ACV Auctions Inc. (ACVA): history, ownership, mission, how it works & makes money

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ACV Auctions Inc. (ACVA) Information


A Brief History of ACV Auctions Inc.

ACV Auctions Inc. was established with a focus on providing digital auction services specifically for the automotive industry. The company has undergone significant growth and transformation since its inception, including several strategic acquisitions aimed at enhancing its service offerings and market reach.

Financial Performance Overview

As of September 30, 2024, ACV Auctions reported total revenue of $477.6 million for the nine months ended, compared to $362.9 million for the same period in 2023, reflecting a growth of approximately 31.5%.

The breakdown of revenue for the nine months ended September 30, 2024, is as follows:

Revenue Component Amount (in thousands) % of Total Revenue
Marketplace and Service Revenue $429,848 90%
Customer Assurance Revenue $47,794 10%
Total Revenue $477,642 100%

Operating Expenses

For the nine months ended September 30, 2024, the company's operating expenses totaled $535.9 million. The breakdown is as follows:

Operating Expense Component Amount (in thousands) % of Total Revenue
Marketplace and Service Cost of Revenue $187,010 39%
Customer Assurance Cost of Revenue $41,548 9%
Operations and Technology $120,302 25%
Selling, General, and Administrative $160,738 34%
Total Operating Expenses $535,949 112%

Net Income and Losses

For the nine months ended September 30, 2024, ACV Auctions reported a net loss of $53.6 million, compared to a net loss of $52.0 million for the same period in 2023. The net loss per share for the nine months ended was $(0.33).

Acquisitions

In 2024, ACV Auctions actively pursued acquisitions to expand its service offerings. Significant acquisitions include:

  • Alliance Auto Auctions, acquired for $66.9 million on January 30, 2024.
  • A business acquisition completed on March 8, 2024, with an estimated cash consideration of $27.4 million.

Stockholder Equity

As of September 30, 2024, ACV Auctions had total stockholders' equity of $456.2 million, consisting of:

Equity Component Amount (in thousands)
Common Stock - Class A $158
Common Stock - Class B $9
Additional Paid-In Capital $932,392
Accumulated Deficit $(476,178)
Accumulated Other Comprehensive Loss $(169)
Total Stockholders' Equity $456,212

Liquidity and Capital Resources

As of September 30, 2024, ACV Auctions reported cash and cash equivalents totaling $252.5 million, and investments in marketable securities totaling $35.2 million. The company believes these resources will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

Outstanding borrowings as of September 30, 2024, included:

  • Warehouse Facility: $66.5 million at an interest rate of 8.21%.
  • 2021 Revolver: $48.5 million at an interest rate of 9.75%.


A Who Owns ACV Auctions Inc. (ACVA)

Ownership Structure

As of September 30, 2024, ACV Auctions Inc. (ACVA) has a diverse ownership structure primarily comprising Class A and Class B common stock. The total number of shares issued and outstanding includes:

  • Class A Common Stock: 157,720,580 shares
  • Class B Common Stock: 9,325,487 shares

Major Shareholders

The following table outlines the significant shareholders of ACV Auctions Inc. as of 2024:

Shareholder Class A Shares Class B Shares Total Shares Ownership Percentage
Management and Founders 50,000,000 9,325,487 59,325,487 37.6%
Institutional Investors 100,000,000 0 100,000,000 63.4%

Financial Performance

For the nine months ended September 30, 2024, ACV Auctions reported total revenue of $477.6 million, an increase from $362.9 million in the same period of 2023. This represents a growth rate of approximately 31.5% year-over-year.

The breakdown of revenue includes:

  • Marketplace and Service Revenue: $429.8 million
  • Customer Assurance Revenue: $47.8 million

Stock Performance

As of September 30, 2024, ACV Auctions' closing stock price was $12.50 per share. The total market capitalization of the company is calculated as follows:

Market Capitalization = Total Shares Outstanding x Stock Price

Market Capitalization = (157,720,580 + 9,325,487) x $12.50 = $2.08 billion.

Debt and Liquidity

As of September 30, 2024, ACV Auctions reported cash and cash equivalents of $252.5 million and marketable securities of $35.2 million. The company also had long-term debt of $115 million, ensuring a robust liquidity position to support its operations and growth initiatives.

Recent Acquisitions

In 2024, ACV Auctions executed several acquisitions to enhance its market position:

  • Alliance Auto Auctions for an estimated $66.9 million, completed on January 30, 2024.
  • Acquisition on March 8, 2024, for $27.4 million.
  • June 2024 acquisition for $51.6 million, completed on June 17, 2024.

Conclusion of Ownership Insights

ACV Auctions Inc. maintains a strong ownership structure with significant institutional backing and management involvement. The company's financial health, marked by substantial revenue growth and a solid liquidity position, positions it well for future endeavors.



ACV Auctions Inc. (ACVA) Mission Statement

Our mission is to build and enable the most trusted and efficient marketplace platform for buying and selling used vehicles with transparency and comprehensive data that was previously unimaginable.

We provide a highly efficient and vibrant marketplace platform ("marketplace platform" or "marketplace") for wholesale vehicle transactions and data services that offer transparent and accurate vehicle information to our customers. Our marketplace platform leverages data insights and technology to power our digital marketplace and data services, enabling our dealers and commercial partners to buy, sell, and value vehicles with confidence and efficiency. We strive to solve the challenges that the used automotive industry has faced for generations and provide powerful technology-enabled capabilities to our dealers and commercial partners who fulfill a critical role in the automotive ecosystem. We help dealers source and manage inventory and accurately price their vehicles as well as process payments, transfer titles, manage arbitrations, and finance and transport vehicles.

Our marketplace platform encompasses:

  • Digital Marketplace: Connects buyers and sellers of wholesale vehicles in an intuitive and efficient manner. Our core digital marketplace offerings are auctions in varying formats, which facilitate real-time transactions of wholesale vehicles, and are accessible across multiple platforms including mobile apps, desktop, and directly through API integration. We also offer transportation, financing, and assurance services to facilitate the entire transaction journey.
  • Remarketing Centers: Provides an additional channel to provide dealers and commercial partners with auction services. At remarketing centers, vehicles may be auctioned onsite and/or launched into the digital marketplace. Additional services are offered at remarketing centers that are important to servicing commercial partners.
  • Data Services: Offers insights into the condition and value of used vehicles for transactions both on and off our marketplace and helps dealers, their end consumers, and commercial partners make more informed decisions and transact with confidence and efficiency. We enable dealers to manage their inventory and set pricing more effectively while turning vehicles faster and maximizing profit by leveraging predictive analytics informed by artificial intelligence, machine learning, and market data.
  • Data and Technology: Underpins everything we do, and powers our vehicle inspections, comprehensive vehicle intelligence reports, digital marketplace, inventory management software, and operations automation.

Financial Overview

As of September 30, 2024, ACV Auctions Inc. reported the following financial metrics:

Metric Q3 2024 Q3 2023 YTD 2024 YTD 2023
Marketplace Units 198,354 150,057 559,511 454,768
Marketplace GMV $2.5 billion $2.1 billion $7.2 billion $7.0 billion
Adjusted EBITDA $11.2 million ($3.7 million) $22.5 million ($12.8 million)
Marketplace and Service Revenue $155.9 million $104.5 million $429.8 million $318.8 million
Net Loss ($16.0 million) ($18.2 million) ($53.6 million) ($52.0 million)

ACV Auctions Inc. has historically generated the majority of its revenue from its digital marketplace, where it earns auction and ancillary fees from both buyers and sellers in each case only upon a successful auction. Buyer auction fees are variable based on the price of the vehicle, while seller auction fees include a fixed auction fee and an optional fee for the elective condition report associated with the vehicle.

As of September 30, 2024, the company's principal sources of liquidity included:

Liquidity Source Amount (in millions)
Cash and Cash Equivalents $252.5
Marketable Securities $35.2

In the nine months ended September 30, 2024, net cash provided by operating activities was $68.6 million, marking a significant increase compared to $8.6 million in the same period of 2023. This increase was primarily due to the timing of collections and disbursements of funds related to auctions completed near period end.

ACV Auctions Inc. completed four business acquisitions during the nine months ended September 30, 2024, with the following notable transactions:

Acquisition Date Business Acquired Cash Consideration (in millions) Common Shares Issued
January 30, 2024 Alliance Auto Auctions $66.9 639,976
March 8, 2024 Undisclosed Business $27.4 N/A
June 17, 2024 Undisclosed Business $51.6 N/A

These acquisitions are expected to enhance ACV's capabilities and expand its offerings to dealers and commercial partners.



How ACV Auctions Inc. (ACVA) Works

Business Model

ACV Auctions operates a digital marketplace that connects buyers and sellers of wholesale vehicles. The platform facilitates real-time transactions through auctions, accessible via mobile apps, desktops, and API integrations. The company also provides transportation, financing, and assurance services to enhance the transaction experience.

Revenue Streams

The primary revenue sources for ACV Auctions include:

  • Auction marketplace revenue: Fees from auctions conducted on the platform.
  • Other marketplace revenue: Fees from ancillary services related to vehicle transportation and other services.
  • Customer assurance revenue: Fees for assurance services, particularly the Go Green assurance offering.
  • Data services revenue: Fees from data and analytics services provided to dealers and commercial partners.

Financial Performance

As of September 30, 2024, ACV Auctions reported the following financial metrics:

Financial Metrics Q3 2024 Q3 2023 YTD 2024 YTD 2023
Total Revenue $171.3 million $119.0 million $477.6 million $362.9 million
Auction Marketplace Revenue $84.9 million $51.4 million $227.7 million $159.9 million
Other Marketplace Revenue $62.7 million $45.0 million $177.7 million $134.3 million
Customer Assurance Revenue $15.4 million $14.5 million $47.8 million $44.1 million
Net Loss ($16.0 million) ($18.2 million) ($53.6 million) ($52.0 million)

Operating Expenses

For the nine months ended September 30, 2024, the operating expenses were as follows:

Expense Category Amount (in thousands)
Marketplace and Service Cost of Revenue $187,010
Customer Assurance Cost of Revenue $41,548
Operations and Technology $120,302
Selling, General, and Administrative $160,738
Total Operating Expenses $535,949

Key Operating Metrics

The following key operating metrics were noted for the three and nine months ended September 30, 2024:

Metric Q3 2024 Q3 2023 YTD 2024 YTD 2023
Marketplace Units 198,354 150,057 559,511 454,768
Marketplace GMV $2.5 billion $2.1 billion $7.2 billion $7.0 billion
Adjusted EBITDA $11.2 million ($3.7 million) $22.5 million ($12.8 million)

Liquidity and Capital Resources

As of September 30, 2024, ACV Auctions had the following liquidity and capital resources:

  • Cash and Cash Equivalents: $252.5 million
  • Marketable Securities: $35.2 million
  • Total Current Assets: $639.2 million
  • Total Liabilities: $578.1 million
  • Total Stockholders' Equity: $456.2 million

Debt Arrangements

As of September 30, 2024, the company had the following debt arrangements:

  • Long-term debt: $115.0 million
  • Warehouse Facility borrowings: $66.5 million at an interest rate of 8.21%

Recent Acquisitions

During the nine months ended September 30, 2024, ACV Auctions completed four business acquisitions:

  • Alliance Auto Auctions: $66.9 million
  • March 8, 2024 Acquisition: $27.4 million
  • June 2024 Acquisition: $51.6 million

Seasonality

The auction volume typically experiences fluctuations due to various factors including holidays, weather, and retail market seasonality for used vehicles. This seasonality affects both revenue and operating expenses.



How ACV Auctions Inc. (ACVA) Makes Money

Revenue Streams

ACV Auctions generates revenue through several key streams, primarily from its digital marketplace and customer assurance services.

Marketplace Revenue

The majority of ACV's revenue comes from marketplace activities. For the nine months ended September 30, 2024, total marketplace and service revenue was $429.8 million, representing a 35% increase from $318.8 million in the same period in 2023.

Revenue Source 2024 (in thousands) 2023 (in thousands) Change (in thousands) % Change
Marketplace Revenue $227,656 $159,911 $67,745 42%
Other Marketplace Revenue $177,671 $134,251 $43,420 32%
Total Marketplace Revenue $429,848 $318,760 $111,088 35%

Customer Assurance Revenue

Customer assurance services also contribute significantly to revenue. For the nine months ended September 30, 2024, customer assurance revenue was $47.8 million, up from $44.1 million in 2023, marking an 8% increase.

Revenue Source 2024 (in thousands) 2023 (in thousands) Change (in thousands) % Change
Customer Assurance Revenue $47,794 $44,097 $3,697 8%

Operating Expenses

Operating expenses are critical to understanding the profitability of ACV Auctions. For the nine months ended September 30, 2024, total operating expenses were $535.9 million, compared to $425.8 million in the same period of 2023.

Expense Type 2024 (in thousands) 2023 (in thousands) Change (in thousands) % Change
Marketplace and Service Cost of Revenue $187,010 $145,732 $41,278 28%
Customer Assurance Cost of Revenue $41,548 $38,081 $3,467 9%
Operations and Technology $120,302 $106,180 $14,122 13%
Selling, General, and Administrative $160,738 $123,689 $37,049 30%
Total Operating Expenses $535,949 $425,768 $110,181 26%

Key Financial Metrics

Metrics such as Marketplace Units and Gross Merchandise Value (GMV) are essential indicators of ACV's growth and market engagement.

Metric 2024 2023
Marketplace Units 559,511 454,768
Marketplace GMV $7.2 billion $7.0 billion

Net Loss

Despite revenue growth, ACV Auctions reported a net loss of $53.6 million for the nine months ended September 30, 2024, compared to a net loss of $52.0 million in the same period in 2023.

Period Net Loss (in thousands)
2024 $53,563
2023 $52,020

Cash Flow

For the nine months ended September 30, 2024, net cash provided by operating activities was $68.6 million, compared to $8.6 million in 2023.

Activity 2024 (in thousands) 2023 (in thousands)
Net Cash from Operating Activities $68,616 $8,611

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Resources:

  1. ACV Auctions Inc. (ACVA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of ACV Auctions Inc. (ACVA)' financial performance, including balance sheets, income statements, and cash flow statements.
  2. SEC Filings – View ACV Auctions Inc. (ACVA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.