that new second third don't mentioned assuming the or half. internal car headwinds assumes the imply in conversion You and your growth volume

George Chamoun

Ali. Yes. Hey

give don't matter. mentioned, you we just As But more a you for units obviously ARPU to to guide color. to or little that

the remains the So consumer supply are also assuming half end through at historical conversion weaknesses we've -- seeing that assuming the second in the that lower just of due rates that the ranges. yes, discussed as seen we're to all we We're demand. we're muted

our improvement you guidance that's the at But we've baked numbers the into the or revenue any this obviously So, when at our for projecting expecting outlook that's what's we're unit half. not our implicit second point math and what in declined do and look and guidance. has

that. terms to as In already of moderate to back some We're half. starting expecting we're the of ASPs, vehicle in those see well

of supply ARPU conversion So then the pressure that put this some and mix on wholesale of driven that all again, market by rates. upon is depending into what come trades is. will the the And

then vehicle obviously that But what of we've methodology color. gives into guidance. in our new dynamics change So, little that a more and supply if any variance you create could a hopefully the kind these baked of that's versus terms of etcetera

Ali Faghri

one could in here. more That’s squeeze just helpful. And I if

can what specific is exactly give reductions? On the on cost some the you outlook, -- driving reduced that color expense more operating

Bill Zerella

sure. Yes,

you've I align look balancing managing So mean diligent and and to revenue so our conditions and with of terms the spending be in our far outlook. us this that seen trying year very macro OpEx

So, a of all our preserving do maintain is also partners of service dealer investments. while certain growth this to our also to we level our focus while

market positioned the So, again be groups down continue look all we're we going And the across aspect in as prioritize of spending road. optimize And very improves how the well continuing for just company. we we're to our to about functional across of the ways cuts to every thoughtful business. of which kind all

So, EBITDA that's this we in manage basically a and have focus and line revised commitment the our very adjusted to has on bottom clear and guidance reflected I margins. George and OpEx

Ali Faghri

that’s Good. Thanks. helpful.

Bill Zerella

Thanks so much.

Operator

moment our question. next for One

Our next go comes from Josey ahead. Ron Citi. with question Please

Ron Josey

question. it's to if dealer to are can if knowing down listings over and us adoption But talk terms change sales as up, any you taking we're we if normalize. ask about in wanted conversions I of of wondering past or Thanks now there this sort here. but several the evolved process the for approach are normal that how units the things and new got terms the you sold been will the has in of in years,

a more the lot fact a because still just the progress sourcing. about getting up just competition And if you you're sourcing out a bit pretty here. interesting? think more and process, to the sales talk little There's listings I them going sign on more could consumer consumer to there for are up dealers So that question is as and then

So, guys. going? you love how to hear would Thank that's

George Chamoun

Yes, fact Ron. increased Thank with listing we that, pleased the We're year-over-year. you. dealers very XX%

markets and emerging customer our while. working, that in So been are strategies it's for showing a in really acquisition the well as as both markets, our we've

So, doing about large If the large more think and know, things rooftops for give but reasons a some groups added groups. we I from very happy storage had prepared growing, growing of difference maybe to maybe private why think the dealer so been for base, don't there. of I out single pick a different. than I has pace little the of marketplace areas color percentages at growing some dealerships we well are the out the we're I we on you're have bit the the higher there, in are second, looking

been a great So that's investment.

nature somewhere in of us of groups. with We Private groups trade a the consolidation of Marketplace, with on the stores large are competitive using in our know large one buys gives the And which advantage end groups country XX-plus month when we as a store. top to among dealer the every up out winning now you ACV going XXX themselves, simply there

a your be to that So difference ago. years question one would from than few

And group Our to Drivably products win now dealer two we're large win and dealer to there's are group with sellers working previously. data our and as because have starting example, differentiate there out group sort on MAX We've great for us the software auction on products that's side a in and helped of there that of we MAX and there. in things. much data the weren't out just trial Marketplace Private a of dealer whatnot,

And like Hopefully, on the gives little So – I you Hopefully, that's prepared answer. a I somewhat second that are different. really think color on that's things related. the and consumer an wasn't example. that that one

you has Our grown. primary Live know Live consumer offering and Appraisal as been Appraisal has

or is typically done year-over-year, on inspector correctly Appraisal our at consumer's a Live growth if grown remember it's the consumer's year-over-year. inspector and really we when XX% I So auction site our is with car home,

allow once is really having and later very that in inspect vehicle. for this prior the Monk leverage this with like the going then excited So release products We're we growing year. to technology consumer but we're Drivably are – to nicely, early where still to in These are to plan for inspectors, investments to our very also a the consumer to plan. engine sort the outside of vehicle. in Those out excited technology the our the valuation about and there investment. so modest inspect dealer of get or this we're us inspect Allows investment products a

still areas. we're these in So investing

Appraisal so far is going well. So, Live

a and But about. them little of The which investing going in still a now part to the the And over feel we're future young. make are in the quarters. other few we investing great material is products this next

Ron Josey

That's George. great. Thank you,

George Chamoun

Thanks, Ron.

Operator

next One question, our moment for please.

Our Please Sheridan Sachs. next question with is from go Eric ahead. Goldman

Eric Sheridan

bridge first Thanks the question. your years. taking looking the about dealing confidence of of sort demand Guys the just chain the to and but more so seeing little you're some question initiatives following the with targets the going over you're terms in so longer of you're on interval, economics to term and much both platform? better supply environment much. picture a elements of help newer understand just current like revenue in doing terms for some the unit EBITDA Thanks what deeper of the investors up driving on bigger zooming you're next side? still both of in of some four what term maybe thinking Capital those for a you of targets Can And those out bit out, sort obviously longer initiatives maybe

Bill Zerella

it's Eric, Bill.

first the Yeah. with start question. I'll So

if on better So targets we're very levers than few feeling XXXX, going even And much about the think drivers if actually progress still margin you about intact. fundamental a the this our a anything and were that based long-term we're months making. ago out little growth the are to we

kind rifle just to of each should are I maybe on those those level. through high of from So a hit what

very territories XX,XXX across established that we know country. and US to you last the as first, a enables was year independents us target the all initiative So across that big

and believe market share terms we checked that that's a key driving already lever time. last over growth So box in we've of kind year of

strong seeing marketplace. our by terms territory already it's So yielding attracting of penetration to you're new in dealers results our strategy,

intact. that's So all

tough year-on-year gaining and share. market environment which You're seeing really that's we're listings us grow XX% nearly that shows a also

share rather. and So wallet --

XXXX drivers to these traction improve and a a We're tech other bunch reminder is a margin that be in like delivering are about and various investing now continue of intact. frankly, to gaining SAM as driving new mid-single-digit improvements rapidly Transport So now XX%. which solutions the all targets in of in of bunch to of We're ahead operations. talked getting our business. way parts We because by plan are of QX margins

these about only after it March. we're frankly, months back than less a few targets in So there call little talked a we halfway

again OpEx On we're getting the on side, while more preserving our operational investments. efficiency, much also growth focused

as positions better operating even volumes frankly that for recover, right. us So leverage

from at the This right are intact. our are to think of of And return behind these don't that if we're be. year target kind when a of know time point what's and built or more I that timelines any anything market operating again, our within. over at But articulated the of will right. kind now drivers historical normalize, we our and of long-term Analyst five Day us model market are is But model. Obviously, bit ahead will we levers in all perspective. exactly we've these growth identified will market some So of of we intact we're changed that levels. tenets all some the the those key when that believe March

feel So we still great achieving about targets. those

take of But base about a little normalize. really Now on again, feel might macro you touch bit when want there back we achieving Capital, to anything targets. about the when step do drivers On a we kind not think different be to get road George, great the these long-term, these and sure we're there? because

George Chamoun

ACV On Capital?

Bill Zerella

Yeah.

George Chamoun

ACV as day, the and success both rate as goals two all at the attach on So of transport, Capital at value-added of look I when think XXXX. end our primary you about achieving well of services as we're our

improve a there in of remember attach care our When you helped all of do can really had last get we you taking if Over -- us where the still attach other look things. a was incredible at believe margins overall in to showed year were certain execution our quarter a rate? Could margin quarter-over-quarter, to went and ACV the And things transport. success to success improvement. we other had -- day-to-day headwinds ago, margin increasing overall we you also rates, we incredible we

how you out in about really going think to across I to country, So continue you're we're our believing territories XXXX, the we scale which when believe do do.

objectives. margin You're quarter-over-quarter to attach on our more be the get I and proud execution. And believing couldn't that going rate focus of the we're

Eric Sheridan

Appreciate color. all Thanks the guys.

Operator

Chris Please ahead. & One Company. Pierce It’s with question please. go our moment for from next Needham

Bill Zerella

Hi, Chris.

Chris Pierce

comfortable more more fellows. competitor, units second retail not Hey, about seen wholesale but are come especially that you share price average you necessarily dealers seen subset quarter, hear -- digitally? good realized the where higher Can How in guys on afternoon we've you? we've getting talk you average the price just of you're from higher-priced it Are a love someone it point? I'd down. about taking it. adding? selling Is Is deal units a to higher at new price

Bill Zerella

Yes, price. can two that. probably parts talk to about first There's I

was it's per story exactly much -- basically and so year mix. last and terms QX. a in And between unit in half mix. the evenly XX% change ASPs pretty split price, the and in that our ASPs higher increased that's of So half been evenly almost And for or that GMV year-on-year been mean I

question? part and what there, pause was second then second your I'll -- So the of the

George Chamoun

Yeah.

So we ASP more to when what win doing of vehicles. share think of you higher are

franchise their either the others better can products to Because vehicles. higher them rate filter just So it us the conversion help these to dealers like and/or SAM, vehicles based it want up setting on relates profile what and who as is a now automatically priced bidding. buy on get

So, SAM, use in does decide that to however, it area. on help they

prices I really is likely come we a in of share Overall, ASP year high higher will at the more now see the what gain think see we level come back the may and down, down. will we'll half segment. So but still prices between

is so And together, a that comes how part. right, tricky

up prices So market. are we down, as will -- because going overall coming remain

share even more the we yes, down I throughout in as, higher be modestly though overall signaling will think year the we're believe the really segment. GMV we'll So go gaining

Chris Pierce

inspectors? just talk curious, third-party I advantage I'm Are Okay. Perfect. kind guys VCI. use about hear obviously inspectors, question we in and people other of education there And for you that of use of sort then kind gives what -- the you other report condition inspectors, reports, I'm about are have. just sense you different advantage that uses inspection or standardized platform curious, six the to guys there are the third-party of they whatever by six that So have from those through wade dealers kind third-party hey an me. just other

George Chamoun

you're is employees. use to, I referring believe third-parties have competitors we may versus who what

models But density area, hundred in the like start get these cons assume So I'm you geographic are if to the once I each not units of then you pros think the a exactly in question, area. of get that's each sure of several geographic and question.

your inspectors get from a often CR send more And have given your to more can a can wallet likely a to share. you customer You higher of quality arbitration. control

for changes, some and arbitration. some we the in that and quarter-over-quarter some training process made it's in saw arbitration some improved got mentioned You last really to we in we earnings call, related as challenges technology changes, Well, we example, goodwill market harder. a had

got market harder and the we and did So harder better.

who have when you is advantages team. So don't your their there our they – given don't is to region, are advantages competitors many have any don't lower. have when sales in employees The you of cost – having own as structure have

across or paying for we're we XX We're don't per inspectors for those be XX country So territories early. doing enough have in the nine where we day. inspections to full-time of infectors have where inspectors dozens or or eight still

at advantage, our competitors a scale. growing cost markets So have while would you're those in

Hopefully, like gives one I So your certain like our competitive obviously, it of that We our model. think believe to And We are answers us these question. strengths we model. advantages. either there models.

Chris Pierce

does. Thank you. It

George Chamoun

Yes, certainly. Thanks, Chris.

Operator

with next Labick our From for Securities. please. Bob CJS moment One question,

George Chamoun

morning. Good

Bob Labick

you you. studied Thank it we've conversion talked Hi. it's taking Thanks given rates, Obviously, important and much have an how about topic question. for internally. guys my I'm sure

how lower is to rollout the the years what practices dealers? going tell conversion? conversion if higher have you conversion us or you right you've dealers toolbox wondering guys and can several what was And learned converting And I what now higher to dealers converting take from help maybe next increase you versus with So could about share with? specifically, to also increase conversion? over And quarters their lower us tools

George Chamoun

a question. Bob, Yeah it's great

to even we today XX% your point – we So dealers plus with – have conversion. we

are understand So months leverage trading couple compared thousand more trading ago. help them those they were And ACV Report Market will right now on. are to, dealers cars dollars the of a to you several where if

So ACV that's where use the one Market Report. could area they

that Appraisal. helps product value the is of Live them trade understand Another a

gives the Live take you Not So said the actual Appraisal in whatever cash months car, with instead or value, they two because the guessing run when data the a is ACV a ago, Appraisal, value, car. longer you no Live was worth the relevant. of month of the it the if

Drivably we're another that's practice. in MAX best going and our Where with So products. newer

don't. to scale two to take customers we've first and tried some well of the some advice all So our our

$XX,XXX the say you them MAX, and When their the to think would dealer's The on with more -- the And on to about I $XXXXX, widget difference gets different the it a one $X,XXX condition. could it let's be dealership car, different different traded answers newer And come shows one when the consumer newer quickly, based these condition-adjusted in have the their more in problems it's get website. $XX,XXX any allow is, it a dealers brands, I when them. They whether say a be model, first between they're at with on way. ignore up and a the market we're because on structured Drivably low on value website. all given then they in a it any two, there the other really to -- products, of these pricing, doing websites, the won't could car all $X,XXX, things make always they've with consumer be high, how got the could a car on name

strides right So these dealers developing and we've been tools good making the trade. decision help at that make will

Now on they bought months are midst of the having we dealers to do inventory in decide they ago. what

cars months also the wholesale That for to to higher it's just about a for the amount trades much goes it the So several ago it, the about priced, to have they X either reach want new now, at retail out new to to realization were they wholesale have right trades, just you and/or if prices. which months, going just bought think trying it's higher not you're next or price. it's that to be like, that

what you're Bob, from question. this looking hopefully, great you there question, So gets a but

Bob Labick

questions, other No, the the that’s thank A answer to of That’s color so you. Appreciate lot have it lot me for a bunch A perfect it. answer. other today. you -- of there. for

George Chamoun

Thanks, Bob.

Bill Zerella

Thanks, Bob.

Operator

next moment Rajat Gupta from please. All Please It's question proceed. for right. JPMorgan. One with our

Rajat Gupta

Thanks the questions. for Great. taking

George Chamoun

Rajat. Hi,

Rajat Gupta

this, but today? not you half I'm sure are positive EBITDA the missed guidance second I if reiterating

Bill Zerella

I'm sorry, say that again.

George Chamoun

last year. exiting --

Rajat Gupta

just -- that profitability With EBITDA are the target second you half reiterating today

Bill Zerella

XXXX? for mean You

Rajat Gupta

yes. Yes,

Bill Zerella

Yes.

committed So, year into entering at rate. lower yes, EBITDA year previously albeit, a run to at exit We're we're next actually $XX OpEx that next million maintaining we commitment, breakeven.

breakeven and our and achieve So to position point next us our to course. market whatever ability better are that lowers grow a subject year, the the to of top-line breakeven in conditions obviously puts

Rajat Gupta

you levers sluggish Just pull maybe remain more any there cuts curious sooner if get tech there. thoughts discretionary could on your to around or more spending? some spending are And your it. do Got there even volumes

Bill Zerella

our of continue business can would you continually but and at rates the is optimize call tell stop to We're that looking I looking OpEx where going mean to optimize for on doesn't our commitment across this we're making we're level we the we we're spend everywhere All going efficiencies today, operations. to can. and

committed at and George numbers, manage going bottom-line But everything do any we're any to we What in multiple can look to the I'm preserve to going commitments. those obviously share. continue we're put So, against but continue do and I to grow out we ability execute grab levers to trying time. not and to to to our have point is have

George Chamoun

is And an we've resources our example where our our plan original of more on been managing tech. than spend effectively

and team deliver product great a with but That's over product America, Toronto, of team example and so less have this them. augment folks I'm headcount team folks to year. tech of North significantly did able America. an country, unbelievable just tech in some we an proud able Buffalo, that roadmap in to been something development and with were my here in the We've all that at North We offshore

talk companies You've of a it. did heard this. about lot probably We

then other deliver offshore incredible development but really are lower on folks executing France North America got a us are folks helping roadmap. places in in And our products cost. are folks and other delivering, we've the here great are We a in that delivering at Paris,

it So, saying is we're what is now. think yes, doing Bill I

to our look achieve initial basis at our optimized in overall for ways results more cost And We had way. business. are looking cost We doing it the infrastructure. and we're in a

Bill Zerella

example. discussed I I you this that is results increase XXX especially for think earlier QX at points basis on quarter-on-quarter execute augment ability results, more point in our QX to of what kind our look in I pulling as data very, generating versus margins levers would to just think of indication I one those the could case very an and add quickly

next So do earlier our our of But achieve that's a that's everything I that ship of kind to now, right just would get continue we that's to can obviously, reflection year, and that. by -- think ability, to steer exiting we'll and target the of standing we there we're breakeven. and to at commitment it. And try do

Rajat Gupta

just That’s one and helpful volume I mean, anything, peers. incremental curious, your more better terms larger just growth particular you Just was your there. a on continuing on customers? share Maybe sizable Is color. in obviously, much thoughts to any than your to getting numbers attribute in the those that market tough ADESA did impact of acquisition, of gain backdrop would Thanks. there your you're have

George Chamoun

the one believe, I or competitors with -- conversion think our from of ones. outperformed everything rate quarter-over-quarter, other to I on we many

outperformed since And softer, is the why? we report. competitors. we side condition gets needs to demand the think market trust One, okay, several little I asked the a

like this anything bidding almost hot, heard going anybody. is on you say, for start XX me be was When the when And way are what almost sell buying. are hot, for when me to more quarters. wholesale prices bid a to more on dealers heard years, When have they're get markets of from and are You've last careful few up, difficult, the will car. markets markets it anybody many which can say dealers

Number So right massive you a a paying we've That's two, Private thing, the really you're really trust, us got to key are Marketplaces need here. buying. that now. like off for asset difference products

became groups, to new dealer consolidation. more growing introduced, more probably general a and a That's out having rooftops, because focusing By key. even to go dealer We're more without are rooftops. be manager, on and part they of growing group. to just getting We there's going

over competitors. our have a with advantage dealer We groups, competitive

advantage. So demand have we when you side, competitive a look at the

here, larger the And and our out for a off. at end is field, of have team there's technology the paying and relationships On we but more day, in side the supply investments mix there the our groups, advantage. competitive our the

Rajat Gupta

color it. Great. and for Got good luck. Thanks that

George Chamoun

Thank you.

Bill Zerella

Thanks, Rajat.

Operator

And the session, our this remarks. today. Q&A to call for back turn you. Fox, for Tim Thank ends final I will

Tim Fox

quarter. today. that I'd Please Carmen. going on investor note be this the like joining thank a to you, number us ACV participating conferences for of everybody, to in Thank is call

forward road. You a in to for the on details and all again, thanks your you on look interest ACV can our great And have website. find We evening. seeing the

Operator

and concludes may today's now Ladies for Thank you. participating Thank gentlemen, and you call. conference you disconnect. this

ACV Auctions (ACVA) 11 Aug 222022 Q2 Earnings call transcript