Liquidity Services, Inc.

To listen to today's call, please have our press release in front of you, which includes our financial results as well as metrics and commentary on the quarter. During this call, management will discuss certain non-GAAP financial measures. In our press release and filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP measures, including the reconciliations of these measures with their most comparable GAAP measures as available. Management also uses certain supplemental operating data as a measure of certain components of operating performance, which we also believe is useful for management and investors. This supplemental operating data includes gross merchandise volume and should not be considered a substitute for or superior to GAAP results. At this time, I will turn the presentation over to our Chairman and CEO, Bill Engert.

Good morning and welcome to our Q4 earnings call. I'll review our Q4 performance and the progress of our business segments. The next Jorge Salaya will provide more details on the quarter. Our outstanding Q4 results reflect the depth, scale, and liquidity of our proprietary e-commerce marketplaces, value-added software solutions, and our team's customer-focused culture. Our ability to connect buyers and sellers in the circular economy across hundreds of diverse categories ranging from multi-million dollar industrial and construction assets to vehicles and retail consumer goods is a key competitive advantage and positions us well in any economic climate. We continue to expand and enhance our capabilities, including our recent integration of a new payment solution to improve the buyer experience and operational efficiency of our marketplaces. Our growth in Q4 reflects the strong operational execution of our RISE strategy, as GMB, adjusted EBITDA, and our adjusted EPS grew 12%, 28%, and 16% year-over-year respectively, all above our guidance range. Our Q4 adjusted EBITDA margins as a percentage of direct profit grew over 310 basis points over the prior year to 32.8%, reflecting a continued mix shift to higher margin consignment and software solutions and the operating leverage of our technology platform. For the full year of fiscal 2025, liquidity services made strong financial and strategic gains, and we see a clear path to our midterm goals of $2 billion in annual GMV and $100 million of annual adjusted EBITDA. Let me now cover some of the key highlights from our fiscal year 2025. We achieved a record $1.57 billion in GMV in fiscal 25, eclipsing the $1.5 billion GMV milestone for the first time and achieved revenues of nearly $477 billion of 31% year over year. We achieved these marks with an increasingly diversified business as every LSI business segment grew both its top and bottom line during the year. Our strategy has prioritized low touch consignment services and software solutions with recurring revenue characteristics that are creating substantial value for customers within a $100 billion plus GMB market opportunity across the government, industrial, and retail sectors. Second, we generated strong profitability and free cash flow during fiscal 25 with adjusted EBITDA of $60.8 million, up 25% year over year, our highest EBITDA in 11 years. Our asset-light business model and operational efficiencies, including the increasing use of AI-assisted technologies, allowed us to generate $59 million of free cash flow during the year providing strong flexibility to execute our strategic plan. Our buyer base and liquidity continue to be a strong competitive advantage for LSI, and during fiscal 25, we eclipsed 6 million registered buyers for the first time on our platform and set a new record of 4.1 million auction participants on our platform. We continued our expansion and diversification of our GovDeal segment during the year, which achieved a record $903 million of GMV up 8% over the year, eclipsing $900 million GMV threshold for the first time. Driven by consistent growth in the number of new sellers, active sellers, and record vehicle and equipment sales volumes, We have further segmented our North American territories, identified government adjacent markets, and added capacity to our GovDeal sales organization to drive further growth. We also continue to expand our CAG heavy equipment fleet category during fiscal 25, which grew GMV 35% organically during the year. Our strong buyer base, sell-in-place service model, and user-friendly experience has allowed us to develop and grow relationships with national equipment fleet owners with recurring sales volumes. This has propelled this category from zero a few years ago to a run rate of more than $100 million of GMB, resulting in higher and more consistent growth and profitability within our CAG segment. Our retail segment grew GMB 30% year over year by securing new recurring program flows from existing and new clients and leveraging the strength of our multi-channel buyer base and agile operating footprint. We recently launched our new localized consumer auction channel, Retail Rush, to drive higher recovery for our clients and value for consumers. We also further scaled our Maschineo classified and dealer management software business in fiscal 25. In addition to achieving record revenue in EBITDA during the year in our Maschineo segment, We've expanded our machinio sales capacity and developed platform innovations to target new growth opportunities within the heavy equipment, marine, and service industries. We completed the purchase of auction software in January of fiscal 25 to expand our software development capacity to grow our SaaS offering with existing and new customers to provide a platform for the launch of our new consumer online auction channel, Retail Rush. We are excited by the opportunity to accelerate and expand our innovations in the circular economy with our new auction software team and technology platform, which anchors our new software solutions business segment. During fiscal 25, We continued to advance our LSI product roadmap with several innovations. For example, we deployed our new seller asset management, or SAM tool, in Canada on our GovDeals and all surplus marketplaces. The new SAM tool incorporates mobile responsive design templates, AI-assisted listing tools, and asset verification. tools, which enhance the speed and quality of our customers' daily usage on our platform. We are well underway in rolling these new tools out in the U.S. market to our over 15,000 sellers. During fiscal 25, we also deployed new payment processing capabilities as a value-added service. We expect this to improve the convenience of choices of payment. our buyers but also to enhance our margins over time finally we've benefited during fiscal 25 from strong employee engagement collaboration and recruiting new talent this past year our human resources team sourced 51

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