Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the ACVA Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. [Operator Instructions]

I would now like to turn the call over to your host, Tim Fox, you may begin.

Tim Fox

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

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

by forward-looking expressed Before we note to statements. forward-looking statements results please such could get risks These differ or and future guidance. from are involve to statements, factors cause comments financial that that regarding statements including today's started, implied include those subject uncertainties materially and actual

A in and related which be release, discussion our and our to uncertainties of on of the our risks Investor business can Relations can both today's found be found filings website. SEC press

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

George Chamoun

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

very We X. in EBITDA Slide on pleased with exceeding guidance guidance revenue quarter line with performance, and are our third with

in decline continued grew $X.X momentum in mix of ARPU, in billion by strong 'XX. also revenue to driven results a quarter modest versus third a GMV vehicle year-over-year and market Our growth of $XXX price XX% a Despite increase an QX in strong with units, year-over-year million, the due to inflation. which was wholesale

automotive conversion will balance in QX facing our QX, in conditions strong are with very wholesale be market compressed year. and to progress weakening we an we Overall, volumes We of pleased appreciation. constraints, the retail challenging continued strategic that the market execution price delivered remain and vehicle our Because and are through have assumed rates and expected results despite supply demand, key initiatives.

this investing path balance cautious maintaining while guidance reflecting growth market Our conditions in clear to current view between profitability. also of more and reflects a a

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

Slide X. vehicle important independent plays XX,XXX role overview a is brief supply U.S. and franchise retail the composed market to automotive Moving with dealers as of dealers. dealer I'll a and source. wholesale market begin wholesale the retail of XX,XXX

historically after dealer rely side a retail age And dispose a Together, estimated together, trade let's sold units a XX Slide they used as and context, trends illustrate XX market. further to this our year. accompanied of wholesale new sold in the typically the an on million inventory supply over market that has months. turn, market few sold structure trade wholesale by turn in annually. retail transactions to the to produced million and Dealers that, not aged into also wholesale vehicles X market. are consumer These is units vehicle With

supply volumes The borrowing sellers. to U.S. are to early well affordability for consumer behavior retail under But longer cautious is which supply issues chains now, There supply from pressure that automotive costs. wholesale pricing signs consumer retail improving, remain more some new are OEM and increased stemming and market recently, due bodes used continues term. clearly for challenges

to Slide turning Now X.

market. compression to QX conversion price that quickly, rate decelerating early but the wholesale have reaching vehicle across picture renormalization typically leads especially industry Wholesale the quarter consistently appreciation, is sensitive trials historically a first in in as After dealers modestly in auction the this declined consumer wholesale prices market. softening more the illustrate the when demand. levels prices recovered demand become reflecting year, high at look The of incurred also since price been time. XXXX, during Let's wholesale that in

rates declining the this conversion X months. which shows in see the industry chart the illustrated right, can on past You for

XX. Slide on Next,

is our penetration of in our marketplace a opportunities. our insights of confidence in which positive the marketplace, Through adoption. The dealer quarterly and reflecting year-over-year XX% XXXX QX, of shows additional is business listings of penetration on turned listing measure long-term and have dealer provided wallet the ACV's year-over-year, chart listings share at that OEM underpins After left issues and strong XX% grew volumes mounted, growth beginning We half in XXXX increased second QX. supply moderating execution expansion. our

XXX reached penetration increase franchise points the of fact, In across QX basis an XX% U.S., 'XX. since approximately

we share new wallet is many in working course, many days in Of as early the are limited cases, with our today dealers. of

continue figure once we view this However, variance wholesale the growth the to rates. The expanding of is foundation for recover, eater. conversion right quarterly updated robust in volumes on network and gain ACV's a builds an

market few pre-pandemic Beginning quarters, drove in significantly As the pricing marketplace correlating the levels. prices demand conversion rates historical vehicle QX, quarter-over-quarter, we rates. QX, wholesale tight increased in returning trend range, rates demand, with in past to normal cautious and this ticking as continued and conversion over This Book on rates data supply, shown declined slide. a with behavior earlier in in were prior wholesale that in to moderated, very conversion further consumer resulted our conversion Black the highlighted strong down year, factors buying then the then

which will be rates strong our macro We to growth are the confident given serve as a normalizes, that will recover tailwind performance. listing conversion environment

aimed with place tools a new increasing at currently and in format marketplace are rates. we conversion Furthermore, pricing

we market historical remain conversion lower will based However, of the trends, on end assume QX. rates believe for below the prudent ranges it's to latest

X. Slide to Turning

unit unit Despite points. can $X.X billion, material was than unit on year-over-year by decline, You grew GMV negatively growth to the X% driven percentage the growth strong that more XX,XXX conversion -- greater impacted by rate impact around a had in and specifically, unit modest year-over-year XX with ARPU. see volume headwind conversion a change

analysis, remain and are XX% key gaining now dealers executing attracting wholesale dealer to lines below Despite XX. we Turning continues market growth QX. marketplace. on the initiatives macro we control, to share backdrop, internal estimate our year-over-year new normalized the our Slide and on including that our to market Based well U.S. contracted in within

Given in market estimated unit QX decline X% our and contraction year-over-year XX%. an of

share approximately year-over-year. XX% market that by implies ACV grew This its

up we'd the to with highlights value-added services. and Next, our wrap section like growth

investments for Capital into creating the in scaling are ACV can scale and growth deliver partners also experience to top-line and is our both great you Slide ACV while ACV efficiencies, to driving strong that resources and transportation and technology customer business. transportation Our XX, continues strong a results improving see On truly and ACV.

partner gaining and percentage dispatched, were wider cycle of from transports automatically carrier with XX% increase In carrier in an resulted app, adoption. points once again as our of attach QX, times growing XX our Our technologies, XX% QX, such in rates exceeding fast QX. newer over

we are investments are to The and our efficiencies. carriers technologies attracting making in operating driving new transport marketplace

another hit QX the double in margins In digits, key fact, milestone low with an increase from our QX. in in transport revenue digits the business mid-single

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

year this clearly progress on a rapid path target. our this So is us to achieving putting

Turning now to Slide XX.

Our results in ACV attach loan in strong year-over-year over team market. doubled continues capital XX% in QX, the to volume deliver resulting rates Capital growth.

of strong, in dividends. now capital financing and this Our been dealers tech our paying investments has launched solution. adoption are ACV's QX, XX% post-auction leveraging ACV Capital Active capital portal within with business also

and continued to ensure adoption capital have service driver to sales engagement drive to dealer we and important profit ramp capacity value-added going our is Lastly, in forward. investments growth the up ACV an

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

dealer highlight experience like large engage XX. of drive broader examples Turning of enhancing will buying a range enabling the I now innovation would growth to to few our marketplace that Slide to with groups. and a by product dealer on ACV

Let and ultimately, me begin with creates SAM. our solution, intelligent realization This persistent auto-bidding notifications optional cables. SAM and better advanced price the higher our demand conversion. leading enhances in solution to sellers through our fire marketplace, experience for buyer to

cases still X,XXX today, with and big it and on our we dealers driver, but can are expand be early, over capabilities. We SAM growth we believe a leveraging marketplace use

experience by of Next, we're enhancing formats, auction varying merchandise. new vehicle-specific a including pricing, our also duration, host start and testing marketplace

increase Our is marketplace. promising our conversion and on cellular testing success could higher showing results

with marketplace specific and vehicle solution the fully groups enables within marketplace. auction private seamlessly dealer country. to open market gain easily private purchased dealership with each integrate continues group's groups solution to to the marketplace is This their not a our our in of It's profit. the group Lastly, to match in largest maximize when needs traction customizable network some inventory

On scaling focus a inspection are Slide we success customer XX, operations I'll our how market-leading of with wrap innovation innovating data section capabilities. up with examples while drive reduce costs to the on and and our

of going with upgraded the Recall while our our across significantly audio vehicle going collection data First, team. and comprehensive is that detection for data set also our tool, inspection launch nationwide delivered the inspection has Apex increasing sensor displacement, with productivity capture great, our transparency next-gen The ultrasonics. by higher capabilities adoption more been condition operating APEX in and teammates. APEX drives vibration,

vital Next, we leverage to excited data are by our powered AI.

developed we catalyst a converter left, app. on Starting the detection have

As has of in you expensive may There to devices replace. due converted higher been precious be aware, a also huge content there to valuable are gas very a to catalysts metals. spike

critical accurately derive of to can So vehicle it's element dealers a process inspection our apps. ensure

the converter actually catalyst can presence model Our accuracy. or XX% detect with a lack of

important penetrating inspections can the changes a rust equation perhaps for value. and mistake bit rust, still but easily deeper materially structural flashy, And rust. the which element air on or conditioning an less a right, Manual is surface the of vehicle

the and automatically care, to risks. detect app again under bar rust ACV's raises classification Our and and which while technology inspection the amount uses the quantify reducing arbitration transparency AI

Copilot our predictive to an we have team capability we analytics, copilot. internally common a like technology machine customer issues pre-inspection is insights, innovation have leverages BCI and our Next, learning, conducting to introduce that inform vehicle-specific dubbed a proprietary I'd data before that beta, infection. newest feedback, on in field

acknowledge an standing valuable the front start millions they and of, and vehicle equipping they the impact. format our team in delivered it are easy-to-consume of are infection points We be inspections, before in all through data with specific gained vehicle to

delivering wrap it me our that profitable moat to hand take Bill innovation, that think drive is to the I it's results up operations clear own team to growth that, our how highly to and financial on market our and technology differentiated driving over With growth. solutions scale. through at help you expand and competitive long-term our to So let we're

Bill Zerella

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

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

We also model 'XX. business versus adjusted strength margin and with demonstrated EBITDA margin the expansion QX our revenue of

Slide of our Turning a begin review third-quarter I'll XX, to results. with

was and guidance basis Adjusted EBITDA points year-over-year loss XX% QX margin versus million in or of guidance, EBITDA $XXX of 'XX. Revenue results revenue the beat our representing of QX versus XXX midpoint range, 'XX. approximately XX% strong at of growth million improved $XX of

XX% a CAGR Turning to QX Slide revenue. on additional XX. 'XX. I will revenue since some represented detail $XXX cover of Total million

revenue, Auction on driven which sold GMV vehicles last adoption revenue, QX strong due our Services of insurance and XX% higher revenue, the of to versus in capital strong Year-over-year December. of X% XX% total and grew platform bus solid ACV Assurance and and of results in mix reflecting ARPU auction year-over-year instituted 'XX. increase grew was was XX% growth of the offerings. total our revenue, transportation Marketplace which year-over-year, was XX% by we

comprised the services of Our Digital adoption primarily grew XX% growth and MAX of products business revenue X% inspection SaaS data-enabled from and driven services. year-over-year, in and our total data

I of basis a revenue QX Now quarter. cost points of review will the versus turning Slide XXX in percentage XX, to QX approximately as 'XX. decreased revenue costs

double-digit business, indicator Transport basis, achieved margin has this business. profitability earlier of revenue of targets margins The transport, low an margin transport for impact reinforce reminder, was having this our on our a the improvement delivering require margins. revenue by XX% a which blended so margin the scale double-digit in low we're in our about To delivered improvement George's assume business. soon a the XXXX strong our gross primarily a revenues this overall point a quarter. By is outsized on Also, long-term driven

operating to Turning now costs.

rate we expansion support this the identifying key ACV done team, operate service optimize to ways to of at This takeaway to lower technology a still here delivering partners. a but dealer have testament initiatives, is invest who The our market is XXXX we customer growth. to in ramping and job while that year superior a continued OpEx significantly great after to has much how

finer strategy our me Moving path XX, profitability. put and let on a point Slide to investment to

the investing to and large on and market to remained we opportunity, investments. both prudently support ensure Given path At our position leading we continue to addressable have profitability. growth ACB's time, market a technology same clear focused

growth. yield expected a operational As see, our in you spending this is on material to decrease can discipline OpEx focus full-year year and efficiency

this position doing technology market preserving conditions ACV investments key is also while an when We're stronger to our improve. ensure in go-to-market even and

market believe objective. additional despite to relates to achieve headwinds business help the breakeven and it our in As us objective, are ongoing macro that our facing EBITDA levers there ACV, we this

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

outlook operations we As float the operating cash flow. and of QX, in business the on positive flow. materially the $XX improved sheet to half the fluctuate cash quarter, expect to discussed million balance contributing $X of current previously, in million, impact of it Based decline can of continue corresponding balance In a the operations each we first just to in a based half XXXX, our with to second has cash our flow increase used of for amount 'XX relative on leases year. on used sequential in the final trends on X flow in cash in meaningfully

Slide XX. Now to guidance turn I'll on

loss we $XXX $XX million. of million. million to of a are Adjusted EBITDA is $XX in in of million quarter fourth the to the XXXX, revenue range For expected range to the expecting $XX be

of the is to now our factors our cautious range market. million is or previous to be revenue represents million. range impacting $X outlook, to XX% just a be in loss million is and lower million of expected to macroeconomic midpoint more rates increase the in For revenue volumes view at EBITDA this of below of revised to is year-over-year XX% of wholesale This the adjusted Despite XX% year and $XXX modestly expected adjusted our now to range $XX expected loss of to million growth approximately conversion guidance full our guidance, the reflect XXXX, a $XX revenue. $XXX EBITDA

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

XX% to approximately year-over-year. non-GAAP expect expenses we Finally, operating grow

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

very in challenging million of $X.X our are remain XXXX. and We our ability pleased very was to achieve environment, which proven to of be we billion with in confident macro execution $XXX revenue a and EBITDA

strong Our resulting by dealer sustained number a share gains is our reinforced factors, and penetration including confidence across of wallet in territories gains. market share

platform, long-term George. efficiency, in a technology growth broad and margins as enabling with commitment me growth improvement durable operating turn And back balancing let scales. business revenue that, consistent investments it to our to Our and and

George Chamoun

Thanks, Bill.

take your we me Before summarize. questions, let

these And with strong especially pleased team times our very our are our of proud we execution are these industry. has during ACV that delivered We challenging in results.

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

offerings of are territory gaining on our penetration suite our traction. executing are marketplace and plan We

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

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

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

Operator

from Jefferies. Vincent comes question first Our Instructions] [Operator Cardell of

Unidentified Analyst

you headwinds And you versus are of on the to what kind think sense engagement in they conversion enroll you're is as sales you at could so to of can How any hardest? developments you're a the try teams that for wholesale This or headwinds John the get far QX sort then get to terms seeing of Jefferies. seeing retention about Vincent maybe Colantuoni customer in us rates? us hitting Do help and talk impact are impacting to new where of -- dealers? headwinds

George Chamoun

start, Vincent, chime to if I'll in. Bill it's George. and then wants

out little out, data continued of what is recently is conversion rates what really to then So that seen Black Vincent, Book the have to bit. look sort if came really level informs and decline, a it at started we this you have that

last data to beyond we're pretty it I to think in minimally. much by consistently. speak like went the our in Books Black QX showed down And going conversion mirrored is not it XX saying hours,

could I dealers, part we thinking thought when sort we're you of really expansion, there of So of question your gain how of our the we at have could about a I'll to solved then high-level a is -- conversion. we've answer question market and though couple ways. even in be continued trough as look sort is, we're on out the it, leveled And second

have now use more country X/X so than the across to franchise So some one, others. of ACV, we dealers starting

Some limited wallet share. we have

we a lot have So of share. wallet

dealers time, that looking does That's per the for differently. listings to their what see say? So same ways wholesale At are starting vehicles we are because to liter.

at it from used dealers listings to less that's And of selling started listers share, environment cars, the mainly where wallet decline. plus across If are a you related macro look the XXX% to have their industry, of new. combination

So even this decline. per listings by the available over XX%, though cars we've starting are listers and to of we number gained gained even lister wholesale we've though year see

and but industry, job well, the you're we So done add? and the are a and want more going we've also in you wallet starting share. something the anything else bode take like seeing, compared gaining things those macro to others more of on, to taking Philip, relationships share great to

Bill Zerella

Yes.

listings took that our of just basically are are conversion of through just all add, decline remain assumed flat dealing based macro as historical QX what But per essentially our versus this would liter, that we of we that terms the today. with then with we on call assuming and, this, does kind I based rates call environment we're it, you rates. depressed what at liftings George it, level conversion guidance, in So have on context again,

QX, kind of So for essentially. for guidance the underpinning that's our

Operator

Chris comes Our Pierce. next question from

Chris Pierce

question prices safeguards more as past of curious depreciate what it? have think of with place? you a caveat vehicle you are a always guys it that arbitration. guys vigilant And have in to growing as and around a had are on we something you you higher do what Just the somewhat that pain, seeing, be just kind I'm should of is --

George Chamoun

start question. I'll for Chris, Great Yes. this. the on Thanks question.

tends the we -- investments look we've the industry platform, in going market decline. for us, probably the discipline prices at at our when there way a you as we're business, improved in not actually You've look easy. seen quarter-over-quarter, where made market, risk a we And inspection the the throughout in you in technology operating have and we higher With price actually improved. look that our you down, tough arbitration that's at a operations. the When were

invested So the Chris, significantly they in inspection about, when a invested in working things. right you really there, are all who really very this national employees inspection We've of ours who think out technology. team, are all are doing we've hard

little we this. our of throughout we got goals maybe sort achieved of third good still on at have on We Bill When room have have We're not actors, internal improvements sort and to have sure not any all tremendous chime we not bit grow. objectives. But year. to We make discipline the in on of a look at. relying here more we the parties. We've can the improve And that platform. processes next you bad actors got still can

Bill Zerella

which million. our basis. per-unit quarter-on-quarter Chris, million we see were of is -- almost down that took basically $XX.X if -- in we on it revenue, P&L base, a you XX% you'll What the at data arbitration per-unit you in our And our down supplemental is on what from costs Yes. cost effectively a to what's assurance $XX.X actually look is

we've a what's of So made some environment costs pretty actually, strides terms challenging driving today. in those great down despite

in you'll data. see So some terms the that the of math in of

Chris Pierce

buy not could. fees, I'm you about below at, look evolution think kind know the the Is If I increase just just to something curious you're auction still commit if I you grow XX% platform increases, on the but And Bill, XXXX you brick-and-mortar that -- then there. last platform? to guys fee how annual to going more, December. you one let's the KAR's I pricing say, of are mentioned that as price of XX%

Bill Zerella

question. fees for there. headroom pass smaller And we any Yes, to quarter it's mitigate our some have prices a downside have vehicles. you're which, buy did fact, increase we again, on good to a And right, do in ARPU this tends in we declining

how over are all going of also we've time. there, headroom right? upward march some just I inflationary what costs, all to subject our continue -- we we're terms see we'll got that whether mean, So forward decide but we competitors to in and subjects, not us, we

So forward. us, pretty pass mitigate through again, we've of going downside for us on been able helps any and some ARPU to this successfully, it

George Chamoun

Yes. And a on I'll that. more just little Chris, add

So don't XX opportunity increases the our is be more. I pick. increase we made over very comments limited didn't have price months. surprised commentary community, like the it with we and to a dealer had increase from philosophy do last We both small

fair. Comments extremely still like that's

So being to for than still market next few we and do your to it still we'll and do lower we also we'll where We -- fees, time, markets dealers but be be the for we're carefully. thing. about where it, what smart actually -- this feel smart the in years. And doing the should charging like value earn about it we'll we're have we'll whole are in point, manner fair a

we've so a as GMV good challenged. ARPU far, increased so Chris, was where within market actually So

Operator

Khan next from Naved Our comes question with Truist.

Naved Khan

from your on me. kind the there response -- price on about just Maybe just to you increase that piggyback did. questions of X So

use to the efficiency the these? when of that in Just to out And it of that Just the you really, just benefit on we maybe benefit the you terms figure higher field innovations to QX? then second, trying the in expect timing. in can clarify Or see highlighted, QX? start that also did process from you to in inspection in happened kind as

Bill Zerella

is This Bill. Okay.

and to I'll So Yes. pass question, then take first George. I'll it the

fee increase earlier buy actually that this was quarter. So

weeks ago. literally few it was just So a

the So we'll it the...Yes, get for sorry, all didn't Meaning of QX. it. of but most the benefit quarter, not impact

George Chamoun

asking question, of around? is about your the our really team. inspection what sort Is believe question with you're And gaining and efficiencies that second your scale I

Naved Khan

the do of even that you And things innovations make kind faster, can process here you it's to leveraging the more highlighted, maybe Yes. other some whether of maybe. or efficient,

George Chamoun

Yes. Thanks for clarifying.

we're still So investing.

So I'll give of different an thing you there'll and a categories. today. some little X we'll the be per Think take each we part data couple could working where part now APEX, a in let's other vehicle bit X then about manual right us, device where yet be there's utilization. inspection. more adjacent on, get sort say, or Any minutes application of the or to of hit

in and aggregate, of XX be every to we're eventually might so down making vehicle under an we objective investments it per and is So taking spending getting minutes are XX with minutes. you inspection each early. And where between the these XX

benefit in even massive or QX. won't like see QX we So

a about in between fairly end the type. on that and of do think in that the inspection year, vehicle inspection should the should us I investments type versus on when do investments next But is APEX, vehicle. the based a now we high-priced vehicle low-priced of The we curating

Nissan, which based issues, So now go following internally investment at the this that copilot new product the on allows called to a new us following say for this has is look we right things.

early. still So

Some of just this, we've built.

that here something. do say discipline see objectives We hit it. go to have you got next internally year. going going We're We're ACV. at to going we it. the But we're about to we're we've And do really can excited

get you we've industry, infect vehicles. And by But some to on to get don't then this you takes on built help you same doing the kill more more probably at the arbitration. and studies the the us tech time to time, efficient in it want see

it's need you And you and car efficient, need the So don't is to get but the need you be going to data going surprises. you or you. come any else to want hurt also to back,

data think else marketplace. years but we we're the the So combination we're we ahead efficiency, of anybody getting -- of need, that in

Operator

Our next from question Gupta with JPMorgan. comes Rajat

Rajat Gupta

what conversion but like and the Maybe of how managing of your this context understand rates terms twin trying maybe, is a structure, like cost question your you're seeing in OpEx in listing. to you're

You've year? But are expecting planning planning Are obviously recovery fourth viewing quarter trough given to you fourth you curious the I'm how be business. as -- a are XXXX? quarter like for guidance. XXXX for you the a the

Or that context, manage -- your OpEx into how whatever like you a into I expense you grow outlook enough your are structure? in can volume is mean, do that to plan at just And level the you for that like just XXXX? So if a you could cuts? need follow-up. both to budgeting tying make for is you more think just might then have help XXXX, maybe And do you I that? just clarify

Bill Zerella

Yes. It's Bill.

into what that opportunities examples the give give look, to there us company, a just for to question I'll business And last flavor to said, That few your year. we for exiting going we just to the you are answer fact optimize that's you when specifically, continue call, So but more about than rate this. really we at across the next the to this million into other entered obviously, a our year. on talked we're year a $XX lower guided run OpEx

inspection costs you those question $XXX costs together, of if terms So and year, costs look from earlier driving the we in between arbitration okay? million, answered costs, down that's at QX. QX right, this Arbitration about X, roughly to split our evenly that

to to strides leverage going a So technology the reducing ability size of the really prepared But and that there's lot continue claims. making in George frequency there's we're that terms remarks. forward, arbitration the the highlighted great of of already in his

improvement. going backdrop costs of with being argue other when down in you're lot we're doing you in that the for context I this lot us And in in more up would terms the cases. a a of to able again drive those particularly there's those costs environment So room impressive of seeing is where consider

going sure forward, that's So But some on in on a front, focused manage making and been that. two, on inspection that territories made side. there we've versus one. as inspection the cost got our we've at the number Number if obviously, possible you the well double that we quarter. inspections we've And pretty team out country, we're as best the to team our out roughly still our look last structure averaging current day per across adjustments there, even X big

you So territories far mature that still that we've are below what tells got our less that average. is

anything. And with to to us that without ways a more structure. that continue us to gives today we're right? grow opportunity that going And continue our look relatively lot can much-changing units as a cost capacity it in side That's increase optimize we to really, our just of bet small cost, pretty an that you really exists at can

area just terms lower already beachhead expanding leaning on of establishing as and in a going And more to cost augment it into process one that was and But more in engineering. year really Another next lower-cost even the started we're in capacity basically existing our team. offshoring. example, we've of offshore bringing

examples, a just optimize. of there's those So and array are few a areas we myriad that can other

of at as put terms any we So we can look EBITDA continuing focus you deal a optimizing in in everything other market better I to going forward, year turbulence breakeven. tell and on us of hit will we're our with target that exiting would next to to that position

color I want So any if you more George, to add know, don't that. to

George Chamoun

could follow-up further question, thinking into go up a or have could XXXX, to you. about I how we're you

Rajat Gupta

helpful. fourth would XXXX on comments the maybe Yes, like like and quarter trough any be

George Chamoun

production we is that okay, values, really we factors of into And external the can things And control. are sort we we buckets. what market. that used put car OEM it we the then One are control? units, control. think, consumer borrowing, the the happening what about think XXXX can't what's we X So can't is way Those in of

We between right going and out today, back out come we're one, And see But lean third on and to with when more with the our have to share. of X% you're really plan work starting go let's and there we you what to are gaining is, in about X%. a we're now us today, dealers talk the deliver share. ACV. at only annual market look work dealers, only Even

bringing job starting more fantastic earn on we've at share. foremost, look jobs done you So and to dealers, when fantastic more wallet a first

that's Dealers dealer means we we taking I you ourselves about think delivering are We're accelerating When value, while territories, more share, I we've more marketplace seen acts it's ACV products it And I of do. in starting that a more to value, which share us for those adding adding value consistently territories, when wallet hold the that to mean, with penetration both new share. -- means also and wallet more been first work foremost, more these addition and challenging. taking also dabbling And you've that's think mature going to in because contracting others. with even us. like private think of -- products next to increasing really about about and market on for year. sort are accountable think

Our value-add approach is helping win. us

growing into about, us Bill as the elements of that after think about scale. whether you over of focused seeing focus You're inspection But size scale, scale, our other we've I consumer talked commercial technology quarter building how right? year. heard about mentioned, we've say be and least, would the talk we on last quarter, not Last much been inspection on haven't you away. but When it our or us team

cars, to XX offering get products. acquired acquire other rental taking of building companies. market risk We're sort think work about on little few. We've start an vehicles. been we We've dealers more that talk got of we'll not to with to traction. coming that We've some in But a quarters will asset-light both we the tire consumer starting elements with us as some go a helps these commercial

our rental in companies, this and all way, need, their cars, And making the is by starting with starting companies, sure we selling needs rentals get car what second, expanding have the commercial actually to to and already traction be not going companies see -- full some we're -- because after we're repo and is offering service. we'll this a we're

Rajat, So about we're year. feeling good next

disciplined being that but We're you feel We're approach, still into feeling anything to really our that? this. to add want in Billy, we're good. seeing we You're good. going

Bill Zerella

just -- couple Rajat. a Yes. items, I would more

about I equation. the of cost side So the talked

terms about next in side, we're about revenue year. feeling things that So the going good and of margin and into thinking

any that passed will that we X of on we have mitigate the kind just on further So ARPU. downside increases

car ARPU. margin relatively a in affect came We going with So business. revenue better transport essentially margin certainly material a year into since breakeven. And next going used year we're We're our be gross our being as we're into secondly, a part with not margins. so profile. entirely that double-digit can reduction profile insulated it again, this with in go prices, from our year basis, that to And of it it's next going to low on would necessarily much into we're but mitigate to

you So throw just give in that a for to sides well, to of I the more all P&L. little context just wanted as

Rajat Gupta

I for But know, viewing quarter now? it. as George, that trough fourth you industry? was got are implied in don't your I like of answer kind the for like a

George Chamoun

is get of going us right? I'm What didn't market next accountable. -- worse. know of Trying for right? the you, that ourselves how there politics going to happen, on now, to bring None us last the is know right couple year what telling we're I might to hold of days is us. Rajat mean, predictions None

-- the to really might by you to one worse, a more... start growth. hold production, know more going mind market We're That's back. that's are It's And because like knows? get positive. new to the accountable what, ourselves who share little think seeing We car way, about really come

the And we're some way, starting come back. by to programs see,

They out volume. are of of down, groups some -- that's groups the of positive. I some about there think it them go franchise points higher in dealer predicting predicting the what like like not predict to some there, what year, it's next they're a of So going great couple out when not dealer

units are customers year. largest positive. our predicting That's of some higher So volume next

over it X hours, car haven't have relates a mean, We with out manufacturers seen I X% couple years. as we rebate. I the think next in new slight year a do a come come X.X% cars saw even last interest, dealers the used advantage they'll with only XX of financing. programs like selling almost to that in

So whether shares. is all not, for better I to could we're more year that be think ourselves hold implies a But or it of going taking accountable next year.

Operator

Eric Sheridan Sachs. Goldman from with comes question next Our

Eric Sheridan

follow want lot a in I because was there answer there. on do up that last to

sitting what you months When unlock elements share most to of of the what think you XX you're you of of be unknown about in part of yourself pieces though, of in most execution the sit volatility as was a sort most XX of those today, variables, get is If bucket, that do on focused -- important holding think execution that variables. on supply-demand you're now terms of which be you what's do a But little environment already the to you? terms determinative the totally now? gotten and of versus of would and in and a elements be where advantageous now, year bit efforts the then you you And fair control, that most the we're dynamic at you variabilities those would to share. dealer one said, would the gained which more dealer critical of look you XX, that that see bit the your yield those pieces externalities, a result you you've months from as from the here, share you think would put I think to that of

unlock Is Is in demand to months? the externality think over you it OEM the do tied it Which would result the next consumer XX the piece biggest supply? interest rates?

George Chamoun

Eric. the question. Yes. for Certainly, Thanks

I when about going this execution start think next looking dealers to are we for prepare for is be right? year, more asset? as is What one and to of more our guidance, and value the So

launching duration a group, -- even they minutes, car And should should that they within launched meeting is yet? be for their XX X be we're is price One should launched hours. is, Two the do be the first, dealer series large should group of what a sell enhancements. we when they within of delivering for expectations. Fourth, an car? Three, auction should

Should say way us , platform the we whereas dealer. the ACVs of So would the have us And just end And spent try of it? I -- of think, several we're now they on And -- to for the ahead random we I would got money at delivering until the Eric, intelligence engineers. first adding -- recently, the keep we've XX-minute sort the becoming up day, it's to hundred auction. say been we're competition.

some example. the buyers from dealer one all deploy of you the can away. groups now the appreciate the dealer already building dealer quarter you of us And going expect results this, I'm U.S. Hopefully, seeing sensing you're it are ACV. and from the testing after we're amount largest give been groups and to on X I'll opportunities. in We've franchise all quarter. of products some

That happened private right marketplace. after ACV we launched

one whether execution delivery, became only it's never not share. value, -- disciplined bucket so per arbitration on our you. number revenue were it's to #X. unit, is whether chase into bucket by cars, get #X getting on sell largest starting that So you but value bad you being to and some offering more That's is actors, good more approach they dealers extremely of of they more because actors, offer goodwill, product buyers our one, think our hands on product our Eric, the

build good a You business.

but as mean, important, when not margin. I You've of path out coming are ex-unity the we're seen just to grow And grow going We're profitability. just I'm these We're here we're units revenue. us to to do units. that. to hit we mention calls going union. not to going our

not large we're more a have this which the we've mentioned So quarter-over-quarter look And gaining seeing only and by at before, you're capability out discipline, doing improvements. be we'll and with going products, more advantage disciplined, acted here already on adoption three, while and executing a there while broader transportation, relationship, I building like -- then more value we'll be product delivering think but offering job, of of our about when great more I retransporting. a done

capital. like ACV products You're seeing

us differentiated enhance we're setting products SAM, allowing Eric, buy more. ourselves up seeing overall extremely offering, an way. our You're in like them to

some of further products seeing resources that So well. confidence when of my increasing live we're everything gone results about right the just from have see that. It's and think our investing that we're we're I XXXX, -- testing increasing or And I now. the suffering it's the just

of The the traded cars of coming what of of Really, your into That the it's number it's a the used trades wholesale dealer of meaning number dealer question the car most like uncontrollable being used OEMs, of pieces, a the I car what like do end think transactions in. of market. sort whether new is important? in, day, the component being number biggest a second is was coming consumer part the sold the car, as or of at values, the is

that like last of And to see the as dealers some will market. cars the of sort by first the the of start produced see benefit element is think is been we've starting the So few cars weeks, to with new to to promotions trades. here the and TAM wholesale will the that benefit being lead of we our of over starting advantages OEMs, franchise see selling dealer

so walking well bodes I into think got relationships. We're And already for third. that us. We've great the

disciplined. -- always they're going out always going to figure to to on they're almost a what free In the of paying These to are entrepreneurs country monocot, They're come dealers. are more dealers car If prices based down, the win. going best out be some to like used independent way. they're independent used are and these readjust this cars. way always going more in for

comes supply think from So trades. The funnel. of about the that top the

I start to will think production the back. come OEM

our year. next think should franchise well do I dealers

bode think well that I for could us. really

Operator

comes question with Imbro Daniel next Stephens. from Our

Daniel Imbro

a high lot of of discussion the of We've level. had kind

So just a financials. couple of kind of the clarifies

business? it expect that like group any You scaling a about kind year? that Is per help what be to is is year then Where dealer next grow of pricing? franchise that's times, talked this to better percentage to gets do that or on as drag George. growing that revenue channel? kind the a groups. Is big of How this And going next that offering profitability you the volume of of year? the unit you grow few Obviously, internal with go

George Chamoun

XX% think to be and it's I'll a dealer Their objective of aged to morning, would not it, can the objectives of Daniel, So the more talking keep They those But you goals, like was of I importantly, like in give of more this cars. drag. It's wash. the inventory. about a a coming okay? trades

their would would they So inside group. wholesaled very like successful. have be That

wholesale So they cars group vehicles, between and that can trades keep specific aged XX%. XXX,XXX

open objectives So auction an Their end anyway. the most and up are think cars goals Daniel, of reasonable.

dealer retail actually their a within -- these smart. doesn't groups Like hurt are don't keep the going that's car got material to in it's to want It fit They issues. brand.

all Just about very reasonable. of them are

then our vehicle. fee, lots So of get small it wholesale say, them and other charge nominal kind already inspected, then out, as fees actually we we of we cars got think into Dan, about a we -- let's fee, and the works a it then well way in the go for, we

you reasonable. go -- to does their unit simply when I our it look are actually injectors gold So when it reasonable, the And and a since are out. from open them, works objectives they look at to at it their that's actually think marketplace, to as hinder to actually but econ. goals the partnership not front us inspecting

Daniel Imbro

in Was it on is where Was decline keep Where just that took you big this of the higher it scale take fuel of or then double longer-term then could of quarter. improvement? margin mentioned, Bill, the higher, step drove what a can be? that kind digits it quarter the prices? in just And last for transport, the kind business? the should mid-singles this low kind comments, And go of your transportation

George Chamoun

Yes, thanks for question. that

just and attach is at focus quarters hit on spread. maximizing what because time, increasing ago, on first, several in the point moving something targets one, we from quarters pivoted rate that ago, we So this drove improvement? focusing our kind the we number a of started to really So few

dispatch, are, But of these a our to transactions we the need team So of quarter. some it technology what data if deployed kind of our last do capabilities which intelligence, was through other in orientation auto what terms and drivers was change just basically XX% on. at they conscious look in now the to of for focus we

we just price automatically. less of lanes. requiring through transactions intervention, happen So in that's which improvements that also, is how huge a percentage our human We're different including matching loads

we're better carrier two. three, And also number deliveries optimizing then that's So number through management.

to of than actually us So those a up we are these drive faster collectively lot margins kind allowing expected.

The XX% target transport margins XXXX. are by

the striking certainly So digits. Right so go distance year, we improve continue of be we're pretty already we're far, of next in think that's we double happy low targets. long-term into But We next well as Whether we're to sustainable schedule. now, very we'll kind can to ahead see. that within year.

to been the margins So we're nice a happy. for that's business. pretty And overall tailwind again, our

Operator

today's gentlemen, remarks. any this to the call conclude conference. to and Chamoun does Q&A like the for over portion turn back closing of I'd Ladies

George Chamoun

today. thank the at on Thanks, this be and that note road on to like Please call for I'd conferences quarter. investor everybody us we'll joining the several

on our details website. Investor You can find the Relations all

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

Operator

today's presentation. Ladies conclude and gentlemen, does this

You now may wonderful a have and disconnect day.

ACV Auctions (ACVA) 9 Nov 222022 Q3 Earnings call transcript