Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to the ACVA Fourth 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]. today's being that advised be conference recorded. is Please hand over Vice to would of now speaker conference to like Fox, I your the today, Relations. Investor President Tim

Timothy Fox

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

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

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

George Chamoun

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

over delivered We quarter with the share ACV an estimated We during did. declined a team ACV marketplace, which expanded XX,XXX in are environment. that capped execute dealer a with our exiting execution our we from the performance, growth, required that challenging pleased revenue fourth off strong XX%. partners. and year market a year And XX% market gained

over an XXXX. inspections reached in million team X VCI exciting milestone, performing Our

margins to and range exceeding operations. Our and of across broad expanding our all achieved new a our technology this guidance. EBITDA drive while team growth solutions And we scale launched

emerge moderate. positive automotive As are industry to in to beginning to signs we XXXX, we headwinds see encouraged with the turn market

our let's With expanding fourth full deliver X. leading-edge increasing market brief year targets. on of a technology, year scale this to consistent remains competitive Our margins results that, moat and turn growing and share, XXXX EBITDA on Slide focus to our quarter recap driving with on

and wholesale Fourth was highs in a modestly a from per QX in quarter declined of We as unit with in to very $X.X declined guidance GMV versus year-over-year QX range, marketplace, our was rate revenue $XX year-over-year, conversion results expected, primarily strong 'XX. point within in and of QX as our XX% million in GMV the of guidance billion prices historical decrease vehicles 'XX. XXX,XXX decrease sold which 'XX. impact versus reflected declined in line due X,XXX-basis

a the to million the reflecting rate. full a of X,XXX-basis XX% due conversion revenue conditions increased year. in despite to in XX% units second decrease modestly GMV per year $X point year, increase increased $XXX unit, while billion the GMV of half in the market for declined challenging For year-over-year,

growth. On dealer with discussion to with retail we're On X, providing in pillars growth, scale. I Slide of rest strategy relation X the wholesale X, shareholder of automotive our innovation will broader I will context and value, around today's market drive to the Slide the the market. long-term frame begin again

vehicle side new supply provided on of market, volumes. we data our the illustrate to have light First,

automotive As finally which is left, you the encouraging easing. in can an see are on QX, production the challenges sequentially increased that in SAAR chart sign

into sales right, in year. pressured year-over-year on the see last the decline in wholesale X% auction fewer pre-pandemic during volumes were retail chart can translated you down XX% listings which trades, volumes. This as the below However, and year

to X. Slide Turning

auction created and interest sales relative under resulted to pressure additional levels. and used prices wholesale retail year-over-year, trading XXXX, throughout market for used headwinds for trends wholesale to listings. recent volumes increased used positive retail rate signs on year This a historical in pointed market. for review start solid which retail vehicle elevated used up recent with Let's The data retail the for new retail a and was are as used the These more volumes in On remained vehicles. declining market this trends January. sales XX% positive industry month-over-month has note, and year-over-year

However, the XXXX, impacting market have the and macro our factored into supply may we factors in persist throughout that guidance.

in shows vehicle are X, this the seen since that has selling Slide seeing also reached chart supply of of pandemic. wholesale business that Why levels Dealers the onset benefit we the is to not trends cars, are the typically important? turning on market. inventory used some the The encouraging not them. Now left the storing

and build their inventories tend improves conversion leverage as start also age, aged price-sensitive to inventory. inventories channels reach used to sell Dealers which less auction levels, become elevated wholesale dealers rates. As vehicles to

have our a which leading is market. to in these We see wholesale started play positive out for dynamics in XXXX, early marketplace the indicator

low new historically vehicles light important This The albeit X also chart right of illustrates off supply for recovering, is that on levels. reasons. is the the

first reason require consumer most dealers is The that adequate to of supply and satisfy demand. inventory obvious an

market is dealer are appear used aged incentive The is replenished channels. new lots volumes with reason the takeaway reduce vehicles, that that have inventory, in which we for second to wholesale The corner. added here to from turned turn generates perspective when there is a more

moderating. the headwinds earlier, to appear impacting volumes be persistent mentioned I wholesale As

a points primarily marketplace to and days our driven Bear early in majority franchise mind, year-over-year a which over this business Next, year-over-year reinforces which annual insights with by XX%. marketplace, into we're measure share engaging in in shows increasing the year. large dealer basis listings marketplace in sales. confidence wallet dealer left penetration across key opportunity. the are of on XX% objective we Therefore, that penetration, sharing chart long-term still on XXX the our is a we decline listings and Slide XXXX, our additional our in adoption. growth increased In XX dealer retail XX% just is of partners. opportunity The was despite our growth ACV's grew for of Listings

annual right rates. The in the figure variance is conversion on ACV's the

over were factors, demand prices significantly. impacted we quite our Then conversion rates recent pandemic-related increased pre-pandemic As highlighted rates wholesale predictable. as were and by and marketplace quarters, on stable supply, conversion

While this in tailwind of conversion declined put cautious was conversion as depreciation into To resulted half in the XXXX resulting X,XXX-basis unit rate in rates buying increase price behavior. perspective, XXXX, growth year-over-year in in this in back the headwind accelerated, a decline point XXX,XXX XXXX. significantly

to trend believe normalized As year. see are rates levels we I start to and to mentioned the earlier, XXXX in early encouraged revert we conversion back will throughout this reverse

continues dealer XX% gaining Turning on we now to Slide XXXX. this market wholesale to well below normalized market backdrop, executing in XX, key that market share. growth the Despite and initiatives U.S. contracted our are remain estimate year-over-year we volumes and

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

Next, services. I strong value-added would to ACV On great that to see and on like results deliver a our XX, the you business. wrap Transportation into is can up section with Slide growth highlights continues scaling

in network strong rates cycle XX%. times exceeding again resulted and Our once attach carrier fast

an Over transports carrier QX. points fact, from further and were achieved quarter, In setting automatically in cycle buyers QX, of benefiting our our basis the partners from and our record us increase both competition. XX% in times apart the sellers dispatched marketplace X,XXX of during

from margin drive in efficiencies. with digits, growth investments in an resulted low XXXX. increase mid-single and continue early double the another both Our to the efficiencies operating These technology digits revenue in quarter

financial path our reminder, progress target a putting our us margin on transport XX%, is As a achieve this assumes and revenue target. XXXX clearly of to

growth rates strong attach in over grew year-over-year. now to in to the average and year-over-year increasing market. continues Capital in loan experience values Turning volume Slide approximately demand Capital QX, loan resulting XX, XX% ACV XX% XX% over

have and ACV profit is ramp and scale driver engagement important growth our We dealer continued drive going investments forward. to ensure an to that Capital to

our innovations offerings, Turning drive innovation. to of shareholder buying On first focused the Slide in on delivered and TAM. the innovations growth-oriented These are long-term some rates, strategy expanding I'll marketplace our our the XXXX. value, second enhancing product experience, increasing element dealer recap of conversion advancing XX, to

features. with buying search, Let a X.X with dealer UI me Marketplace begin new filtering, the and updated experience. notification delivered

the experience data, broader new conversion merchandising dealer our by partners. of for buyer through notification leaned S.A.M., bidding to a format advanced enhanced rate and range capabilities. pricing auto solution, Our increase intelligent options We auction buying in tech creating with enhanced and launching

Private traction Marketplaces of auction the enables to dealers for within solution dealer unsold solution This with country. strong some network experienced easily the Our and units. largest their open groups inventory marketplace in ACV's leverage

business, lane provide to dealers expansion. drive and XX/X we Capital the drive adoption In We data partners Transport, self-service targeted capital improve spreads our mobile to further pricing we to critical their streamline carry and app were of launched portal, equipping access developed digital a with to offerings. carrier ACV margin and to launched tools

Monk enable and through Drivably our our from and by digital consumer transform machine solutions to new with enabling TAM powered upstream BCI prior our consumer ACV experience dealer expanded sourcing critical to engage we These with data. resources. Lastly, deploying dealers solutions with to also the partners solutions acquisitions, learning our their

delivering On Slide reducing costs. our success of investments operations, extend customer XX that into examples while are tech

inform pain transparency raising leverage vehicle predictive the ArbGuard. bar capabilities on VCI operating target conditions our Our next-gen our analytics, virtual conducting center teammates. transparency capabilities advance vehicle-specific points leverage collection into learning, before and risk. data inspection inspection also Copilot process. the AI increasing further capabilities, lift and delivers reducing arbitration new specific APEX These To technology, an our the productivity to inspection device while significantly that launched higher introduced and ACV's We while technologies we issues in inspection of These machine inspection.

extraction, processing with is investment data and technology title leveraging recognition image our processing title in higher supporting our Lastly, and efficiency in-house accuracy.

to our to we innovation exciting expand competitive road an Turning Slide of now moat. XX, map have further

intelligence our increasing new and on focus to and our focus rates conjunction self-service repository. powered enhancing and the machine with further elevating to features. primary programmatic innovation is We'll capabilities extensive platform, year our learning continue this dealer on which in with leverage is vehicle and AI growing experience by enhance by data conversion Our

through of with service transportation Our ArbGuard system Monk our We'll integrations platform continue a this consumer and that lower the exposure. upgrade SaaS and of industry-leading Digital full sourcing reports off-network and loan in Apex, deeper Capital. implement Drivably financing a raise integrations launch in even and ACV to inspection the bar major expand for with enable management offerings Monk Copilot, And partners. rollout generation dealer and next data arbitration with we'll condition higher improved our and to result of MAX will of capabilities

delivering over hand through up think to our long-term market our help Bill moat financial and is the and our operation scale. own growth. on drive profitable agree technology at to that growth let me With our results expand you I we're driving it and you'll take that that, competitive wrap To team innovation, to industry-leading into how

William Zerella

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

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

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

Turning to year-over-year resulting versus modestly QX was 'XX, an versus loss $XX begin results QX a Slide XX, points revenue 'XX context beat or of XX% rate XXX range conversion Adjusted some of guidance Note EBITDA headwind. margin $XX To performance. range improved results. I'll fourth basis our Revenue declined declined guidance quarter 'XX. to that 'XX. within million X,XXX our of and approximate million EBITDA points of versus basis add QX revenue QX approximately our the $XX in and million strong in review our with

year-over-year will conversion strong I $XX Turning since additional Total to total The XX. XX% decline QX revenue, CAGR X% in and offset of 'XX. declined million XX% a revenue auction to which some versus rate due revenue on 'XX. unit assurance by assurance Slide a of ARPU. performance Auction XX% higher results revenue, QX represented was compression, year-over-year and partially cover reflects revenue. detail

of total more ACV Marketplace year-over-year. revenue, revenue Capital doubled XX% X%. Services revenue, declined which than was

the However, impacted business which Transport decline larger units was revenue, a in today, is much by year-over-year.

data total and X% year-over-year. Our revenue SaaS grew services products of X% comprised and

a exit to acquisition significant measured we mass XXXX. digital platform to ourselves more making for of also improvements a growth as reacceleration approach We to are while position customer the taking

to in low initiatives on cost of technology year-over-year in market points of we reflects review revenue as flat excluding costs revenue was a costs, and our XX, XXXX significant again delivered Turning XXXX as Operating effectively optimized This expansion we quarter. reflects was XXX made expense The QX. our Slide QX the now basis I in improvement business, the driven scaled business. which support percentage discipline the a revenue will primarily of and focus to quarter. investments our in revenue double-digit margin in year-over-year. and cost approximately Transport by decreased

XX, to investment Moving our path frame profitability. strategy to and Slide let me

OpEx in material spending on XXXX. decrease operating growth focus discipline Our efficiency in in a and resulted

our In fact, investments improve. our guidance position despite loss conditions And the due XXXX our anticipated conditions. while to less a was the $XX million market to preserving market adjusted of ACV than is at of in million original midpoint as ensure EBITDA we this go-to-market revenue initially $XX and strong technology accomplished challenging

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

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

QX, increase the flow. the we in in a contributing the million operations million, in cash flow half Consistent outlook used just $XX In from of 'XX of $X $X sequential cash million year. quarter, cash from half positive with operations provided with the last $X to million first in declined float significantly of second was

on to XX. guidance Now I'll Slide turn

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

to year, growth versus loss EBITDA EBITDA breakeven and a adjusted be $XXX and to exiting to to revenue of expected in over of full year-over-year. $XXX range the a X% million expected million this year. committed improvement For the is Adjusted This $XX be we range is remain XX% $XX range million. represents XX% a of to million to achieving XXXX,

the As as constrained we improves vehicle remains in new that it relates the continue our inventory to throughout are and to near guidance, year. term supply assuming production that recover

back are price increase that the of half assuming as also rates the We XXXX, conversion historically wholesale low moderates. from levels in depreciation

rate expect non-GAAP at and of we grow cost to operating revenue revenue growth. of expenses, the and half excluding Finally, amortization depreciation approximately

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

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

gains. resulting adjacent markets, wholesale. Our confidence including share reinforced factors, expand sustained market a Opportunities TAM is of to dealer by wallet in strong our commercial gains number penetration into share and including

Our providing Consistent balancing business improvement that, durable on and me June Day back long-term turn upcoming targets efficiency. forward scales. margins We our it and platform, Analyst with commitment long-term revenue operating broad growth enabling And George. technology a let in and X. to details on growth to you to with our our investment as at look

George Chamoun

Thanks, Bill.

questions, let your take we me summarize. Before

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

growth attracting by share for market which attractive dealers market share, as gain and wallet to ACV continue gaining positions new improve. by our to We marketplace conditions

expanding executing of penetration gaining plan on territory an offerings. are traction with and suite our We

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

track medium We margins $X achieve generate adjusted EBITDA that are to revenue we target. And term, with believe the will significant our attractive over near-term drive billion shareholder in value. on over

begin We the our are call to over With Operator team world-class these on I'll Q&A. building goals. that, results to committed the achieving to while a turn the to deliver

Operator

[Operator Instructions].

& line Co. comes Our Pierce first from question of at the Chris Needham

Christopher Pierce

a wanted I start just over. take -- to kind of I'll

February Sorry temperature George, speak given take dealers temperature of wholesale of data. just with that. to I about your kind wanted you better and

effect seemed what dealers, thinking investors, you're of because used to kind at talking strength. to just of about the path that level of I'm retail retail retail forward And wholesale talking lower prices going curious January -- to an did would given units. January because just the of Specifically, kind in better prices. Because price on have

Just curious about about kind and you're that dealers thinking how of how thinking are it.

George Chamoun

sure? to you me Can okay, make just hear

Christopher Pierce

you. hear can I

George Chamoun

phone to little a We issue just Okay. second, Great. a there had -- for wanted

Christopher Pierce

what specifically? hear said any you I Did

George Chamoun

in started, market. even generally what are say cars up, point, remained going question rates been probably a right? were are elevated, now of buying were is have couple consumer your a keep expecting. expecting. on held fear it Yes. January I market is dealer we with than There's more market of of a bit seeing issue be to pullback they're were phone I rising, And out would that and Chris, of that reasons so probably think, though knowing prices a say rates to dealers consumers lot there say to right different theory may is is is more good, is what would the theories just Both in how market expecting could January dealers a I go going far, up. strong. year while hanging only compared pretty either the way, the February dealers that One different That's positive started. happening. has be All little the signaled, a would had I knowing But interests I why right favorable have But why interest the even the think so well the could few has we're together sentiment interest why. still has

Christopher Pierce

wholesale and prices, help help out. up where that that had in trying Or could could would dealers retail you tends which to retail kind kind we we etc. if conversion, And prices phenomenon, mean prices? units funky think higher of kind last year see to of I be through wholesale just a end auction flow what the prices of might necessarily but because direction, comment not just Okay. just for lower on at wholesale get widened one certain going relationship retail know retail really to of just higher will wholesale spreads prices. of I'm

George Chamoun

Yes.

far I different quarter, a retail reports think, in used few there Chris, pretty you I if have for thus industry reported. hung strong think see prices this have

and has I strong has think retail been wholesale strong. been

I there. think there's correlation consistent been a pretty

Operator

Our CJS next Securities. Bob at is Labick from question

Robert Labick

start, biggest you wanted see from. these growth I'm do I next a asking where but not maybe you to year? new you specific buckets coming can see terms in of can like points, of of Like what numbers please? unit it expanding growth same kind order you wallet? The Maybe is here commercial? them. on sign-ups? couple you the from, Is growth, just a units, but TAM? touched dealer growth, of you rank Is driver, it buckets is of pin it Like it bit rank down where for share of units dealer little coming

George Chamoun

Bob. But adding has a more definitely, the our a share rooftops. been -- wallet certainly, I Yes, approach dealerships been think focus. to from more larger We measured has growth grabbing

just if alone, of wallet You've dealers heard calls. on and the supply within me from really are most is wallet had I We rooftops. to dealers ACV. room few a other working with ACV. I few, would significant. talk focusing have X/X areas share, But significant franchise pick on about over of earnings last There have -- share say grow still lot growth. be that are would adding working that gaining already That the more a We with already opportunity. a of the additional to just We

Robert Labick

Got it.

more what year? the $XX,XXX you the case? the there's are of are at $XX,XXX kind we've trading, shift auction, impact terms just $XX,XXX how Is can't in supply guess to then or holding dealers of that cars meaning and cars volatility, next get the might anyway. read etc., And P&L? that and but declining I And the been $XX,XXX prices, below, tight auction are mix them given expecting Or Great. mix on some environment maybe Okay. at they because to

William Zerella

of definitely did significantly Yes, return spot, Vehicles normal. relatively actually you back probably their to cars, to of vehicles. always a seen one but on low, industry dealers prior so Used, as towards with it when helped to look mix normal. has growing is as example having starting newer dealers aged percentage starting their specific marketplace. years Prior we at newer, starting sort go come vehicles still strange that sort that right be, I Bob, an to And new matches COVID. from are of would cohort all from X before the the are holding look are sweet know all aged younger of to that we've dealers seems But challenges, in mix that's supply vehicles grown perspective. really our why to inventory, as at shift of a yes, more that recent sorts pretty and what the the to our is get but that these share the factors, back.

Operator

The from Canaccord. next Graham question Michael comes of

Michael Graham

wanted around. ask see these to great questions. It's turning some I of trends to X

quarter, just a wonder The you this the outline could wallet of your share being ask, as year. share your but was important XX%, key around times X.X%. first only the you down auction of an growing if wallet wanted factor your just of of declined revenue sort mentioned in factors just And of I existing couple GMV is success And in I on couple rooftops. to then a

some on QX. if in light shed wondering you Just hood on Thanks. underneath the what was could going there

George Chamoun

in? on moving We're why so strength start helpful don't forward seeing Bill, there, mentioned and actually first, I'll chime chime to then side. basis ARPU. can Bill I a on the in and before, and you Yes, Michael, related revenue certainly. that's auction I'll actually as mix, go

William Zerella

GMV in our fees to well. example price would Michael, that pretty unit. passed ARPU essentially more as attributable on unit buy that apply right, the Hey, most quarter-on-quarter. you're offset through And Yes. remember. year-on-year any we per than October, dynamic did increased And per Same if in increase reduction actually, you for that go of down But GMV our substantially. X% is

be into modest what's for any really ARPU We our GMV mitigate in per we fact, year-on-year flattish as declines about to a this And we as been And our modest, well. in year, further guidance baked we're some unit. expect in think have if decline result. to able expecting GMV

George Chamoun

types growing to one inspectors often. things our the far as share, pretty more share, as wallet And customers having to we're simple doing tactic. existing focus a wallet is our of That's on show up

add value. more Second,

of of more asking Monk, share. your consumer and these go-to-market, few for Drivably example part acquisition our as these acquisition our consumer dealers Some product a is the for and our tools, are offerings, customers, tools for of more as we more relationship Think help things our both customers. opportunity of about other and us it we're value, offer looking with a few wholesale for drive our might

Operator

Our from from John next comes question Colantuoni Jefferies.

Vincent Kardos

Kardos Vincent into time question. the little players is a extend then just hear a to providers most are shared your depressed I'd Thanks the there's thoughts thinking my and of auction industry? taking pie order This digital early due you competition by to And How about lead volumes the your the the less at important the Thanks. to of over thought, for improve curious on of physical various to be to business other industry. for John. you potentially what 'XX a bit heading as on related in when kind in for be areas in digital some view as maybe

George Chamoun

years. that when group. ACV capabilities groups And auction, to various physical a large which out key look still cars the of example bringing is we're you Yes, it in sort of next digital marketplace That's certainly. in the an if is extended share I an marketplace. helps compare few goes ACV a outside first what one see dealer Marketplace, But a so one all our others helping our about you'll it of we we've Private That's our digital to us more think likely open of you share. the adding part more product the all largest is within of at think focus that's When is vehicles over moving in us offering before you the trade gain value. as to open trade market, industry. of the Those example into lead is competition, know,

offerings how from and side traditional are broader approach later the to and from dealer broader and We're next partners are we're as for well. a a going year a Drivably market with early looking like us and our go products newer that we market wholesale share helps all Our year to auction differentiate Monk MAX to partnership bringing just this company. that

Operator

Our Rajat of Gupta next question JPMorgan. comes from

Rajat Gupta

just on guidance. a had I question the OpEx

what given target X% is implies Because haven't was year-over-year, it us you governed what's it cost of of like in a think revenue driving volume pricing, breakup of curious the by? excluding so terms Curious I'm curious the that the I I revenue. like increase? OpEx Is Thanks. pricing because Or cushion you a more do follow-up. a I feel more on have you is you function And investing it elaborate of that. have volume? stronger? just if could on versus

William Zerella

this And capacity OpEx quarter with it's footprint our our inspector on that actually we're growth. we Hey based Bill. -- mind are There inspectors. drivers few aligning includes to volume. starting Keep Rajat, a growing our in that OpEx, which marketplace are includes operations,

through on And growth. flows P&L. an that's that important our OpEx So our know, driver to you support as

one area. that be So would

going terms making the support go-to-market our at in major growth of on to of is kind also sales terms area other support is the financial business at the that our to growth than last it. look we be we've resources for to modeled we baked well. our sure as some Even to we're more The if just into other though overall in in investments Capital a more general, And it investments year, muted model growth supporting of supporting year. this accounts, have kind folks, want was that of go-to-market make that there ACV growth you little the side

year disciplined. pretty past, the demonstrated that and far I quarter, been especially especially so think we've last last we've in

be return answers would that really basis OpEx of Hopefully, strong a making expect question. unless or wouldn't terms in investment. on we supporting volume terms there's of decisions You any in your that

Rajat Gupta

way volume now? to of base to Like volume versus kind growth at growth the inspector from the in equation? helpful. size growth you of of terms That's what growth Any frame way are inspector kind Any Got requires right it. of that? what kind

George Chamoun

to formula basically capacity in a generate expected to through it's projected territory our I precise advance to necessarily our across you decisions support Yes. as Rajat. in where It's support of how because that We not apply We What not make need to basically do have all give volumes look than across it. actually to we'll we but we biz sure ops kind ways. those the have we you that's that, that to can't higher at more teams, decisions. is could volume. and you Wish capacity of we a country. volume the of territories se, lot in clarity a of you I can't just the make formula build And per give basically, can give can necessarily a make that selectively hard model add volume. to capacity

Rajat Gupta

enough. do clarify intact? as placeholder Just in the -- Maybe that. is update I'm view this Thank that still from loss like $XXX Analyst officially a $XX inflecting like, that I at are year? are if you an to pretty you we curious going XXXX, could follow-up, targets? going much reiterating to like on Fair the you years. Or XXXX point Day? just reiterated a is that Or that X Understood. EBITDA million to you. of get some you're mean, more in million

George Chamoun

prepared remarks reiterating targets. our Yes. In those today, we're

we different how Analyst of evolved will terms the Day big We those That that Analyst how model haven't doing year be Day changed part has very a our those in targets. a -- our deep dive be At Analyst hit Day targets. the from model of our how we'll and of the June X. in parts X, terms at June of on last

Operator

from from Our next comes JMP question Securities. Nick Jones

Nicholas Jones

if sneak in two for questions, here. taking can thanks the I Great,

Thanks. more wallet stopping try of wholesale or within kind from their you to And go the kind share then units to desire of I of of kind any limiting platform? do the when limiting about add by what's dealers, dealers franchise of share? about How of more as George, sophistication platform. or kind there was mentioned double of time you you dealers X/X think, you gain over think them kind on organically doing What's to levels factors number kind to units that required and build that? organically

George Chamoun

think how working limit really the be us. many dealers I about put When a on with I what's could limit, don't

physical good about online is them to You and the about we've competitors, from the online, as digital. so partner their And also to moving end more seen it's the move ACV going wholesale day, digital there. our if example how other choice been feeling foremost. the At you've a it it's we for happen to that first comfortable winning auction, feeling double. relates think really could preferred far dealers about compared operation And of to

time. in ways matter to that And of or the is twofold way this for a rooftop. dealer the level decision principles just think group, are that specific aren't it's customers to to Think digital on be in local providing as executives for gives really And does One, of it's start These just approving a with for you inertia your time. think a also ACV about share is have wallet for increase a have will other just us new to not the you new and platform, what the dealership, it dealer an over right the value-added us, second, aren't the digital. we're second edge most your a the share. share broader of To X maker wholesale. we working dispose the to be the wallet senior really, wallet marketplace. other in competitors just the helpful to partner services that for relationship time, customers because which have of X, significant you I on I we've question years. we Very related significant with matter been that

Operator

next question Imbro from from Stephens. is Our Dan

Daniel Imbro

looking that guess those you fixed guess inspector start I fair assume what XQ volume Or OpEx, go margin decline be up into want the knowledge costs limit and are volume. volume the a leverage saw we should leverage could even question. financial more might with back costs? gross that a that leverage given that improves? in this is further it the you investments of to some of just in Bill, at as to to pick nice incremental year-over-year year I get leverage some line, despite needed as begins I marketplace

William Zerella

Daniel. Hey,

that. pricing margins. our as down and as of I cost to the improve the next margins. assuming to June. especially is kind I latter had assume margin investments upstream that XXX model, Analyst we sure demonstrated we've have somewhat revenue/revenue about movement about in quarter as revenue growth of and that drive year there that kind of we're I'm I would mean to demonstrated basis we sure, of maintain new extensively. is we'll don't to a guide talked improvement say investments a assuming in down, that part into kind we certainly, the able margin think think continue going of do kind we're in think certainly in we're if we about that of are drive are But of And our our lot improvement As get over Day into you profile, year-on-year make continue improvement cost a points terms for going hitting and this Transport we're here. cost talk would helps. a which not of as that well significant this you we of be of I we're our get made that in of towards all kind the but to year-on-year as at revenue factor to a we year we back modeling Scale we terms well. efficient. our us We know, and our already in about target 'XX, in margin we improving more profile But profile, -- more more of that power we up that mode going able investments kind Plus, more pretty another certainly some to quarter-on-quarter we've will make. to being nice continue continued We'll of maybe help

those grow all Capital so and business, a it's to continue high-margin that's business Our will factors combined.

Daniel Imbro

Got on the last strategic Thinking pillar it. That's growth gain year some helpful. And helped then, George, innovation thing. about of maybe talked share. more the Apex about, you one

deck we add to how to innovation? as when how about truly when think do have about And the usual. players players, do you portfolio forward do do as -- I think your omnichannel in you that about think today, think the tools more the incremental that tools? does wholesale incumbent Are the you larger color? ArbGuard I don't going they just these you you these and or have similar offering called What then Copilot that today? provide Can compare And out slide channel?

George Chamoun

Well, had XX% Hey, to Daniel, to terms, simple that These vehicle time. question. the it And X and of instead great are an about inspections, vehicle. that becomes in an inspectors technologies. inspect say given inspector say expert one every our differentiated specific vehicle, transmission they thousands expert issues put doing a one becoming and of let's you're single let's years of of every inspect after before

first is costs alone, technology about over once, If small really we'll arbitration so our having three issues two time. other in next you our data allows anyone data we're we've us and structuring Not they're buyer benefits creates a satisfaction. could more years. is, higher time. would financial And few buyers is, auction be but vibration of technologies statement that harnessing believe And And as these the all used from foremost the over we're number of think less last at arbitration be vehicles, there's many benefit our the really see listening our because that outside issues don't gain bit, world inspected little moderate The to marketplace. over harnessing confidence incredible. just look we're types who this sensing data we at cars. in launched. the We issues and X way to that and million year moat is way recently The the new

come they're value of into matter having they're and the we're when the more that's the the frequently in the they most the technology Yes, more great think show across was asked fact, because store, the technology, thing tweak to whether of NADA market. roadmap asking dealers want from outside providing Meaning our this retail this to dealers a questions, or differentiation, to dealers product wholesale. in we us I probably past cars year invest more As auction. this own their use

Daniel Imbro

And inspectors if growth. tack on the Bill's technicians supply. Is inspectors? various difficult I ability fuel auto to find inspectors I hiring more earlier, these do to is could guess today? mean think I in it were to more for across a I answer how about needing follow-on, people

that to at yet? think is up Just labor? that available And how trying loosening about is all

George Chamoun

a changed would Really, our days I role strong. fill not XX% at XX%, of very the hiring say our has been to all. has country,

we Now keeping per in year a were inspectors mind, we're many as not month ago. as hiring about

your do not answer size Our mechanical because tools, into nice as to making country. number for of from car a true a but great mechanic. great into across helps full turn background, grew a take mentioned of first And a inspectors don't it having training. we're That's background today background then not -- a a with a of mechanical can inspectors. of as the lot him simple a we about and We investment much or do nice that looking of We her size question the him someone the we're not But over inspector. have you -- we're time. validity would XXX be the a into difficult

Operator

Ron is Josey question next Citi. from Our

Ronald Josey

just I to please. the follow Bill, drivers around conversion for rate Two, maybe, up wanted and improvements. George

this -- going I year. think I forward for

I enhancing this coming think up you say programmatic I heard year. capabilities

since the just I all on using you it's outside George, know that. follow-up could If on would more then, a and mean can getting really as rates be your point provide able to higher, all just there about you to data the details to conversion leverage IPO, that marketplace, of the being And helpful. before drive been what data

given to couple dealers for asking are we viable here how guys. be something do that close Is And that that, product? might so years? being able of are next actually Thank the the in you, to this

George Chamoun

right significant to we're down But saw improvement where we're conversion of need assuming more it. values in answer really pretty describe Even year, already see strong, to I'm and Did rates sort saw of across would below of the certainly, relatively We Ron. we'll significantly. we're be dealers Yes, about the year. ton quarter the we've marketplace not conversion environment they another of wholesale understand to see car price kind being directly of levels. to out think -- living in these last an to towards rates which year, be say are I the this We not this the sort much don't market improve strong. go Think We're it sort remember. really to you this sure current We there half this back we're figure are going will end go We're really effective -- down. see affected to a the question point back this all supply is once. down, year. way at going this make say depreciation the still I'm of stabilization I -- depreciation, market with this moderated stabilization. is why Maybe rates rates let's more we're of are I conversion expecting rates the just a cars. we would today better. more question? radical have think your trying values will of than at trying to want conversion go them traditional for conversion now. very But used year, with strong

Ronald Josey

about helpful. the just that -- the following comment you. Yes, million on I was up thank you given your corpus super That's using data have

George Chamoun

capabilities On the at it And think imagery. really AI much. in we're this data is the to too I trying time. not ranges from building one broadest we're of automotive But side, boast there

issue looking time, year, The by or catalytic and high AI been percentage the to acquisition. Our of days. revenue was to the Monk detect at whether isn't still missing, windshield a engine. this R&D broken, We're a not technology an engine engine XX% a just be being our everything is able has think an to to the our but like if coming scanning undercarriage affecting of the in early is listening This able listening almost time, see glass to really team from or the detect converter fantastic a extraordinary. and materially or costs acquisition to on from

say would objectives goals We're how adding next we're on year, we've about on early for of SaaS is some tools do too We've cases. we trying machine and and ready late creating use year. I an to And us. those and own them we you market maybe sort do their AI to brainstorming got on services, capabilities foremost own objectives, out work this and yes, many turn of to We're incredible focusing and this that. can for All are for some really by to moment. these would to moat just their get asking obviously at dealers of the that this to learning marketplace be not careful take all. first be laid like for

increase to don't headcount significantly this want We year. also

license, a even a opportunities the per to deliver and that but could a There future probably dealers. talk there of Yes, got But maybe there being more on Investor rooftop. add more specific bit and broader lot are about of cost Day we'll As some the faster. think Bill think to moderating mentioned, And move some of devices very us this next I dealer, we'll fine. be that low early for need to they year. a come not we'll late Because are for will what provide the cost. on of key capabilities, we're I only -- there's today. other relationship sort out And dealers objectives don't headcount. but great are cost these early think year, out technologies than But really go I we've I'm sort any next differentiated in very they would our These this us. our these these with year. more be I little towards look

Operator

Our from next Prestopino Research. Gary comes from Barrington question

Gary Prestopino

that that data accelerated it the I like George, your penetration somewhat QX. dealer have looks in according to

that? in Do just QX. what had more for account street? it for and Or to at on would in think you have QX the I XX% feet accounts I What acceleration? up XX% that

George Chamoun

dealerships, there's do If beyond -- don't it see -- reason quarters say had specific don't can't in but to at consisting my moat think any why really you this right quarter, what things about look look if we a in year, I we've point value-added doing. pretty one we growth of in thing these I time, or accelerated higher share. little one we're of back we're point to on around I pretty really would have a share building you wallet one across, you had have broad across together, that been I both a to all consistent really have we've anything consistent. But if top would be growth this ACV Gary, talk services QX. reason in head in to QX. now But probably It I coming

Operator

like would turn Vice to back closing to now Tim Fox, remarks. Relations, for I President of it Investor

Timothy Fox

Thanks, next I'd Registration Conference have in mentioned, IR look details and on that to call. San York. you George ACV, the few evening. months. either be Bill And hosting we'll the Gerald. Great. release forward our X. us for be you again in New or be seeing in on to the thank website. in hopefully Day today and press as a your JMP's our on June everybody X like We on we're And in found great road the can thank Note for in joining Francisco on March XXXX mentioned going Tech to participating Analyst interest

Operator

program. you today's does in conference. conclude Thank participation your for This the

You may disconnect. now

ACV Auctions (ACVA) 22 Feb 232022 Q4 Earnings call transcript