Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ACV Auctions Inc (ACVA, Financial) reported record revenue of $171 million for Q3 2024, marking a 44% year-over-year growth.
- The company achieved a 32% increase in vehicle sales, selling 198,000 vehicles, driven by strong listings growth and conversion rates.
- ACV Auctions Inc (ACVA) raised its full-year guidance, reflecting confidence in continued top-line growth and margin expansion.
- The transportation segment delivered record revenue with 108,000 deliveries, achieving a 20% revenue margin, which exceeded midterm targets.
- The company is making significant progress in its commercial tech investments, aiming to support commercial consigners and enhance platform standardization.
Negative Points
- Used vehicle shortages remain a material headwind for the dealer wholesale market, with inventories still 25% below normal levels.
- The company anticipates a negative impact of approximately $2 million in revenue and $1 million in adjusted EBITDA due to recent hurricanes in southeastern regions.
- Despite strong performance, the company acknowledges that the used vehicle inventory recovery will take several more months.
- ACV Auctions Inc (ACVA) is still in the early stages of its commercial business, with commercial volume representing just over 5% of total volume.
- The company expects continued investment in platform expansion to support commercial rollout, which may delay achieving full incremental EBITDA margins.
Q & A Highlights
Q: Can you explain the trend in auction and assurance ARPU, and whether more revenue is coming from auctions versus assurance?
A: Bill Zerella, CFO: The auction and assurance revenue should be viewed together, not separately, as GAAP accounting can distort trends. There's no intentional shift towards auction revenue over assurance.
Q: How does ACV Auctions view competition from larger players like Carvana, which have their own wholesale auctions?
A: George Chamoun, CEO: Carvana has a small market share. ACV focuses on empowering dealers with technology to compete effectively, offering solutions for buying cars from consumers and using AI to enhance operations.
Q: What is ACV's approach to pricing, especially in comparison to competitors who seem to raise prices annually?
A: George Chamoun, CEO: ACV has been closing the gap on buyer fees without impacting market share. The company aims to maintain competitive pricing around $500 per unit, with some room for adjustments.
Q: How is ACV progressing with its commercial wholesale market initiatives, and what is the profitability compared to dealer wholesale?
A: George Chamoun, CEO: Commercial volume is over 5% of total business, with similar EBITDA per unit as dealer wholesale. Investments in inspection technology and integration with back-office systems are ongoing.
Q: What factors contributed to the improved conversion rates in Q3, and are these improvements sustainable?
A: George Chamoun, CEO: The improvement was due to both favorable market conditions and enhancements in technology and product offerings, which are expected to continue driving strong conversion rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
