ACV Auctions Inc.

Greetings and welcome to the ACV fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Tim Fox, Vice President of Investor Relations. Thank you. You may begin.

Good afternoon, and thank you for joining ACV's conference call to discuss our fourth quarter and full year 2024 financial results. With me on the call today are George Charmon, Chief Executive Officer, and Bill Zarella, 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. And with that, let me turn the call over to George.

Thanks, Tim. Good afternoon, everyone, and thank you for joining us. We are very pleased with our fourth quarter performance, which capped off another strong year of execution by the ECB team. Q4 revenue and adjusted EBITDA exceeded the high end of guidance, resulting in 32% full-year revenue growth. and we delivered our first full year of adjusted EBITDA profitability. Our 2024 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 over half of dealers in the US transacting on our marketplace. Second, we had record performance in ACV transport and ACV Capital, along with market traction of our growing suite of dealer solutions. And third, we executed on an exciting product roadmap to grow our competitive moat and expand our TAM, while delivering significant margin expansion. As we turn to 2025, ACV is focused on delivering strong top-line growth despite a muted outlook for the dealer wholesale market. We're also focused on driving meaningful adjusted EBIT expansion while continuing to invest in exciting 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. Q4 revenue of $160 million was above our guidance range, resulting in full-year revenue growth of 32%. GMV increased year-over-year in Q4 and for the full year, with nearly $10 million of GMV transacted in 2024. We sold 183,000 vehicles in Q4 and 743,000 in 2024, growth of 24%. Unit growth was driven by continued market share gains and solid execution across our remarketing centers. 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 will begin with growth. Turning to slide seven, I'll start with observations about the automotive market as context for dealer wholesale volumes. On the retail front, new vehicle sales increased 2% year-over-year in 2024, benefiting from solid 7% growth in Q4. With new vehicle inventories back to historical levels, along with more attractive OEM incentives, retail sales should continue to recover to normalized levels. However, the used vehicle market continues to tread water, According to NADA, sales declined modestly year-over-year in Q4 and for the full year. Consumer affordability has remained the primary headwind to our retail volume recovery. With used vehicle inventories about 25% below normal and off-lease returns still bottoming, we have yet to see a sustained improvement in the trade-to-wholesale mix. This resulted in flat dealer wholesale volumes in 2024. In terms of our outlook for 2025, we're encouraged by pockets of improvement in the broader automotive market, but we believe it's prudent to assume dealer wholesale volumes will be approximately flat year over year. Moving to slide eight, let's cover highlights on our value-added services, beginning with ACV transportation. The transportation team delivered another strong quarter. resulting in over 30% revenue growth and 410,000 deliveries in 2024. By leveraging AI, the team has optimized pricing across nearly the entire ACV transportation network, resulting in both strong growth and operating efficiency. Revenue margin expanded 300 basis points in 2024, exceeding our midterm target margin target of high teens. Lastly, Our off-platform transportation service continued to gain traction with our dealer partners in Q4. We're excited to deliver these new value-added services that accelerate network densities and create additional long-term growth factors. Turning to slide nine, the ACV Capital team delivered strong results with accelerated year-over-year revenue growth in Q4 and full-year revenue growth of 26%. As we discussed in recent quarters, Our ACV Capital team has been balancing growth and risk in an environment that has been challenging for independent dealers. Going forward, we are confident that we can accelerate ACV Capital growth while continuing to manage risk. In addition to our core floor plan offerings, we are excited with the early adoption of new value-added offerings we began piloting in 2024. Recall that these include dealer financing for consumer source vehicles and dealer trade-ins that are sold retail or wholesale on ACV's marketplace. This bundled clear car ACV capital offering supports dealer sourcing strategies and creates another long-term growth lever for our capital business. Next, I will address the second element of our strategy to drive long-term shareholder value, innovation. Turning to slide 11, I'll frame our tech investment around a core differentiator that underpins our products, services, and operations, ACV AI. It's not lost on us that investors are hearing a lot about AI these days. 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. Within our digital marketplace, we leverage AI together with our proprietary data to deliver condition-enhanced pricing intelligence and to generate tailored buying experiences based on historical buying patterns and available inventory. We just released new features in ACV Max powered by ACV AI that predicts prices with incredible accuracy. We can now predict what a retail vehicle will sell for within a few hundred dollars and within a hundred dollars of its wholesale value. This pricing capability, informed by specific vehicle and local market dynamics, is used to guide sellers on vehicle listing price. We are seeing sellers and buyers adopt our prices increasingly, driving higher conversion on our marketplace. ACDAI is foundational within our inspection platform, delivering the most transparent and accurate condition reports in the industry. Before our VCIs or dealers touch a vehicle, we flag known condition risks and guide them through the inspection process. These disclosures are added to condition reports based on insights from our vehicle data model. This model contains structured data from millions of inspections, augmented with third-party data and we believe represents one of the most comprehensive vehicle condition databases in the industry. We're incorporating advanced technology into our emerging commercial platforms as we expand into this adjacent market. ACVAI powers our consumer-facing solutions like ClearCar and our trade-in solution for auto e-commerce partners, dealer partners, are piloting our new AI-enhanced applications to perform their own inspections for a number of use cases. And we've received incredible feedback, which has informed our product roadmap. To wrap up, as you know, innovation has been one of ACV's guiding principles since inception and a key driver of our marketplace success. We're only getting started. And we look forward to sharing some more exciting new AI-enabled products and services at our upcoming Analyst Day in March. With that, let me hand it over to Bill to take you through our financial results and how we're driving growth at scale.