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ACV Auctions Inc. (ACVA) Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered record revenue ($200.0M) and record unit volume (218,065), with services strength; EPS modestly beat while revenue was essentially in line with consensus; management cut FY25 revenue and profitability guidance citing softer wholesale market and elevated arbitration costs .
  • Revenue was $199.6M vs S&P Global consensus $199.9M (slight miss), Primary EPS $0.065 vs $0.060 (beat); Adjusted EBITDA was $18.7M as reported, though GAAP EBITDA was negative on S&P methodology; the difference reflects non-GAAP adjustments including Tricolor bankruptcy charges and other items .
  • FY25 guide lowered: revenue to $756–$760M (from $765–$775M), Adjusted EBITDA to $56–$58M (from $68–$72M), and GAAP net loss widened to $(69)–$(67)M; Q4 outlook embeds mid-single-digit decline in dealer wholesale and higher arbitration costs .
  • Positive catalysts: continued market share gains, AI-led product traction (ACV Guarantee to 18% of units; Transport margin expansion), and record Marketplace Services; Risks: macro softness, elevated arbitration, ACV Capital provisioning, and cautious 2026 market assumption (flat) .

What Went Well and What Went Wrong

  • What Went Well

    • Record top-line and unit volume with market share gains; “record revenue despite challenging market conditions… record unit volume, and strong adoption of our Marketplace Services” — CEO George Chamoun .
    • AI product momentum: ACV Guarantee rose from 11% of units in Q2 to 18% in Q3, improving conversion and buyer engagement .
    • Marketplace Services strength: Transport and Capital posted record revenue; Transport revenue margin expanded ~200 bps YoY, in line with low-20s target .

  • What Went Wrong

    • Macro/market headwinds: dealer wholesale weakened in last two months; Q4 market expected to decline mid-single digits YoY with below-normal conversion given above-normal price depreciation .
    • Elevated arbitration costs; cost of revenue ex-benefits would have been ~300 bps higher; management expects elevated arbitration through Q4 before normalizing in 2026 .
    • ACV Capital reserves and Tricolor bankruptcy: ~$7M higher reserves plus $18.7M bankruptcy-related operating expenses (excluded from non-GAAP), while FY Q4 ACV Capital revenue trimmed by ~$2M .

Financial Results

Quarterly P&L snapshot (YoY and sequential context)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($M)$171.3 $193.7 $199.6
GAAP Net Income (Loss) ($M)$(16.0) $(7.3) $(24.5)
Non-GAAP Net Income ($M)$7.6 $12.3 $11.2
Adjusted EBITDA ($M)$11.2 $18.6 $18.7

Revenue composition

Metric ($M)Q1 2025Q2 2025Q3 2025
Marketplace & Service Revenue$165.9 $176.0 $176.5
Customer Assurance Revenue$16.8 $17.7 $23.1
Total Revenue$182.7 $193.7 $199.6

Key KPIs

KPIQ1 2025Q2 2025Q3 2025
Marketplace GMV ($B)$2.6 $2.7 $2.7
Marketplace Units208,025 210,429 218,065
Auction & Assurance ARPU ($)500 523 508 (down 3% QoQ; modest YoY growth)

Margins (S&P Global methodology)

MetricQ1 2025Q2 2025Q3 2025
Gross Profit Margin %30.17%*29.26%*30.11%*
Net Income Margin %(8.11%)*(3.77%)*(12.26%)*
EBITDA ($M)$(2.4)*$3.7*$(12.7)*

Values marked with * retrieved from S&P Global.

Consensus vs Actual – Q3 2025

MetricActualConsensusSurprise
Revenue ($M)$199.6 $199.9*(0.2)
Primary EPS ($)$0.0652*$0.0601*+0.0051 (beat)
EBITDA ($M, GAAP)$(12.7)*$18.8*(31.5) – not comparable to company Adjusted EBITDA $18.7

Values marked with * retrieved from S&P Global.

Footnote: S&P Global EBITDA reflects GAAP methodology and is not comparable to ACV’s Adjusted EBITDA, which excludes non-cash and one-time items (e.g., Tricolor bankruptcy expenses) .

Guidance Changes

MetricPeriodPrevious Guidance (Q2 release)Current Guidance (Q3 release)Change
Total RevenueFY 2025$765–$775M $756–$760M Lowered
GAAP Net Income (Loss)FY 2025$(51)–$(47)M $(69)–$(67)M Lowered (wider loss)
Non-GAAP Net IncomeFY 2025$38–$42M $27–$29M Lowered
Adjusted EBITDAFY 2025$68–$72M $56–$58M Lowered
Total RevenueQ4 2025NA$180–$184M New
GAAP Net Income (Loss)Q4 2025NA$(23)–$(21)M New
Non-GAAP Net Income (Loss)Q4 2025NA$(4)–$(2)M New
Adjusted EBITDAQ4 2025NA$5–$7M New
Non-GAAP OpEx growth (ex-COGS)FY 2025~11% YoY ~12% YoY Raised assumption
Dealer wholesale market assumptionQ4 2025Flat to modestly down 2025 Mid-single-digit decline in Q4 Weaker near-term

Earnings Call Themes & Trends

TopicQ1 2025 (May)Q2 2025 (Aug)Q3 2025 (Nov)Trend
AI/Guarantee channelGuarantee is fastest-growing; 100% conversion; building pricing-as-a-service and pilots (Viper/Virtual Lift) .Guarantee at 11% of units for quarter, ~15% exit rate; pilots expanding; Amazon trade-in data use discussed .Guarantee rose to 18% of units; 60k+ vehicles inspected by Viper/Virtual Lift pilots; aiming commercial launch in 2026 .Accelerating adoption
Marketplace ServicesTransport margin +460 bps YoY in Q1 to low-20s .Transport margin in low-20s; services 39% of revenue .Transport margin +200 bps YoY; record services revenue; Capital growth strong but risk controls added .Strong, with risk focus
Macro/tariffs/retention2025 dealer wholesale “flattish” baseline; dealers adopting tools to source inventory .Trimmed FY revenue; higher dealer trade retention; conversion softer late Q2 .Market weakened late Q3; Q4 dealer wholesale down mid-single digits; conversion below seasonal .Deteriorated near-term
Pricing/ARPUARPU $500; buy fee increase in Mar; expect modest ARPU improvement .ARPU $523; sequential conversion softness .ARPU $508 (–3% QoQ) on targeted promotions; expect ARPU to rise in Q4 .Mixed, stabilizing
ACV Capital riskLoss ratio planning ~3%; bad debt down 50% YoY in Q1 .Continued rapid growth; very accretive .~$18.7M bankruptcy-related expense (Tricolor) and ~$7M reserves; lowering exposure to higher-risk segments; Q4 Capital revenue trimmed by ~$2M .Heightened risk management
Commercial wholesalePlatform nearing readiness; first greenfield planned H2’25 .Opened first greenfield (Houston) trial; sold first car on platform .Houston soft launch; plan to add greenfields; 6–7% of 2025 volume from commercial; upstream via AutoIMS .Building footprint

Management Commentary

  • “We are pleased with our third quarter results, delivering record revenue despite challenging market conditions… and strong adoption of our Marketplace Services.” — CEO, George Chamoun .
  • “ACV Guarantee… increased from 11% units sold in Q2 to 18% in Q3… a win-win-win… 100% conversion rate while removing seller market risk.” — CEO .
  • “Adjusted EBITDA… benefited from a $7.6M class action lawsuit settlement… almost entirely offset by approximately $7M in ACV Capital reserves… Adjusted EBITDA also excludes $18.7M… related to the Tricolor bankruptcy.” — CFO, Bill Zerella .
  • “We are lowering our exposure to higher risk customer segments and reducing our Q4 ACV Capital revenue forecast.” — CEO .
  • “We’re expecting the dealer wholesale market to decline in the mid-single digits in Q4… and higher expected arbitration costs.” — CFO .

Q&A Highlights

  • Structural market change? Management does not view a long-term structural shift; expects recovery as macro factors normalize (off-lease, rates) .
  • Competitive dynamics: ACV cites 8,000 unit QoQ growth and double-digit share gains in Q3; remains confident vs. competitors .
  • ARPU/pricing: Targeted regional pricing drove share gains and modest QoQ ARPU decline; management expects ARPU to rise in Q4 .
  • Conversion rates: Expect more consistency in 2026 as valuation volatility normalizes; near-term pressured by depreciation and arbitration .
  • ACV Capital: Post-Tricolor, enhanced controls; booked ~$7M reserves; attach rates remain high-teens with mid-term 25% target intact .
  • Commercial ramps and Viper: Commercial volume 6–7% of 2025; taking orders for Viper by NADA (Feb) and shipping mid-2026 targeted .

Estimates Context

  • Q3 2025: Revenue $199.6M vs $199.9M consensus (in line/slight miss); Primary EPS $0.065 vs $0.060 consensus (beat). GAAP EBITDA on S&P basis missed vs consensus, but company-reported Adjusted EBITDA was $18.7M reflecting non-GAAP adjustments .
    Values retrieved from S&P Global.
  • Q4 2025: Company guides revenue $180–$184M vs S&P consensus ~$181.8M (midpoint ~in line); Non-GAAP net income guidance $(4)–$(2)M implies negative adjusted EPS consistent with consensus negative EPS .
    Values retrieved from S&P Global.
  • Post-guide, Street models should cut FY25 revenue and EBITDA, incorporate higher arbitration costs, more cautious ACV Capital growth, and flat 2026 dealer wholesale baseline .

Key Takeaways for Investors

  • Trajectory: Core marketplace remains resilient with share gains and record services, but macro crosscurrents (dealer wholesale decline, depreciation) weigh on near-term growth and margins .
  • Profitability mix matters: Adjusted EBITDA performance is better than GAAP EBITDA due to one-offs and non-cash adjustments (Tricolor, reserves), but elevated arbitration costs and risk controls are near-term headwinds .
  • Product edge: AI-led Guarantee (18% units), Transport margin expansion, and data services bundling (MAX, ClearCar) support durable differentiation and wallet share gains .
  • 2026 setup: Management frames 2026 planning on flat dealer wholesale but expects re-acceleration via field model enhancements, AI innovation, and commercial footprint expansion .
  • Watch list for next quarter: ARPU recovery, arbitration cost trajectory, ACV Capital attach/growth under tighter risk, commercial contribution, and Viper order intake at NADA .
  • Stock narrative: Near-term is guidance reset and macro caution vs. a medium-term AI/platform monetization story; estimate revisions likely lower on FY guide cut while investors focus on execution against Q4 hurdles and 2026 product commercialization .

Appendix: Additional Detail

Revenue and EPS vs Consensus – Q3 2025

MetricActualConsensus
Revenue ($M)$199.6 $199.9*
Primary EPS ($)$0.0652*$0.0601*

Values marked with * retrieved from S&P Global.

Q3 2025 GAAP financial statement excerpts (Company)

  • Total revenue $199.6M; GAAP net loss $(24.5)M; net loss per share $(0.14); key line items detailed in the 8-K .
  • Reconciled non-GAAP net income $11.2M and Adjusted EBITDA $18.7M (excludes Tricolor bankruptcy, etc.) .

Q4/FY 2025 guidance assumptions and reconciliations

  • Q4 revenue $180–$184M; GAAP net loss $(23)–$(21)M; Non-GAAP net loss $(4)–$(2)M; Adjusted EBITDA $5–$7M .
  • FY25 revenue $756–$760M; GAAP net loss $(69)–$(67)M; Non-GAAP net income $27–$29M; Adjusted EBITDA $56–$58M; non-GAAP recon provided .

Press releases relevant to Q3

  • Earnings press release highlights (record revenue and services; guidance update) .
  • No Reserve Sale expanded to four days/week during Q3, reinforcing momentum behind the Guarantee channel .

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