ACV Auctions - Earnings Call - Q1 2025

Executive Summary

• ACV delivered Q1 2025 revenue of $182.7M (+25% YoY) at the midpoint of guidance, and Adjusted EBITDA of $13.9M, exceeding the high-end of guidance; non-GAAP net income was $7.5M and GAAP net loss was $(14.8)M.
• Results beat S&P Global consensus: revenue $182.7M vs $182.1M estimate*, and Primary EPS $0.0445 vs $0.0213 estimate*; Q4 2024 and Q3 2024 also posted revenue and EPS beats*.
• Management reiterated full-year 2025 revenue ($765–$785M) and Adjusted EBITDA ($65–$75M) guidance; they modestly improved FY non-GAAP net income ($33–$43M) and GAAP net loss to $(60)–$(50)M vs $(62)–$(52)M prior (raised).
• Key catalysts: upside on Adjusted EBITDA vs guidance, consistent beats vs Street on revenue/EPS*, rising ARPU ($513) and continued market share gains despite soft February, plus new Q2 guidance ($193–$198M revenue) sustaining 20–23% YoY growth.

What Went Well and What Went Wrong

What Went Well

• Adjusted EBITDA exceeded the high end of guidance, with margin expanding ~500 bps YoY; non-GAAP net income exceeded guidance with ~300 bps margin expansion.
• Strong execution across marketplace services: ACV Transportation set quarterly revenue and deliveries records; revenue margin expanded 460 bps YoY and tracked to low-20s midterm targets.
• AI-enabled product momentum: ACV MAX bookings reached a 5-quarter high; ClearCar launched at 200+ rooftops; Project Viper pilot interest surged, with dealers queued for units.

What Went Wrong

• Macro cross-currents and a “very soft” February muted conditions; dealer wholesale volumes remain below historical levels due to used inventory shortages.
• Despite ARPU uplift from March buy-fee increases, management expects GMV per unit to dip seasonally in 2H, tempering ARPU progression.
• GAAP profitability remains negative (Q1 GAAP net loss $(14.8)M), reflecting ongoing investments (commercial platform, remarketing centers) and stock-based compensation.

Transcript

Operator (participant)

Welcome to the ACV Q1 2025 earnings conference call. All participants will be in listen-only mode. The question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press the star key and then zero on your telephone keypad. Please note that this event is being recorded. I would now like to turn the conference over to Tim Fox of Investor Relations. Please go ahead.

Tim Fox (VP of Investor Relations and Strategic Finance)

Good afternoon, and thank you for joining ACV's conference call to discuss our first quarter 2025 financial results. With me on the call today are George Chamoun, Chief Executive Officer, and Bill Zerella, Chief Financial Officer. Before we get started, please note that today's comments include forward-looking statements, including statements regarding future financial guidance. These forward-looking statements are subject to risks and uncertainties and involve factors that could cause actual results to differ materially from those expressed or implied by such statements. A discussion of the risks and uncertainties related to our business can be found in our SEC filings and in today's press release, both of which can be found on our Investor Relations website. During this call, we will discuss both GAAP and non-GAAP financial measures.

A reconciliation of GAAP to non-GAAP financial measures is provided in today's earnings materials, which can also be found on our Investor Relations website. With that, let me turn the call over to George.

George Chamoun (CEO)

Thanks, Tim. Good afternoon, everyone, and thank you for joining us. We are very pleased with our first quarter performance, which again demonstrated strong execution by the ACV team. We delivered record revenue with strong margin expansion, resulting in Adjusted EBITDA exceeding the high end of guidance. Our results were driven by three key factors. First, strong execution in our dealer wholesale business. We continue to gain market share and expand our dealer partner network with our highly differentiated marketplace experience. Second, we had a record performance in ACV Transport and Capital with strong adoption of our value-added dealer solutions. Third, we continue to execute on an exciting product roadmap for our dealer and commercial partners, expanding our TAM and growing our competitive moat.

While there are evolving cross-currents in the broader macro environment, ACV remains focused on delivering strong top-line growth and meaningful increased Adjusted EBITDA while continuing to invest in our long-term growth objectives. We're confident that executing on this profitable growth strategy will create significant long-term shareholder value. With that, let's turn to a recap of our results on slide four. Q1 revenue was $183 million and grew 25% year-over-year. We sold 208,000 vehicles, which was 19% year-over-year growth, despite very soft market conditions in February. Unit growth was driven by continued market share gains and solid execution at our remarketing centers and a dealer wholesale market that grew in the low single digits. Next, on slide five, today's discussion will focus on the three pillars of our strategy to maximize long-term shareholder value: growth, innovation, and scale. I'll begin with growth.

Turning to slide seven, I'll frame our growth discussion around ACV's core product offerings: wholesale marketplace, marketplace services, and data services. Let's begin with our wholesale marketplace on slide eight. At our March analyst day, we highlighted how ACV is leveraging AI across our entire suite of solutions. On our marketplace, AI is enabling us to provide our dealer partners highly accurate wholesale and retail pricing guidance. This guidance is based on condition-enhanced pricing, enabled by industry-leading inspection capabilities that are highly differentiated in the market. We are enhancing the seller experience by offering flexible auction durations and auction scheduling. We also launched our first seller-in-auction tool, allowing sellers to remove reserve prices mid-auction, driving buyer engagement and conversion. On the demand side, the buying experience is now tailored across buying personas, from smaller independent dealers to large-volume franchise dealers.

have improved discoverability and search refinement through advanced saved searches and notifications. We are taking friction out of the buying experience by making AI-enabled recommendations informed by dealer preferences and current market factors. Turning to slide nine, let us review our marketplace service offerings, beginning with ACV Transport. The transportation team continued its strong execution in Q1, setting records for both quarterly revenue and transports delivered. AI-optimized pricing is driving both strong growth and operating efficiency. Revenue margin expanded 460 basis points year-over-year in Q1 and was in line with our midterm targets in the low 20s. Lastly, our off-platform transportation service continues to gain early traction from our dealer partners. These new value-added services accelerate our transport network densities and create additional long-term growth factors. Turning to slide 10, the ACV Capital team also delivered strong results with over 30% revenue growth in Q1.

This was the second quarter in a row of accelerated growth, which supports our confidence that we can continue to accelerate ACV Capital growth while managing risk. The ACV Capital team is expanding its TAM by delivering new value-added offerings to our dealers, including off-platform transactions such as buying vehicles from consumers, creating additional growth levers for our business. Lastly, I'll wrap up the growth section on slide 11 with data service highlights. Market traction for ClearCar remains strong with over 200 rooftops launched in Q1. We're also seeing growing interest in ClearCar service. This offering enables our dealer partners to acquire vehicles from consumers by leveraging their service lanes for instant appraisals and offers. The ACV MAX team delivered very strong results in Q1, reflecting the investments made in the host of new features and platform scalability.

Bookings were at the highest level in five quarters, driven by a number of large dealer groups that would like ACV to displace the incumbent IMS providers. Our strategy to begin bundling data services with ACV Wholesale is starting to pay dividends, and we believe this new strategy is another exciting long-term growth lever for ACV. Again, this quarter, we're excited to share feedback from one of our dealer partners, The Niello Company, a dealership group based in Sacramento, which is using ACV's full suite of offerings. We posted a video on our IR website featuring their team describing the significant value they're deriving from ACV's solutions. It's another great opportunity to hear directly from a dealer partner. Next, on slide 12, I'll address the second element of our strategy to drive long-term shareholder value: innovation.

Turning to slide 13, I'll go a bit deeper in how we're leveraging ACV AI across our products, services, and operations. As we discussed at our analyst day, technologies like machine learning and large language models are advancing at a rapid pace, and ACV is uniquely positioned to transform how decisions are made in automotive. It all starts with consistent data capture, which is underpinned by our VCIs in the field creating a large moat of curated data. We're now also putting our hardware, diagnostic tools, and damage detection algorithms into the hands of our customers. With ClearCar's AI-guided image capture, we're putting self-inspection into the hands of dealer customers. Using machine learning, we're taking data fusion and processing to the next level, providing pricing for every vehicle in real time within ACV's pricing platform. We are consolidating data into structured AI-powered guidance to provide context-driven dealer decisions.

Take, for example, ACV Guarantees, which is one of the fastest-growing channels on our marketplace. Guaranteed vehicles are launched in a no-reserve auction format, which typically generates a fivefold increase in bidder engagement. Guarantees also remove market risk and pass the upside to our sellers with a 100% conversion rate. Finally, with Virtual Lift 2.0 and Project Viper, we are expanding our competitive edge in AI-driven products by putting the powerful combination of ACV's hardware and software technology into the operational workflow of every vehicle. Stay tuned for more details in coming quarters as we ramp our dealer pilots through 2025. On slide 14, we highlight another growth lever powered by ACV AI. Our AI-backed platform is capable of processing trade-ins at scale with repeatable, guaranteed pricing in under a second.

We are taking the guaranteed capabilities from our marketplace and extending that same power for e-commerce partners and piloting these capabilities with OEMs looking for a scalable upstream trade-in platform. Wrapping up on innovation, I will touch on our commercial investments. It all starts with integrations that feed into our digital-first marketplace. We have established an extensible ingestion architecture that enables us to work with a host of service providers in a standardized way. The next major capability is damage estimation at the panel and part level, which is powered by observations from our inspection platform. This gives us a robust tool that can be used for recon estimates, which is a critical part of the commercial workflow. Finally, we are in the later stages of our commercial platform development, and we are slated to power our first Greenfield Remarketing Center in the second half of 2025.

The commercial platform will include capabilities from inspection to work order creation, repair estimation, consignor approval, reporting, and more. We're excited to begin leveraging these technologies to address the large commercial TAM, providing another long-term growth lever for ACV. With that, let me hand it over to Bill to take you through our financial results and how we're driving growth at scale.

Bill Zerella (CFO)

Thanks, George, and thank you for joining us today. We are very pleased with our Q1 financial performance. Along with strong revenue growth, we delivered meaningful margin expansion and Adjusted EBITDA growth, demonstrating the strength of our business model. On slide 17, let's begin with a recap of our first quarter results. Revenue of $183 million grew 25% year-over-year and was at the midpoint of our guidance despite very soft market conditions in February. Note that organic revenue growth was approximately 20% year-over-year.

Adjusted EBITDA of $14 million exceeded the high end of guidance, with margin improving 500 basis points year-over-year. The upside was driven primarily by continued OPEX discipline. Finally, non-GAAP net income was also above the high end of guidance, with margin increasing approximately 300 basis points year-over-year. Next, on slide 18, let's review additional revenue details. Auction and insurance revenue was 58% of total revenue and grew 28% year-over-year. This performance reflects 19% unit growth and auction and insurance RPU of $500, which grew 8%. Note that units grew approximately in the mid-teens organically. Marketplace services revenue was 37% of total revenue and grew 24% year-over-year, reflecting record revenue for ACV Transport and ACV Capital. Our SaaS and data services products comprise 5% of total revenue, with growth of 5% year-over-year. Next, I'll review Q1 costs on slide 19.

Non-GAAP cost of revenue as a percentage of revenue decreased approximately 200 basis points year-over-year. The improvement was driven by auction and insurance results and by ACV Transport. Non-GAAP operating expense, excluding cost of revenue as a percentage of revenue, decreased 400 basis points year-over-year. These results reflect our ongoing focus on expense discipline as we optimize and scale our business. Moving to slide 20, I'll frame our investment strategy as we drive profitable growth. In 2025, we expect OPEX growth of approximately 18% to support our remarketing center strategy and commercial platform investments. Even with these growth investments, Adjusted EBITDA margin is expected to increase by approximately 500 basis points year-over-year. Next, I will highlight our strong capital structure on slide 21. We ended Q1 with $342 million in cash and cash equivalents and marketable securities and $167 million of debt.

Note that our cash fund balance includes $211 million of marketplace float. In the figure on the right, we highlight our strong operating cash flow, which reflects Adjusted EBITDA growth and margin expansion. Now turning to guidance on slide 22. For the second quarter, we are expecting revenue in the range of $193 million-$198 million, growth of 20%-23% year-over-year. Adjusted EBITDA is expected to be in the range of $18 million-$20 million, reflecting growth of approximately 170% year-over-year. We are reiterating our full-year guidance, including revenue in the range of $765 million-$785 million, growth of 20%-23% year-over-year. Adjusted EBITDA is expected to be in the range of $65 million-$75 million, reflecting growth of approximately 150% year-over-year at the midpoint of guidance. Our guidance continues to assume that dealer wholesale volumes will be approximately flat year-over-year for 2025.

We expect conversion rates and wholesale price depreciation to follow normal seasonal patterns. We also continue to expect revenue growth to exceed non-GAAP OPEX growth, excluding cost of revenue and depreciation and amortization by approximately 500 basis points. With that, let me turn it back to George.

George Chamoun (CEO)

Thanks, Bill. Before we take your questions, I will summarize. We are very pleased with our strong execution in Q1 and especially proud of our ACV teammates that delivered these results. We continue to gain market share by attracting new dealer and commercial partners to our marketplace while expanding our addressable market, which positions ACV for attractive growth as market conditions improve. We are delivering on an exciting product roadmap powered by ACV AI to further differentiate ACV and drive operating efficiencies.

We are focused on achieving substantial Adjusted EBITDA growth in 2025 and delivering on our midterm targets that we believe will drive significant shareholder value. We are committed to achieving these results while building a world-class team to deliver on our goals. With that, I'll turn the call over to the operator to begin the Q&A.

Operator (participant)

Thank you, sir. Ladies and gentlemen, we will now be conducting the question-and-answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star and then two to leave the question queue. For participants making use of speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We will pause a moment while we assemble the question queue.

Our first question comes from Rajat Gupta of J.P. Morgan. Please go ahead.

Rajat Gupta (Equity Research Analyst)

Great. Thanks for taking the question. You had raised fees in early March, and during some past conversations, it seems like there was no real pushback from customers. As wholesale prices have increased just due to pre-buy ahead of tariffs, are you seeing any signs of customer pushback or perhaps needing to incentivize more with ancillary services? Any color on that would be helpful, and I have a quick follow-up. Thanks.

George Chamoun (CEO)

Yeah. Hey, Rajat. We've been very fair in our pricing, as you know, with our dealer partners. We've always historically balanced both our price increases and the interest of our customers. We do make these price increases that are very small, very incremental. To your point, it sounds like you've done some homework on this. We got very little pushback.

Yeah, our goals and objectives as it relates to pricing is we really lean in, and we've got obviously a great business model, great value-added proposition, really at the right price for our dealer partners. I would say for your first question, really no pushback on our value proposition to our pricing. As it relates to the other macro things going on, I don't think any of that, I don't think I've heard comments from any of my teammates about any of the macro elements, whether it be tariffs, whether it be any of this stuff, resulting in us having any pressure on pricing. I think at the end of the day, we deliver a great service to our dealer partners, and our pricing is fair.

Rajat Gupta (Equity Research Analyst)

Understood. That's helpful, Color.

And then maybe could you outline different growth avenues that ACV or maybe just the broader wholesale industry might experience under a tariff backdrop? Obviously, there's uncertainty around manufacturer pricing, production. If supply does get hurt meaningfully, I mean, obviously, we're coming off a depressed base already. Back in 2021, 2022, obviously, ACV was a much younger company, but you have a lot more solutions right now. Could you help just detail for us, investors, what kind of levers you could pull as a company with your portfolio today if the industry were to take a step back in the next couple of years before starting to grow again? Thanks.

George Chamoun (CEO)

Yeah, certainly, Rajat. First and foremost, as you noted, we continue to grow. We're still in a really significant growth mode. We still continue to take share. Also to your point, we're growing in a broader way.

Our value-added solutions like ClearCar, like ACV MAX, and other upcoming solutions are helping us differentiate broader than just our initial value proposition with ACV Auctions. That, coupled with other value-added services like ACV Transport and ACV Capital, are helping us have really tremendous demand on the ACV platform. When you look at it both from a supply and a demand, we've got a great product mix. We continue to take share. When you look at our results of Q1, we were really in line with our own expectations, obviously delivered better on the EBITDA side. When you look at with all these puts and takes from a macro perspective of what's happened, at least so far with tariffs and so far with a lack of generally used car supply that you've been hearing us talk about for a while.

I mean, you've noted this in some of your own research that used car supply, late mile used car supply will likely be a trough year. All of that was in our expectations. We gave you all an expectation to show like a flat-ish wholesale year. We knew there was going to be some ups. We knew there was going to be some downs. I feel really good about where we're at because we were able to just continue to execute. I think we had the right expectations for the year.

Rajat Gupta (Equity Research Analyst)

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

George Chamoun (CEO)

Thank you very much.

Rajat Gupta (Equity Research Analyst)

Thanks.

Operator (participant)

Our next question comes from Bob Labick of CJS Securities. Please come ahead.

Bob Labick (President)

Hi, good afternoon. Thanks for taking our questions.

George Chamoun (CEO)

Thank you, Bob.

Bob Labick (President)

Sure. Yeah. Quick question and then a quick follow-up. It's more kind of timely.

Have dealers' needs or has their focus shifted any with the onset of the tariffs? Are they acting differently? Are they asking you for different things? What's been the feedback as you're talking to your dealer customers?

George Chamoun (CEO)

Yeah. If I take a step back, I would say it's less related to the tariff situation as it is generally our franchise dealers wanting more and more inventory. We're seeing tremendous interest in our new products. Products like ClearCar, like our updated ACV MAX, our other tools that are sort of coming soon. We've seen the interest continues to rise, that they need to buy more cars. They need additional used cars. Just really across the board, most of our franchise dealers don't have enough used cars on their lot today, especially later model, low-mileage cars. It's truly still a gap.

I've seen more and more of a focus. I've seen more and more of a willingness to change. I'm hearing dealers say AI more often. Hey, how can we leverage AI to do things more seamlessly? I'm seeing really some openness. We work with some large dealer groups. I'm seeing them actually really up their game. Obviously, I don't say names here, but I'm thinking of a couple in particular right now that I'm really watching them get more and more efficient, put more and more offers on consumer cars. I'm seeing the service drive increase. Still low. I think the industry can still there's a lot more opportunity out there for franchise dealers ahead. I think it's a great category. I think they could buy a lot more cars.

I'm seeing a little bit of momentum in the adoption of new tools and the willingness to adopt new processes, which will ultimately help them buy more cars. The more they buy, the more they'll retail, and the more they will wholesale. We're early on that mission, as you know, Bob, but I would say great traction thus far. I love the conversations we're having with our dealer partners.

Bob Labick (President)

Okay. That's great. You just named ClearCar and then the updated ACV MAX. My follow-up was going to be about inventory. Obviously, dealers have been wanting it. They're embracing your tools, those two that you just named. You also mentioned in the prepared remarks the price guarantee tool and Viper briefly.

Can you give us a sense of kind of penetration and potential impact on the model of those other two that you only briefly mentioned before, the price guarantee tool, where are you in penetration and rollout, and Viper, what's it take for that to get used and out in the field?

George Chamoun (CEO)

Yeah, certainly, Bob. So our guarantee offering is growing. The team's doing a great job of introducing why this is such a special product. It's got two significant points of interest. On the supply side, it allows our sellers to have access to a marketplace where we're averaging 10 bidders per car. It's just incredible. From a supply perspective, it's not just a guarantee. It's access to this exclusive lane. Think about it as almost like a private club or like you're getting access to something that's really special.

There's nowhere else, no other marketplace where you're going to average 10 bidders a car. We have created this vibrant marketplace. From the supply side, yes, there's a guarantee, but they get the upside. The far majority of the time, there's upside. On the demand side, it's just as important. When you're watching these auctions, you know somebody's going to win. From a buyer's perspective, there's zero waste of time. If you're willing to step up and pay for the car, you're going to win. We're seeing great interest. We still have a lot of growth ahead of us. We're still in the early days, but it's fun that we're sniffing on the near double digits of our, around the double digits, I should say, of our overall marketplace. Really happy with where we are with that offering.

On our pricing tools like ACV MAX and where these other tools are coming into place, the products that we've released recently in beta are getting tremendous interest. The interest is because we're not only predicting the wholesale value, we're also predicting a retail price of the car within the next 30 days of what it's going to sell for. As far as I know, I don't think anyone else is close to us on being able to do this. Now a car comes through the service drive of a dealer, and we're going to be able to run it through our system. The consumer might be there just to change their oil or rotate their tires. The dealer is going to be able to know, "Here's the wholesale value, and here's the retail price." They have to figure out what their recon is going to be.

Of course, we're working on that next. Anyways, so there's a retail price to the wholesale price, and we're making these predictions. Our predictions are within just, I think I said it on Analyst Day, we were within a few hundred bucks. We're even doing better than that. We are just doing an incredible job of helping these dealers predict the value. Obviously, that's one of the most exciting things about AI is you can leverage this curated data. You can leverage these large language models to do things we really couldn't have done 12 months ago. It is really an exciting time, and we're really getting incredible feedback.

Obviously, I can't name names on this, but we're in early days of both rolling some of these dealers out, and we've signed up some, I would call it, regional groups that I'm happy with, and team's doing a great job. Oh, and then Viper.

Bob Labick (President)

That's awesome.

George Chamoun (CEO)

I forgot about Viper. How could I forget about Viper? Thanks, Tim's in the room to remind me on the one I forgot. Not that you would have a favorite child. It's never a good thing to have a favorite child, especially if my kids are listening right now. The Viper, I've never, ever in my entire career have had a product where I've had this much demand for. It's exciting and a little bit nerve-wracking right now because we've got a lot to do here.

We are getting tremendous demand for Viper. As I mentioned on Analyst Day, our team mentioned this summer is our beta. We are going just with a few dozen dealers this summer. It is early stages. I never want to oversell where we are at. We would love to, we are hoping to come out of beta before Q4 is our objective right now. We will kind of go through the summer. We will learn, and hopefully, we will start getting into production by early next year, hopefully earlier. We will see. So far so good. The team is in line with what I said last. I would say, if anything, the line is growing. We have got dealers literally getting in line right now asking for what unit number they are going to get at Project Viper. It is tremendous excitement.

But having said that, we're very early, and we got to get through our beta and then actually manufacture these and get going, so. But thanks for asking.

Bob Labick (President)

Super. No, that all sounds terrific. Thank you very much.

George Chamoun (CEO)

Thank you, Bob.

Operator (participant)

Our next question comes from Naved Khan of B. Riley Securities. Please go ahead.

Naved Khan (Managing Director)

Okay. Thanks a lot. Two questions from me. One on ACV Capital growing revenue more than 30%. Curious what kind of a cascade you're seeing here. And in terms of just expanding this offering, how do you plan to manage the risk as you make these capital commitments to partners?

The second question I have is just around the maybe on the commercial side, is it possible, given the prospects for price increases on vehicles due to tariffs, we could see a downdraft in wholesale listings from fleet owners where they might be wanting to get more miles out of their existing vehicles? Thanks.

Bill Zerella (CFO)

Yeah. Hey, Naved. It's Bill. I'll handle the first question, and then I'll toss it over to George. First, on ACV Capital, a few things to consider. Obviously, one of the many ways that we minimize risk is our VCIs across the country, call it roughly 800 VCIs, visit dealer lots every month and can validate where the car is, right, since we get paid the sooner of the maturity of the loan or when the car is sold to a consumer. That's number one.

Number two, over the last year or so, we've significantly improved our risk management capabilities internally. In fact, if we look at Q1, we grew revenue. It's actually 33% year-on-year. Our bad debt expense actually was down 50% year-on-year. We dramatically reduced our bad debt expense while really driving really strong growth. That's the model that we have in place. Now, with some of the other enhancements we've made to that business in terms of implementing a loan management system and some of the new capabilities we have in terms of new offerings we can offer to our customers on the financing front, we kind of see this as a really nice growth engine that will accelerate through this year and beyond. It's a great business model. I think the team is doing a phenomenal job.

Obviously, as you know, it is very accretive to our EBITDA margins.

George Chamoun (CEO)

Yeah. I mean, it is George. Could you go back and repeat your question regarding commercial and pricing just again, just so I make sure I answer it appropriately?

Naved Khan (Managing Director)

Yeah. People kind of expect that tariffs would cause pricing to go up on average on new vehicles. Is it possible, therefore, that fleet owners who generally participate in the commercial wholesale may look to basically own their vehicles for longer, just getting more miles out of their existing cars versus buying new? That could affect volumes. Curious to know how you are thinking about those kind of shifts.

George Chamoun (CEO)

Yeah. Thanks. Thanks for repeating that. That is helpful. If you frame where we get our supply from today, because you and our other investors here all know, we are very early stage on commercial.

We're very early stage on off-lease. We're early stages on most of our supply still today comes from dealer. When you think about your question as it relates to this year, while our supply mainly comes from dealers, it would be really about SAR, new car sales, trade-ins, and used car sales, and how many of those customers, to your point, will go back to the dealership and yet buy another car. Those cars would not have necessarily been leases that would have been brought to ACV anyways. When you kind of look at the ecosystem, they would have first went to that local dealer. If they buy it, they typically retail it. If they don't buy it, then it would go through the Captives, private marketplace, etc.

If there is pressure on that category, that specific category you're alluding to, which is off-lease and consumers coming in a little bit slower, it could potentially impact new and used. I think specifically with us, it would impact how our supply is coming in a little bit less so than probably others in the marketplace. If we had more exposure to off-lease, which I wish we did, it'll come in time as we get bigger. As for right now, we're still early on that segment. I would say more broadly on tariffs, if that's also where you're kind of going with this, look at it as long as new cars and used cars are being sold, then we will still have trades.

I think what we saw, generally speaking, in Q1 was new car volume was up a little, was up, which was nice, and used car volume was not up as much. We could see the inverse in one of the quarters this year. We could see where new car year-over-year compares look harder, but used car sales will be up higher. Look at why we feel pretty good about the year is whether we see new cars up a little bit or used cars up a little bit, we might see the inverse of the other. That kind of, from our perspective, keeps us pretty level, think down the middle. We're feeling pretty good about the year.

Naved Khan (Managing Director)

Great. And then maybe, Bill, just going back to the capital question, and thanks for your answer, but how did we think about the attach rate for capital? Has that also gone up, or are there other factors driving this growth?

Bill Zerella (CFO)

I'm sorry. The question was, I missed the last part.

Naved Khan (Managing Director)

Attach rate on capital.

Bill Zerella (CFO)

Oh, I see. Yeah. No, the attach rate actually continued to rise. It's well into the double digits now. Keep in mind our target is based on our midterm model is 25% attach rates. We're expecting to make a lot of progress this year in terms of moving closer to that target. Really good progress.

George Chamoun (CEO)

Yeah. Just to also follow that is not only is the attach rate solid on the auctions platform, but the team, we're in the early stages of off-platform, which includes helping dealers buy cars from consumers. We feel good about this midterm growth rate, and we're doing a really solid job about achieving our midterm objectives. We feel good because both will get this, as Bill mentioned, continue attach rate on our marketplace, and we're in the very early stages of the off-platform and helping dealers buy more. Yeah, we feel generally good about our, the team's done a great job thus far, and we feel good about our medium-term goals that we've articulated.

Naved Khan (Managing Director)

Fantastic. Thank you, guys.

George Chamoun (CEO)

Thank you. Okay.

Operator (participant)

Our next question comes from Chris Pierce of Needham & Company. Please go ahead.

Chris Pierce (Senior Analyst)

Hey, good afternoon, everyone. How's everyone doing?

George Chamoun (CEO)

Good, great. Hey, how are you doing?

Chris Pierce (Senior Analyst)

Sorry if he's a repeat, but I missed a little of the call. Two questions. Can you just kind of talk about competitive dynamics in the market? We've seen CarMax and Carvana with ADESA Clear sort of upgrade their buyer-facing tech to play a little catch-up. Then we've seen physical auction M&A as well. Is anything shifting underneath the surface in terms of the market because of what you guys are doing or how the market's moving? I'd just love to see if there's any feedback you're getting from dealers on options that are out there that are maybe better than they were, say, a year ago.

George Chamoun (CEO)

Yeah, Chris, I would say no significant changes. We've had, as you know, since we've gotten noticed, we've always had hundreds of competitors and regional competitors, national competitors.

There has been competition since day one of the business. We continue to execute. We continue to take share. A couple of the companies you mentioned are also in the dealer wholesale space, but they are also retailers. From our perspective, dealers should be very careful about wholesaling vehicles with them. We are out there spreading the word of, "Hey, if you are a dealer, we are a neutral partner." I think, listen, we should continue to win share. To your point, they have done well, but I think we are positioned to do better in the medium to long term for all the reasons you have heard earlier in this call. We are not there just to help them with wholesale. We are here to help them buy more cars from consumers. That actually competes against those other guys you mentioned. We are helping them do better pricing.

Look at it as our role is truly a long-term partner. I think when you do your homework about us, you're going to hear more and more dealer groups say that, which we're really proud of. I think some of the parties you mentioned are, I would say, near-term wholesale vendors. That is really the positioning we're trying to be in the market.

Chris Pierce (Senior Analyst)

Okay. Lastly, can you talk about data and data volatility in the end market with prices going up, whether it's tariffs driving demand? Manheim's out today, and they're talking about April, and that data probably already has an element of staleness to it.

What are the smartest dealers doing, and how are they leveraging the real-time data that you guys are able to provide them, whether it's out of the service lane or putting a bid on a car, when to cut bait at retail and move to wholesale? What are the best dealers doing now, and how are they leveraging data, and how is that an ACV advantage?

George Chamoun (CEO)

Yeah. It's a great question. I'll illustrate some examples. I came back from a major dealer group last week, I think it was, yes, last week. I really got to sit with their manager team and how they're using our tools. It was really fascinating. I'll give you some examples. One, to your point, there's actually a percentage of cars they're buying from the service drive. I won't say what the percentage here is, but it's actually a real number.

Okay, we're starting to buy some cars from the service drive. It's starting to show up as a supply source, which I'm really, really proud about that. Number two, how they're pricing. More and more automation are pricing. Historically, this is an industry where they always went to this sort of traditional competitor's inventory management appraisal tool. Every single car, they had to sit there and look at and click all these boxes and blah, blah, blah, blah, blah. Now, more and more, we're leveraging AI to help them do some of this. You're seeing streamlined, which means you're putting more offers. Now, predicting the retail price also helps you predict should you retail or wholesale the car and gives you an expectation of how much room you have for reconditioning. We don't give them that number yet.

We just show them, "This is what you're going to sell it for." They know what they can buy it for, and they kind of figure out, at least for now, how much they want to put for recon. Even what we already have today in our current version of our tools, none of this was possible in sort of the legacy tools that are out there. Think, okay, you could buy more cars. You could predict the retail price. When you think about even though we're in a market where there's really some solid demand for new, and I think good demand for used, it depends on the price of these used cars. If a car is sitting there for two weeks or four weeks or six weeks, we're starting to give updates for every single VIN, what they should do.

The update could be, "Raise the price by $243 because we're seeing a lot of demand." Or the update could be, "We recommend you reduce the price by $350." I think it's not just when they're buying the cars. It's this ongoing, constant learning that's going on. It's not just coming from our pricing engine. It's coming from what's going on from their CRM. It's coming from how much interest is on the car, what's happening generally on the internet. The team's doing a great job of seeing what's happening from a national market perspective in addition to what's going on at their store and their group. Hopefully, that's what you're looking for, but that's what the great groups are doing. I think you'll see it in their numbers. Some of our dealer partners had a great quarter, I believe, and I'm happy to help.

Chris Pierce (Senior Analyst)

Okay. Lastly for me, I know the end market can be sort of opaque sometimes. On your first bullet around guidance, where the dealer wholesale market is expected to be approximately flat year-over-year, apologies if you gave this on the main call, but what has the dealer wholesale market done year to date in terms of up, down, year to date?

George Chamoun (CEO)

Yeah. I think right now, Chris, it was up, low single digits. Up. I think the why would be new was up, used was not up as much. One report has used retail down a little bit, was one report. One report was for that list from one of the leading providers of data in the category. One had used retail up a tiny, tiny bit. All in all, I would say retail was solid for Q1.

Also, the compares were a little bit easier. We had a better compare. When you look at the back half of the year, it's going to be a little bit tougher of a compare because new started to go up throughout the year. Also, wholesale started to go up a little bit throughout the year. Chris, all in all, again, we said flattish, inventing our own word because our reason for, I think Bill here should get a trademark or patent or whatever on this because the whole intention of flattish is you're going to see it up a little bit. You're going to see it down a little bit. We were trying to, in a way, get everyone to not be so scientific. I say so far, so good. It's what we expected. I feel good about the rest of the year.

Chris Pierce (Senior Analyst)

Okay. Perfect. That's all for me. Thanks for your time.

George Chamoun (CEO)

Thank you. Thanks.

Operator (participant)

Our next question comes from Steven McDermott of Bank of America. Please go ahead.

Steven McDermott (Internet Equity Research)

Hi. Thank you for taking the question. This one is more of a model-related than I have a follow-up. As we approach kind of tougher compares in Q2 and for the rest of the year for pricing, how should we think about that dynamic and, I guess, price increases from here? Thank you.

George Chamoun (CEO)

I think I just commented a minute ago that from a market perspective, the tougher compare would be on the fact that new was up a little bit, used was up a little bit last year, wholesale was up a little bit. The expectations of a flattish wholesale would be a little bit more on that'd be about market, not about us.

On pricing, I don't think I really, I think at the end of the day, we're within our expectations. I think Bill in the call mentioned where we were with ARPU. And it was, yeah, so we, yeah.

Bill Zerella (CFO)

So our auction and assurance ARPU was $513 for the quarter in Q1. And that reflected a buy fee increase at the very beginning of March, right? We'll see some improvement in ARPU, all things being equal through the rest of the year. Although our guidance does assume that GMV per unit dips a little bit in the second half, which would be more seasonal in nature. We've baked that in as well.

George Chamoun (CEO)

Is that helpful? Was that? Okay. Good. Just wanted to make sure.

Steven McDermott (Internet Equity Research)

That was helpful. In terms of the ARPU and the pricing, that was definitely helpful. Thank you.

On the call, you kept talking about how strong demand is, but unit pricing did decelerate quite a bit on stable comps from 27% to 19%. I was just wondering, is there perhaps any other dynamic? I know you touched on competitors a little bit earlier for a question, but are you seeing anything more underlying, or is it just yeah, yeah. Take wherever you want.

George Chamoun (CEO)

Yeah. I mean, listen, we're a bigger company. We continue to grow. I think most investors would say these are very healthy growth numbers on big numbers. No, I think there's really no comment there, only because we were within our expectations. We delivered, and we did all that while exceeding our EBITDA number, which means we didn't give away the farm. Really easy to show a bunch of unit numbers if you give them all for free.

You're not saying you guys do that. I think, if anything, continued strong execution, continuing to take share. I think what we're trying to our brand, whether you want us to think about this as a golf analogy, I just want you guys to keep thinking right down the middle. I'm not trying to win the longest drive competition on every single hole here. We are just you're going to see us be right down the middle, keep executing, keep delivering. Really proud of the team. I don't really know how else to answer that, but I'm really proud of the results.

Bill Zerella (CFO)

Yeah. I mean, I would just add our revenue growth rate was just over 25% for the quarter, and we're just under 22% last year, Q1, right? All in all, I would say we feel pretty good.

As George mentioned, we had a really nice beat on EBITDA, which just continued financial discipline in terms of running the business. The last thing I'll mention is our operating cash flow, actually, in Q1 was equivalent to our operating cash flow for all of last year. Obviously, cash is a pretty important element of our financial model as well. We feel really good about the results.

Steven McDermott (Internet Equity Research)

Awesome. Thank you. Yeah. I'm looking at the free cash flow, and it's ramping quite nicely. Thank you.

George Chamoun (CEO)

Thank you.

Operator (participant)

Ladies and gentlemen, that concludes today's Q&A. I will now hand over to Tim Fox for closing remarks.

Tim Fox (VP of Investor Relations and Strategic Finance)

Great. Thank you. I'd like to thank everybody that joined the call today. We look forward to seeing you on what's going to be a pretty busy conference circuit this quarter.

Again, thank you for your interest in ACV, and I hope you all have a great evening. Thanks.

Operator (participant)

Thank you. Ladies and gentlemen, that concludes this evening's event. Thank you for attending, and you may now disconnect your line.