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LIQUIDITY SERVICES INC (LQDT)·Q3 2024 Earnings Summary

Executive Summary

  • Record GMV ($380.4M, +14% y/y) and strong top-line ($93.6M revenue, +16% y/y); GAAP EPS $0.19 declined y/y on $1.1M acquisition-related and litigation costs, while non-GAAP Adj. EBITDA hit a 10-year high at $14.7M (+10% y/y) .
  • GovDeals set quarterly GMV and revenue records (+17% GMV; +28% revenue) despite softer used vehicle pricing; company highlighted market share gains and expanded services (incl. Sierra Auction) as key drivers .
  • Q4 FY24 guidance raised versus prior quarter’s Q3 guide: higher EPS and EBITDA ranges, revenue/GMV ratio guided to high-20s while segment direct profit/revenue guided to high-40s (from low–mid 50s), reflecting mix; RSCG expected to accelerate sequentially on purchase volume .
  • Near-term stock catalysts: trajectory of Q4 execution vs. raised guidance, RSCG purchase mix-driven growth and margin dynamics, and resilience of GovDeals volumes vs. softer pricing, alongside continued AI/tooling upgrades and facility expansion in Brownsburg, IN .

What Went Well and What Went Wrong

  • What Went Well

    • “Record GMV” ($380.4M) and “strongest Non-GAAP Adjusted EBITDA performance in a decade” ($14.7M) driven by market share gains, expanded services, and buyer participation .
    • GovDeals: quarterly GMV record ($250M), new seller acquisition, and service expansion; Sierra Auction contributed to broader consignment offerings; new clients include State of New York, Spokane County, Norman (OK), Mesa (AZ) .
    • Machinio: another revenue record on increased subscriptions/pricing; management expects mid-teens or better organic growth going forward .

  • What Went Wrong

    • GovDeals pricing: evidence of softening for fleet vehicles and construction equipment, though volumes and supply remain solid (no supply headwinds) .
    • CAG: revenue down 4% despite GMV up 7% due to increased sales conducted with partners and delay/cancellation of certain energy projects; lumpy timing persists .
    • RSCG margin mix: higher purchase volumes and lower-touch, lower-value flows dampened segment direct profit as % of revenue (30% vs. 35% y/y), even as volumes rose .

Financial Results

  • Consolidated performance across recent quarters (oldest → newest)
MetricQ3 FY2023Q1 FY2024Q2 FY2024Q3 FY2024
Revenue ($M)$80.8 $71.3 $91.5 $93.6
GAAP Diluted EPS ($)$0.21 $0.06 $0.18 $0.19
GAAP Net Income ($M)$6.5 $1.9 $5.7 $6.0
Non-GAAP Adjusted EBITDA ($M)$13.33 $7.25 $12.09 $14.71
Net Income Margin (%)8.03% (6.487/80.770) 2.67% (1.907/71.325) 6.24% (5.709/91.453) 6.41% (6.000/93.613)
EBIT Margin (%)10.22% (8.255/80.770) 2.31% (1.647/71.325) 7.21% (6.595/91.453) 8.44% (7.895/93.613)
  • Segment performance (Q3 FY2024)
SegmentGMV ($M)Revenue ($M)Segment Direct Profit ($M)Notes
GovDeals$249.7 $22.1 $20.7 Record GMV; take-rate up on expanded full-service consignment/Sierra
RSCG$79.0 $58.8 $17.4 Higher purchase volumes; lower-touch flows dampen profit %
CAG$51.8 $8.65 $7.43 Partner-led consignment revenue mix; energy delays
Machinio—$4.11 $3.91 Record revenue on subs/pricing
  • Operating KPIs (oldest → newest)
KPIQ1 FY2024Q2 FY2024Q3 FY2024
Registered Buyers (M)~5.2 ~5.3 ~5.4
Auction Participants (‘000)~848 ~1,139 ~1,016
Completed Transactions (‘000)~239 ~300 ~263

  • Non-GAAP adjustments (impact): GAAP net income in Q3 FY24 included $1.1M acquisition-related and litigation settlement expenses ($0.8M net of tax); these are added back in Adj. EPS/EBITDA .

  • Consensus estimates: S&P Global consensus data could not be retrieved at time of query; therefore, beat/miss vs. estimates is not shown.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GMVQ3 FY2024$350–$385M ——
GMVQ4 FY2024—$330–$365M Initiated
GAAP Net IncomeQ3 FY2024$3.5–$6.5M ——
GAAP Net IncomeQ4 FY2024—$5.0–$7.0M Initiated (higher vs prior qtr guide)
GAAP Diluted EPSQ3 FY2024$0.11–$0.21 ——
GAAP Diluted EPSQ4 FY2024—$0.16–$0.22 Initiated (raised low end vs prior qtr guide)
Adj. EBITDAQ3 FY2024$10.5–$13.5M ——
Adj. EBITDAQ4 FY2024—$12.0–$15.0M Initiated (higher vs prior qtr guide)
Adj. Diluted EPSQ3 FY2024$0.20–$0.28 ——
Adj. Diluted EPSQ4 FY2024—$0.25–$0.32 Initiated (higher vs prior qtr guide)
Revenue as % of GMVQ3 FY2024Low–mid 20% ——
Revenue as % of GMVQ4 FY2024—High 20% Raised vs. prior outlook
Segment Direct Profit as % of RevenueQ3 FY2024Low–mid 50% ——
Segment Direct Profit as % of RevenueQ4 FY2024—High 40% Lower vs. prior outlook
FY24 ETRFY202426–32% 26–32% Maintained
Diluted Wtd Avg SharesQ3/Q4 FY202431.5–32.0M 31.5–32.0M Maintained

Management also expects RSCG to grow faster than GMV in Q4 on increased purchase volumes; GovDeals revenue to outgrow GMV on broader full-service consignment .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY2024)Current Period (Q3 FY2024)Trend
AI/technology initiativesQ1: Platform modernization; AI referenced in context of tooling; Machinio expansion . Q2: Unbudgeted IT hires; taxonomy upgrades; high-speed receiving tool with machine automation .“Harness the benefits of AI technologies” to enrich listings/search and drive efficiencies; single-item receiving tool launched .Increasing investment; broader deployment across marketplaces.
RSCG product mix/AllSurplus DealsQ1: Inferior mix pressure; AllSurplus Deals expansion across markets . Q2: Lower-value flows continue; volumes strong; potential sequential margin improvement .Higher purchase volumes; lower-touch flows; sequential growth expected in Q4 with revenue > GMV .Mix pressure persists; scale/operating tools partially offset; growth re-accelerates.
GovDeals pricing/supplyQ1: Vehicle availability up . Q2: Continued gains; take-rate up; real estate subdued .Softening prices in fleet vehicles and construction equipment; supply steady/no headwinds .Volumes and share gains offset pricing headwinds.
CAG timing/visibilityQ1: Delays slipped to Q2; most closed in Jan . Q2: Growth from industrial/heavy equipment; some delays .GMV +7% y/y, but revenue −4% on partner sales; some delayed/canceled sales in U.S./Asia; mandates strong .Stable pipeline; lumpy quarterly timing.
Investment/OpExQ1: Slightly higher OpEx for growth . Q2: Pull-forward IT hires/projects .OpEx expected up y/y and q/q in Q4 with growth and share gains .Continued reinvestment to support scale and mix.
Capacity/footprint—Brownsburg, IN facility relocation/expansion to 203,840 sq ft to handle more retail returns (Liquidation.com and AllSurplus Deals) .Added capacity supports RSCG growth channels.

Management Commentary

  • Strategic positioning: “We’re proud to report record GMV… and strongest non-GAAP Adjusted EBITDA performance in a decade… Our flexible services… and efforts to harness the benefits of AI technologies are continuing to attract more sellers and buyers” (Bill Angrick, CEO) .
  • GovDeals momentum: “Set a quarterly GMV record of $250 million… signed notable new clients during Q3, including the State of New York… Mesa, Arizona” (Angrick) .
  • RSCG tools: “Launched the first phase of our single item receiving tool… optimize operational process, accelerate listings, and better route items to B2B vs. D2C channels” (Angrick) .
  • CAG pipeline: “Added over 33 new mandates… delays reflect macro volatility… we’re winning a very high percentage of anything we’re pitching” (Angrick) .
  • Financial discipline and balance sheet: $136.8M cash/short-term investments; zero debt; $25M revolver capacity (quarter-end) .

Q&A Highlights

  • GovDeals pricing and supply: Pricing softness in fleet vehicles and construction equipment; supply steady with government budgets/replenishment cycles (no headwinds) .
  • RSCG operational tooling: Single-item receiving tool automates identification and routing, accelerating listings and improving recovery across B2B/B2C channels .
  • CAG slippage and conversion: Project delays tied to macro uncertainties at clients; mandates ripen over ensuing quarters; partial catch-up expected in subsequent quarters .
  • Service expansion: Emphasis on both self-directed and fully managed offerings, plus semi-assisted cataloging via Sierra heritage to access more fleet business .
  • IT investments and taxonomy: Pulling forward IT projects (e.g., deeper category taxonomy) to improve buyer discovery and asset recovery; machine-assisted receiving to reduce labor and raise quality .

Estimates Context

  • S&P Global consensus estimates were unavailable at time of query due to a data access limit; therefore, we cannot determine beats/misses vs. Wall Street for revenue or EPS this quarter. Estimates may need to adjust upward for Q4 given the higher ranges for GAAP EPS, Adj. EPS, and Adj. EBITDA, and a higher revenue/GMV ratio (offset by lower direct profit/revenue) .

Key Takeaways for Investors

  • Mix/Model: Consignment-heavy model continues to scale, but rising purchase mix in RSCG boosts revenue/GMV at the cost of direct profit %; Q4 guide explicitly signals high-20s revenue/GMV and high-40s direct profit/revenue .
  • GovDeals resilience: Despite softer pricing, volumes, seller onboarding, and new services/take-rate expansion are driving record revenue/GMV; continued share gains expected .
  • RSCG acceleration: Sequential step-up in Q4 on purchase volumes; tooling (single-item receiving) and capacity (Brownsburg facility) should help throughput and recovery .
  • CAG variability but building base: Lumpy quarter-to-quarter outcomes persist, but mandates and recurring heavy equipment sellers underpin multi-quarter opportunity set .
  • Profitability trajectory: Non-GAAP Adj. EBITDA hit a 10-year high; Q4 guide raises EPS/EBITDA vs. prior quarter’s outlook, though mix implies lower direct profit as % of revenue .
  • Balance sheet optionality: $136.8M cash/short-term investments and no debt enable continued organic investment and strategic deals (e.g., Sierra), supporting consolidation opportunities .
  • Near-term trading focus: Execution vs. raised Q4 guidance (particularly RSCG volumes and GovDeals pricing/volumes), AI/tool deployment ROI, and any updates on CAG project closures should drive the narrative .