Q3 2025 Liquidity Services Inc Earnings Call
Scott.
Please note that this conference call is being recorded.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.
I will now turn the call over to Michael Patrick liquidity services, Vice President and controller.
Good morning on.
On the call today are bill <unk>, our chairman and Chief Executive Officer, and Jorge Celaya, Our executive Vice President and Chief Financial Officer.
It will be available for questions after their prepared remarks.
The following discussion and responses to your questions reflect management's views as of today August seven 2025 and will include forward looking statements.
Actual results may vary differ differ materially.
Additional information about factors that could potentially impact our financial results is included in today's press release and in filings with the SEC, including our most recent annual report on Form 10-K.
As you 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.
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 is available.
Management also uses certain supplemental operating data as a measure of certain components of our 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 Phil angry.
Morning, and welcome to our Q3 earnings call I'll review, our Q3 performance and the progress of our business segments and next Jorge Celaya will provide more details on the quarter.
Thanks to our team's focus during Q3, we delivered record GMB.
Strong adjusted EBITDA and adjusted EPS growth.
Our differentiated positioning.
As the leading circular economy e-commerce marketplace.
Has helped us.
Growth, despite economic uncertainty related to tariff policies and higher interest rates.
The strength of our asset light business model was on display as.
As we generated operating cash flow during Q3 that exceeded.
EBITDA.
These strong results.
To reflect the power of our leading technology enabled marketplaces.
Growing buyer network and disciplined execution to optimize recovery and operations in every segment of our business.
Our strategic investments.
And software platform innovation.
Marketing and sales are.
Are enabling us to capture greater market share.
While enhancing the value, we deliver to sellers and buyers.
Our resilient diversified business provides stability.
For our customers and investors alike.
Amid ongoing economic uncertainty.
With our proven service offerings and continued investment.
In innovation we.
We are uniquely equipped to empower our buyers and sellers and drive sustainable long term growth.
In the large and fragmented circular economy market.
In line with our strategic plan.
We continue to grow.
Our volumes.
Higher base and recovery.
In key categories such as construction.
Trucks vehicles and consumer return goods.
During Q3, we set new records.
The number of sellers.
Assets listed and.
And bidders in these categories.
And now have over $5 9 million registered buyers on our platform.
Our strategy has allowed us to develop an attractive diversified business. We continue to drive adoption of our asset light services in all segments and are transacting more than 80% of our total GMB under the consignment pricing model.
Despite.
Significant investment in our business expansion and product roadmap we delivered.
31% adjusted EBITDA margins as a percentage of direct profit.
During Q3.
We also generated over $19 million of operating cash flow during the quarter and have a debt free balance sheet with $167 million in cash.
Zero financial debt.
Execute our organic and M&A growth strategies.
Now, let's take a closer look at each segment.
Our Gov deals segment delivered a record <unk> of $252 million.
A record number of assets sold in a single quarter and a record number of live vehicle listings.
We continue to expand with existing and new accounts in key areas.
<unk>.
New York, Florida, Texas and California.
Notable new account wins during the quarter include Fresno, California.
Anaheim, California, Mesa, Arizona King.
King County, Washington.
<unk> still Oklahoma.
And Europe County, Virginia.
We are also expanding our digital marketplace for real estate tax foreclosure sales.
In Florida, Louisiana, Wisconsin, and Oklahoma.
We're also introducing new payment technology on our Gov deals marketplace in the U S and Canada to increase.
Payment options and improve efficiencies or.
We're buyers.
And our internal operations.
Our capital asset group.
Our CAG segment posted solid results during Q3 with double digit organic growth in <unk> in direct profit.
The breadth of our CAG marketplace allowed it to grow despite the headwinds of tariff policies and the biopharma semiconductor in machine tools verticals in our marketplace.
Fact, we grew the number of assets sold in our CAG segment year over year by 35%.
Leading the charge was our heavy equipment category, which continued its rapid growth setting records for the number of unique sellers repeat sellers and completed transactions during Q3.
<unk> and our heavy equipment category more than doubled year over year, and we continue to see a billion dollar GMB opportunity in this category.
Our RSC G segment expanded relationships with sellers across product categories, and geographies to drive double digit year over year growth in direct profit during Q3.
Leading the charge was our heavy equipment category, which continued its rapid growth. Setting records for the number of unique sellers, repeat Sellers and completed transactions during Q3
Our market share gains have focused on adding more lower touch higher margin consignment relationships as we transition away from selected purchase model programs.
We're currently in discussions with over 60 brands and manufacturers.
Gmv and our heavy equipment category more than doubled year-over-year and we continue to see a billion dollar gmv opportunity in this category.
We're attracted to the high quality and reliability.
Of our retail appliance supply chain group software solutions and.
Our rscg segment expanded relationships with sellers across product categories, and geographies to drive double-digit year-over-year growth in direct profit during Q3.
And buyer network.
Which ensures that our retail clients benefit financially and operationally from our services.
For example, during Q3, we added several new clients, including a leading national sporting goods retailer a global branded food manufacturer.
Our market share gains have focused on adding more lower touch higher margin Consignment relationships. As we transition away from selected purchase model programs.
We're currently in discussions with over 60 Brands and manufacturers.
National leading furniture retailer and a leading branded housewares manufacturer.
Who are attracted to the high quality and reliability.
In addition, we have expanded our.
Of our retail supply Supply supply chain group software Solutions.
And buyer Network.
<unk> sell in place software solution with a leading international ecommerce retailers to manage and sell the returned goods on our liquidation dot com.
Which ensures that our retail clients benefit financially and operationally from our services.
Online auction platform.
To further optimize our market, leading recovery and expand our market share.
For example, during Q3, we added several new clients including a leading National Sporting Goods retailer a global branded food. Manufacturer
We are establishing our online DTC auctions in Columbus, Ohio.
The national leading Furniture retailer and a leading branded housewares manufacturer.
In addition, we have expanded our
This dedicated consumer focused e-commerce experience, we will utilize the auction software of our software solutions business segment.
rscg cell and place software solution with leading international e-commerce, retailers to manage and sell their returned Goods, on our liquidation.com.
And will lay the foundation for.
Online auction platform.
A national direct to consumer auction platform.
Finally, our machines <unk> and software solutions business segment continues to grow its <unk>.
To further optimize our Market leading recovery and expand our market share.
Share and now has over 5000 paying customers and over 100 countries.
We are establishing our online btoc auctions in Columbus Ohio.
This dedicated consumer focused e-commerce experience.
Which rely on its dealer management.
And marketing solutions for used equipment sales.
We will utilize the auction software of our software solutions across business segments.
Our machinery segment has ample opportunity.
More than double its business by further penetrating existing used equipment verticals.
And we'll lay the foundation for a national direct-to-consumer auction platform.
And expanding with adjacent service providers, who can also leverage machining a suite of marketing.
Lead generation and website hosting tools to more efficiently manage their business.
Share and now has over 5,000 paying customers in over 100 countries.
Which rely on its dealer management.
And marketing solutions for used equipment sales.
Our technology and product teams across liquidity services continue to integrate machine learning.
Our Machinio segment has ample opportunity.
Data analytics, and AI assisted tools into our marketplace platform.
More than double its business by further penetrating, its existing used equipment verticals.
Over time, we will unlock more value for buyers and sellers on our platform through these investments.
And expanding with adjacent service providers.
With our strong financial foundation and strategic focus.
Who can also leverage machinio, Suite of marketing lead, generation and website hosting tools to more efficiently, manage their business.
We are well positioned to seize emerging opportunities to drive profitable long term growth even in uncertain times.
Our technology and product teams across liquidity Services. Continue to integrate machine learning.
I'll now turn it over to Jorge for more details on the quarter and our business outlook.
Data analytics and AI assisted tools into our Marketplace platform.
Thank you Bill and good morning.
Over time, we will unlock more value for buyers and sellers on our platform through these Investments.
We achieved a quarterly record for <unk> and strong profitability, while continuing to invest in technology and trusted service offerings.
With our strong financial foundation and strategic Focus.
Our financial results underscore our focus on profitable growth through a diversified approach targeting sectors with long term potential for growth.
We are well, positioned to seize emerging opportunities to drive profitable long-term growth.
Even an uncertain times.
I'll now turn it over to Jorge for more details on the quarter.
For the nine months of fiscal year 2025, we have grown the total segment direct profits by 12%.
And our business Outlook.
Thank you, Bill, and good morning.
With adjusted EBITDA as a percent of total direct profit at 28%.
Our adjusted EBITDA has grown 44%.
We achieved a quarterly record for gmv and strong profitability while continuing to invest in technology and trusted service offerings.
For these first nine months of fiscal year, 2025, we sustained growth and margins.
Our financial results underscore our focus on profitable growth.
In line with our rule of 40 objective, which measures the sum of direct profit growth of adjusted EBITDA margins as the percent of direct profit.
Through a diversified approach targeting sectors with long-term potential for growth.
For the 9 months of fiscal year 2025, we have grown the total of our segments, direct profits by 12%.
This third quarter for example, we exceeded our target and delivered 42%.
With adjusted EVA as a percent of total direct profit at 28%.
With our fiscal fourth quarter guidance, we anticipate double digit growth in adjusted EBITDA for the full year.
Adjusted EBITDA has grown 24%.
A 2045.
For these first 9 months of fiscal year 2025, we sustained growth and margins.
We ended the third quarter of fiscal 2025, with a $167 million in cash cash equivalents and short term investments.
In line with our rule of 40 objectives, which measures the sum of direct profit growth and adjusted Eva margins, as the percent of direct profits.
We generated $19 3 million of cash from operations during the quarter.
We continue to have zero debt and $26 million of available borrowing capacity under our credit facility.
This third quarter, for example, we exceeded our Target and delivered 42%.
Comparing our consolidated results for the third quarter of fiscal year 2045 to the same quarter last year.
With our fiscal fourth quarter guidance, we anticipate double digit growth in adjusted Eva dots for the full year.
Of 20125.
We grew <unk>, 9% to a record $413 million.
Our revenue increased 28% to $119 9 million consistent with.
We ended the third quarter of fiscal 2025 with 167 million in cash, cash equivalents and short-term Investments.
We generated 19.3 million of cash from operations during the quarter.
With the guidance, we provided for our revenue to <unk> ratio.
It reflected increased purchase transaction volumes in our OCG segment for the third quarter.
We continue to have zero debt and have 26 million of available borrowing capacity under our credit facility.
Our GAAP earnings per share increased 21% to 23 seven.
Comparing our Consolidated results for the third quarter of fiscal year 2025 to the same quarter last year.
And 13%.
<unk> to 34.
On a non-GAAP adjusted basis for the fiscal third quarter.
We grew GMV by 9% to a record $413 million.
Our non-GAAP adjusted EBITDA was $17 million for.
Our revenue increased 28% to $119.9 million, consistent.
For the fiscal third quarter, a 16% increase over the prior year.
With the guidance, we provided for our Revenue to gmv ratio.
Which represents a 31% adjusted EBITDA margin.
That reflected increased purchase transaction volumes in our RSCG segment for the third quarter.
On the total of our segment's direct profit for the fiscal third quarter.
Our gaap earnings per share increased 21% to 23 cents.
Specifically comparing segment results from this fiscal third quarter of 2025 to the same quarter last year.
And 13% to 34 cents on a non-gaap adjusted basis for the fiscal, third quarter.
The <unk> segment <unk> was up 1% revenue up 8% in direct profit margin of 7%.
Each setting a new quarterly record.
Our non-GAAP adjusted EBITDA was $17 million for the fiscal third quarter, a 16% increase over the prior year.
Our <unk> segment fiscal third quarter is also the segments traditional seasonally high quarter.
Which represents a 31% adjusted, even the margin.
During this quarter, we experienced slightly lower vehicle pricing than last year, and lower take rate real estate sales, which had a disproportionate effect on <unk> year over year.
On the total of our segments, direct profit for the fiscal third quarter.
Specifically comparing segment results from this fiscal, third quarter of 2025 to the same quarter last year.
Gov deals continues to add new sellers and buyers and grow market share.
The go. Segment gmv was up, 1% Revenue up 8% and direct profit margin up 7%.
Including in new geographies and with expanded services.
Each setting a new quarterly record.
Our retail segment benefited this fiscal third quarter from drop ship sales of incoming flows and a higher proportion compared to the first two quarters of fiscal year 2025.
Our Gump deal segment. Fiscal third quarter is also the segments traditional seasonally High quarter.
Contributing to the record quarterly segment direct profit.
During this quarter, we experienced slightly lower vehicle pricing than last year and lower take rate real estate sales, which had a disproportionate effect on GMV year-over-year.
Our retail segment was up 30% on GMB at 39% on revenue year over year.
Gut deals continues to add new sellers and buyers and grow market share.
Given this year's high mix of purchase flows during the first nine months of fiscal year 2025.
Including new geographies and with expanded services.
Retail segment direct profit grew 12% compared to last year's fiscal third quarter.
The segment's direct profit quarterly record of 19 4 billion.
Our retail segment benefited, this fiscal third quarter from drop Ship Sails of incoming flows in a higher proportion. Compared to the first 2 quarters of fiscal year 2025.
Contributing to the record quarterly segment direct profit.
Reflects the higher proportion of drop ship flows.
Resulting in lower transportation and storage costs and improved operational efficiencies in marketplace transaction processes.
Our retail segment was up, 30% on gmv and 39% on Revenue year-over-year.
Our capital assets, our CAG segment was up 12% on <unk> up 6% of revenue and up 14% on segment direct profit led by more than doubling year over year growth in heavy equipment asset sales.
In this year's High mix of purchase flows during the first 9 months of fiscal year 2025.
Retail segment, direct profit group, 12% compared, to last year's fiscal, third quarter.
As our client centric flexible auction events continued to attract and retain higher volume recurring sellers.
The segments, direct profit quarterly record of 19.4 million, reflects the higher proportion of drop shipped flows.
Certain industrial categories within our CAG segment, including in our international market have been experiencing tempered activity due to economic and tariff related supply chain uncertainty.
Resulting in lower transportation, and storage costs, and improved operational efficiencies in Marketplace transaction processing.
Our machining and software solutions businesses in total increased revenue by 27% and segment direct profit by 23%.
Our Capital assets or tag segment was up 12% on gmv of 6% on revenue, and up, 14% on segment, direct profit led by more than doubling year-over-year. Growth in heavy equipment, assets sales,
Including the acquisition of auction software.
As our client Centric. Flexible auction events, continue to attract and retain higher volume, recurring sellers.
Moving on to our fiscal fourth quarter outlook.
We expect to complete our fiscal <unk>.
Full year 2025, with double digit annual growth across our key metrics.
Certain industrial categories within our tag segments, including in our International Market have been experiencing tempered activity due to economic and tariff related supply chain. Uncertainties.
For the fiscal fourth quarter.
Our <unk> segment will be moving out of its seasonally high fiscal third quarter with.
With record GMB.
Our Moschino and software Solutions businesses in total increased Revenue by 27% and segment, direct profit by 23%.
Yes. It is still expected to continue its year over year revenue of the segment direct profit growth trajectory.
Including the acquisition of auction software.
We anticipate our capital asset segment momentum in the heavy equipment asset category to continue to drive year over year growth.
Moving on to our fiscal fourth quarter Outlook.
We expect to complete our fiscal.
Year, 2025 with double digit, annual growth across our key metrics.
Despite the macroeconomic headwinds throughout 2025, and select industries and markets.
For the fiscal fourth quarter.
<unk> industrial categories are currently projected to have more volume and completed auctions compared to the fiscal fourth quarter of last year.
Our gov deal segment will be moving out of its seasonally High. Fiscal third quarter with record gmv
Yet, it is still expected to continue its year-over-year revenue and segment direct profit growth trajectory.
<unk> and our newly established software solutions business are also expected to grow year over year.
We anticipate several factors to be reflected in our retail segment's fiscal fourth quarter.
We anticipate our Capital assets segments momentum in the heavy equipment asset category to continue to drive year-over-year growth.
Coming off its record third quarter.
We expect a shift to less purchase volume flows.
Despite the macroeconomic headwinds throughout 2025 in select industries and markets.
While purchase price increases for select ongoing programs may affect results.
We are simultaneously implementing enhancements for operating leverage in our retail operations and investing and expanding further our direct to consumer online auction channel powered by our software solutions technology.
Tags. Industrial categories are currently projected to have more volume in completed auctions compared to the fiscal fourth quarter of last year.
Machinio and our newly established software Solutions business are also expected to grow year-over-year.
The outlook for the <unk> segment compared to strong fourth quarter last year is therefore tempered.
We anticipate several factors to be reflected in our retail segments, fiscal fourth quarter coming off. Its record third quarter,
On a consolidated basis.
Simon <unk> is expected to be in the low <unk> as a percent of total GMB.
We expect a shift in purchase volume flows, and while purchase price increases for select ongoing programs may affect results.
Consolidated revenue as a percent of GMB.
It is expected to be slightly below 30%.
And the total of our segment direct profit as a percent of consolidated revenue is expected to again be in the mid 40% range.
We are simultaneously implementing enhancements for operating leverage in our retail operations and investing in expanding further. Our direct-to-consumer online auction channel is powered by our software solutions and technology.
These ratios can vary based on our overall business mix, including pricing models and asset categories in any given period.
The outlook for the rcg segment compared to its strong fourth quarter. Last year is therefore tempered.
On a Consolidated basis. Consignment gmv is expected to be in the low 80s as a percent of total gmv.
Management guidance for the fourth quarter of fiscal year 2025 as described in our earnings release is as follows.
Consolidated Revenue as a percent of gmv.
Is expected to be slightly below 30%.
We expect GMB.
The range of $355 billion to $390 million.
And the total of our segments' direct profits as a percent of consolidated revenue is expected to again be in the mid-40% range.
GAAP net income is expected in the range of $5 billion to $8 billion.
With corresponding GAAP diluted earnings per share ranging from 15 to 25 cents a share.
These ratios can vary based on our overall business mix including pricing models and asset categories in any given period.
On a GAAP on a non-GAAP adjusted diluted earnings per share.
Is estimated in the range of 24 to $30 per share.
Management's guidance for the fourth quarter of fiscal year 2025 as described in our earnings release is as follows.
We expect gmv in.
We estimate non-GAAP adjusted EBITDA to range from 30 million to $60 million, the GAAP and non-GAAP EPS guidance assumes that we have approximately $32 five to 33 million fully diluted weighted average shares outstanding for the fourth quarter of fiscal year 2020.
The range of 3555 million to 390 million.
Gaap, net income is expected in the range of 5 million to 8 million dollars. With corresponding Gap diluted earnings per share. Ranging from 15 cents to 25 cents a share.
Yes.
Thank you we will now take your questions.
On GAAP and non-GAAP adjusted diluted earnings per share.
Thank you we will now begin the question and answer session. If you have a question. Please press star one on your telephone keypad, if you wish to be removed from the queue Press Star will go. Thank you.
Is estimated in the range of 24 cents to 34 cents per share.
If you are using a speakerphone you may need to pick up the handset first before Patrick Dennis Brushing denim price.
George Sutton from Craig Hallum is on the line with a question.
City. But that to range from $30 million to $M million dollars, the GAAP and non-GAAP EPS guidance assumes that we have approximately 32.5 to 33 million fully diluted weighted average shares outstanding for the fourth quarter of fiscal year 2025.
Thank you, and we will now take your questions.
Bill I Wonder if you could discuss the tariff impacts on one hand, and the U S. We would expect some benefits us.
Certain things Werent being shipped.
Thank you. We will not begin the question and answer session. If you have a question, please press star 1 on your telephone keypad, if you wish to be removed from the queue press star 1 again,
Given the tariff concerns you also mentioned a tempered international activity from tariffs. So just wanted to make sure we understood the puts and takes there.
If you are using a speakerphone, you may need to pick up the handset first before passing the pressing numbers.
Sure.
George satin from Craig halam is on the line with a question.
Regarding international activity.
Daily or weekly changing commentary.
In international markets may require buyers to hit the pause button to assess the total landed cost of.
Used equipment and vertical such as Biopharma.
Semiconductor and some machine tool categories.
Bill, I wonder if you could discuss the tariff impacts on one hand. In the U.S., we would expect some benefits as certain things weren't being shipped. Given the tariff concerns, you also mentioned a tempered international activity from tariffs. So, I just want to make sure we understood the puts and takes there.
Those <unk>.
Assets will trade.
And it's just a question of timing and we noted that.
Sure, uh, regarding International activity.
Delays were directly correlated with <unk>.
Daily or weekly changing commentary.
Evolving.
Negotiations across Asia.
In the.
In certain pockets of the EU on the other hand.
And international markets, may require buyers to hit the pause button to assess the total landed cost of used equipment in in vertical such as biofarma.
We are a go to marketplace with on demand product thats not being.
Semiconductor and some uh, Machine Tool categories.
uh, those
Subject to tariffs all the used equipment in North America for the most part is moving.
assets will trade.
and it's just a question of timing, and we noted that,
On the course and speed as we normally have.
you know, delays were directly correlated with.
There was a few blips in Canada.
Evolving negotiations across, you know, Asia.
It seem to have normalized.
India.
And for US I think a key headline is.
um, in certain pockets of the EU, on the other hand,
Vehicle prices used vehicle prices have been soft.
uh, we are a go-to marketplace with on demand product, that's not being
Yet we're getting record.
Assets listed on the marketplace and sold on the marketplace.
subject to tariffs, uh, you know, all these equipment in North America, for the most part is, uh, moving
When those prices normalize.
Deals for example, we'd be more close to double digit organic growth.
And we are doing a fantastic job.
On the course and speed as as as we normally have, um, there was a few blips in Canada. Um, it seemed to have
Normalized.
And clients as well as on the CAG segment, I think I noted.
and uh, you know, for us, I think a key headline is
AG had the number of assets sold year over year increased by 35%. So I think theres, a little bit of headwind George with <unk>.
Vehicle prices, used vehicle prices, have been solved.
Yet, we're getting records.
Some softer prices or delays in some of the assets due to tariffs, but we're really happy with the variables. We can control, which are number of assets listed and sold number of clients that are active on the marketplace and the business development pipeline.
Assets listed on the marketplace and sold on the marketplace. And when those prices normalize,
Love deals. For example, we would be more close to double-digit organic growth.
And we're doing a fantastic job, you know, reeling in clients as well as on the CAG segment. I think I noted.
Understand thank you.
You mentioned, starting in ecommerce program in Columbus, and something that you ultimately would build to a national program Thats encouraging I am just curious if you could give us a little more detail there.
bag had uh, the number of assets sold year-over-year increase by 35%. So I think there's a little bit of headwind George with
Yes, sure well, we made an acquisition.
Auction software.
In January and one of the strategic pillars of that was the ability to utilize there.
Some softer prices or delays and some of the assets due to the terrorists. But, uh, we're really happy with the variables we can control, which are the number of assets listed and sold, the number of clients that are active on the marketplace, and the Business Development pipeline.
Understand, thank you. Um,
Auction.
Technology and functionality for our consumer experience.
We've traditionally been a <unk> company.
With a lot of business rules around knowing our by our customer and quarantines in deposits.
you mentioned starting an e-commerce program in Columbus, uh, and something that you ultimately would build to a national program, that's encouraging. I'm just curious. If you can give us a little more detail there.
We know there is a huge opportunity selling value price goods to consumers and consumers have certain expectations based on other places they shop about.
Yeah, sure. Well, we made an acquisition of auction software.
In January, one of the strategic pillars of that was the ability to utilize their
How they access quicker.
Quickly and easily.
<unk> pay for the product it's shifting for the product.
And our auction software platform addresses that quite well.
We are piloting a consumer auction experience.
Auction uh, technology and functionality for a consumer experience. You know, we've traditionally been a B2B company, um, with a lot of business rules around, you know, knowing our buyer customer and quarantines and deposits.
In the Columbus, Ohio market wide Columbus, it's a very dense.
Population for the demographic profile of people that are interested in value priced goods and the treasure Hunt experience.
We we know there's a huge opportunity selling value price Goods to Consumers and consumers, have certain expectations based on other places they shop about
We'll be able to control the.
Flows of goods there to confirm recovery rates.
How they access, uh, quickly and easily, you know, product pay for the product, get shipping for the product.
And with with the rollout of the software and a brand that will be announced later in the quarter.
And our auction software platform. Addresses that quite well.
We will have a great validation that this is something they can.
We're a piloting. A consumer auction experience uh in the Columbus Ohio market, why Columbus? It's a very dense. Uh,
Expand throughout the U S. Again, it's an online consumer auction experience in brand leveraging auction suffered technology with nodes of where people can pick up goods.
So the consumer.
You are interested in value-priced goods and the treasure hunt experience. You will be able to control the flows of goods there to confirm recovery rates.
Meyer the winner of.
Of an auction would collect the goods.
In a node.
And uh, with with the, uh, roll out of the, the software, and a brand that will be announced, you know, later in the quarter.
In Columbus to start and.
We will not be doing any heavy touch traditional retail work at that location, it's really an opportunity to make it more convenient for consumers some of which are very interested in serial buyers of <unk>.
Uh, we'll have a great validation that, this is something that can, uh, expand throughout the US. Um, again, it's an online consumer auction experience, and brand leveraging auction software technology with nodes of where people can pick up Goods.
Housewares consumer electronics apparel fitness equipment.
Pick up those goods in the market and then you have a viral aspect to.
So the consumer buyer, the winner of a of an auction would collect the goods.
Introducing these to different metros.
In a node, uh, in Columbus to start and...
And we have a number of buyers on our liquidation dot com platform. These are business.
<unk> that have an appetite to replicate this type of model.
By reselling the goods they acquired through our <unk> channel. So we think there's an opportunity to.
We will not be doing any heavy-touch traditional retail work at that location. It's really an opportunity to make it more convenient for consumers, some of whom are very interested in serial buyers of...
Proliferate, the consumer auction platform directly and through affiliate partners.
Housewares, consumer electronics, apparel, and fitness equipment—you know, to pick up those goods in the market. And then you have a viral aspect to...
I won't call it a franchise network, but we would be selling the software.
Introducing these to different metros, uh,
And the playbook for individual businesses to run in different parts of the country.
And we have a number of buyers on our liquidation.com platform. These are business.
And we will license that that software and collect a.
Buyers that have an appetite to replicate this type of model.
The fee stream associated with that.
Great.
By reselling the goods they acquire through our B2B channel, we think there's an opportunity to.
One other question more of a point of clarity you, obviously, we love the consignment model and you are suggesting you're turning off certain purchase flows I'm. Just curious how you go through the process of turning those flows off what sort of timing is is behind us.
Proliferate, the consumer auction platform directly and through affiliate Partners, um, I won't call it a franchise network, but we would be selling the software.
And.
How just kind of walk through how you're orchestrating that.
And the playbook for individual businesses to run in different parts of the country and we'll license that, that software and collect a a fee stream associated with that.
Sure.
Well like any business, we do periodic business reviews of of everything including anything related to.
Putting our.
<unk> forward on rate cards, so purchase model implies.
There is a rate card that we provide that.
<unk> value in exchange for LSI and our clients.
Those rates.
Are not accepted.
Great. Um 1 other question kind of more a point of clarity you um obviously we love the consignment model and you are suggesting you are turning off certain purchase flows. Just curious how you go through the process of turning those flows off. What what sort of timing is is behind this? And um, uh, how just kind of walk through how your orchestrating that
Or we believe those rates need to be revisited.
Sure.
We reallocate our resources George to other.
Well, like any business, we do periodic business reviews of of everything, including anything related to
Higher margin activities.
And consignment is one of those activities.
Putting our our, uh, commitments for it on rate cards. So purchase model implies
And so that's a normal.
Rotation and management of our portfolio.
There's a rate card that we provide that ensures value and exchange for LSI and our clients.
We see a lot of opportunity with.
If those rates?
Are not accepted.
Sell in place.
Clients, which we noted there are a number that we have.
Or we believe those rates need to be revisited.
Introduced in the last few quarters and Theres a lot of interest in the pipeline.
Uh, we reallocate our resources, George to other.
That's a.
And that's a value in exchange.
Higher margin activities and Consignment is 1 of those activities.
Um,
Discussion.
And so, that's a normal.
<unk> and to some extent with external clients, we want to make sure that we're doing a good job for our shareholders. We're doing good job for our internal resources, which have opportunity cost. So if we're going to do anything allocate resources allocate marketing resources.
Rotation and management of our portfolio. Uh, we see a lot of opportunity with
sell in place.
Uh, clients which we noted, you know, their number that we've...
Introduced in the last few quarters, and there's a lot of interest in the pipeline.
<unk> allocate logistics support we want to make sure we're doing that optimally.
so, that's a
Over the course of time.
Understand perfect I appreciate the answers.
Gary Presto P&L from Barrington.
On the line with a question.
That's a value in exchange discussion internally and to some extent with external clients. We want to make sure that we're doing a good job for our shareholders and a good job for our internal resources, which have opportunity costs. So if we're going to do anything, Al...
So Jorge how are you.
Good morning.
Bill It sounds like you really had some some of what you were talking about a banner year in new banner quarter, I should say new business development.
Allocate IT resources, allocate marketing resources, allocate logistics support. We want to make sure we're doing that optimally over the course of time.
Understand perfect, appreciate the answers.
In general when you cite like some of these wins and Gov deals and all of that when do they start coming into the mix is that something that you can immediately if you win it in Q3, it's going to immediately start impacting Q4 or is there a lag there.
Gary Presto Pino from barington.
Is on the line with a question.
Phil, Jorge, how are you?
Good morning.
Depending upon.
Um,
Who the client is and the breadth of what they wanted to do there can be a lag.
Aware from a few months to five months.
But what's important is.
A lot of this NBD as.
It's showing up right now.
Especially in the heavy equipment vertical we have.
<unk> broken sort of new water <unk> high highs and.
In Q3, it's going to immediately start impacting Q4. Or is there a lag there?
depending upon
Recurring sellers assets sold.
I commented that we've doubled the.
<unk> transacted year over year net vertical so we're very pleased with that I've outlined a number of territories.
who the client is and the breadth of what they want to do, there can be a lag anywhere from a few months to 4 or 5 months.
Um, but what's important is
So we're expanding in Gov deals west Western United States.
A lot of this NBD, you know, was showing up right now.
especially in the heavy equipment vertical, you know, we've
The Florida, Louisiana, Texas.
In some cases these municipal clients are working with online channels for the very first time, that's why there might be a little bit of a lag.
continually broken, sort of new water, you know, water marks High highs and
Recurring sellers assets, sold.
and uh,
I commented that we've doubled the
Gary and setting things up but you'll see more vehicles flowing from places like New York City Buffalo New York.
the GMB transacted year-over-year in that vertical. So we're very pleased with that. I've outlined a number of territories
General services out of that Albany, New York.
That were expanding, in govt deals West, Western United States.
As you move through the remainder of calendar 2025.
Down the Florida, Louisiana, Texas.
And.
One of the officials from the state of New York.
Had a very nice unsolicited.
Semi press release on Linkedin talking about how they were embracing gov deals in moving their process online for the very first time, so we're really.
In some cases, these Municipal clients are working with online channels for the very first time. That's why there might be a little bit of a lag.
Area and setting things up but you'll see more Vehicles. Flowing from places like New York, City Buffalo New York.
Permanently shifting.
This industry this market to online and Thats, where we really make I think a lot of.
General Services. Out of Albany, New York.
In print.
You know, as you move through the remainder of calendar 2025, and, uh, one of the officials from the state of New York,
And thought leadership and allow us to fully realize the growth potential we see up to $10 billion GMB Tam.
Had a very nice unsolicited.
In the public sector, combining the personal property sales in the real estate sales.
Uh semi press release on LinkedIn talking about how they were embracing gov deals and moving their process online for the very first time. So we're we're really
And we have tremendous momentum there.
permanently shifting.
Okay, and then just getting back to what Youre doing in Columbus, Ohio.
You know, this industry, this Market to online and that's where we really make.
I think a lot of, uh,
Is this the first foray into that.
That's correct you to see.
Yes, this would be the.
<unk>.
The first.
Imprint and and and thought leadership and allow us to fully realize, you know, the growth potential, you know, we see a up to 10 billion, dollar gmv Tam.
Deployment of our consumer auction.
Our software through the acquisition of.
In the public sector, combining the personal property sales, and the real estate sales.
Of a business called auction software.
And we have, you know, tremendous momentum there.
Alright allows us to create a vibrant.
Direct to consumer channel, which is appropriate for a segment of our returned goods flows.
Okay. And then just getting back to what you're doing in in Columbus. Ohio, um, is is, is this the first foray into that?
Is this going to be more more or less targeted to somewhat specialty items.
That's correct. B to C. Okay. Yeah, this would be the
The first.
Like say wine.
Deployment of our consumer auction.
Sure.
Or is it going to is it.
uh, software through the acquisition of
It's something you can cross pollinate with your.
Retail business that you have right now.
Kind of selling more in bulk.
of the business called auction software and right allows us to create a vibrant.
Yes, our buyers.
Gary It cross pollinate.
A direct to Consumer Channel, which is appropriate for a segment of our return. Goods flows.
Nicely with a range of products that.
Is this going to be more more or less targeted to somewhat specialty items?
Have a.
Higher retail value per unit and have relatively good condition characteristics.
um like say wine or uh uh you know, or is it going to is it something you can cross-pollinate with your
And the testing shows that it's accretive.
Uh, retail business that you you have right now where you, you know kind of selling more in bulk.
Two are <unk>.
To. Yeah, there's power buyers
Correct profit and EBITDA margins by presenting these items and a scalable consumer auction online channel to.
Gary it it cross pollinates.
Two the direct user.
nicely with a range of products that
have a
And removing a leg of transportation in the process. So we will see accretive results pie.
higher retail value per unit and have
Nurturing this direct to consumer channel and then as I say I mentioned earlier this software platform is essentially.
Relatively good condition characteristics.
And the testing shows that it's a creative.
to our
The DTC business in a box that many of our resell customers on the wholesale side would be eager to license from us and so let's say someone's in El Paso, Texas, and they've been doing retail for 30 years and they want to.
Direct profit and IBA. Margins by presenting these items in a scalable consumer auction online Channel.
To the direct user and you know, removing a leg of Transportation in the process. So
To make.
We'll see a creative results by.
And expansion into return goods flows well, we can give them the software.
And the product flows to setup, an operation there and we will take back of license fee or revenue share and proliferate our software business.
<unk>, it's setting the terms of how to develop a national return goods.
Uh, nurturing this direct to Consumer Channel. And then, as I say, I I mentioned earlier, this software platform is essentially, you know, a DDC business in a box that many of our resale customers on the wholesale. Side would be eager to license from us.
Marketplace for consumers, leveraging our software and aggregating a number of parties that can resell goods to consumers on that marketplace.
and so let's say someone's in El Paso, Texas and they've been doing retail for 30 years and they want to make
An expansion into uh return Goods flows. Well we can give them the software.
And the product flows to set up an operation there.
Okay.
Yes.
Yes.
So from reading this right.
Youre dealing with an individual retailer.
so it's setting the terms of how to develop a national
This or I'm, just trying to understand what what youre doing here because I mean, it would seem to me.
Unless auction software had a pretty large customer base, you really got to develop a buyer base here.
Returned Goods. Marketplace for consumers leveraging, our software and aggregating, a number of parties that can resell Goods to Consumers on that Marketplace.
okay is, um,
You would have the.
Seller base that you can cross pollinate, but is that the case or.
Is so if I from reading this, right?
Yes.
We expect that.
You're dealing with an individual retailer.
In each market, where this is introduced.
We will acquire customers through the very proven list of marketing tactics. There are a number of.
Affinity groups on.
Facebook and Craigslist, and Tic Toc, where.
Value priced goods are identified by consumers and Theres, a big appetite for that so there is a modest.
On this or is I'm just trying to understand what what you're doing here. Because I mean it would seem to me you, you unless it looks in software had a a pretty large customer base. You really got to develop a buyer base here. Um, you know, you you would have the uh, seller base that you can cross-pollinate, but is, is that the case or
Digital marketing.
Yeah, we expect that in each market where this is introduced.
Set of actions that will introduce our direct to consumer products to consumers and the.
We will acquire customers through a very proven list of marketing tactics.
there are a number of,
In this instance, the territory of Columbus, Ohio.
Noting that.
This isn't a first of its kind type of idea. There are many there are many people who have executed on that type of strategy. So it's a relatively modest.
Affinity groups on Facebook and Craigslist and tiktok where?
Go to market investment and then what we've seen is sort of a combination of individual.
Value price. Goods are identified by consumers and there's a big appetite for that. So there is a modest.
Digital marketing.
Consumers that want now.
One item for their son or daughter's college dorm room or their outdoor patio or their home fitness center or.
set of actions that will introduce our direct to Consumer products to consumers in the, in the, in this instance, the territory of Columbus Ohio
noting that
Their media.
At home Entertainment console, we sell things at compelling prices to allow them to do that and then some of them become.
this isn't a first of its kind type of idea. There are many, there are many people who have executed on that type of strategy. So it's a relatively modest.
Quite an.
Go to market investment.
Entrance with repeat buying.
and then what we've seen, there's sort of a combination of
And.
That.
Allows the business to.
To scale quite well, we don't we're not looking to do.
$100 million of GMP in Columbus will make.
Really good incremental.
<unk> margin.
In the $5 million to $10 million GNP range for our first.
Individual consumers that want, you know, one item for, you know, their son or daughter's college dorm room, or their outdoor patio, or their home fitness center, or, you know, their media, uh, at-home entertainment console. We sell things at compelling prices to allow them to do that. And then, you know, some of them become.
Pilot that's per year.
But more importantly, validate for many others, who have asked us have approached us.
you know, quite an entrance with re repeat buying and uh you know that
Can I use your auction software to build my business in different parts of the country.
Allows the business to.
To scale quite well, we don't, we're not looking to do.
We will be able to give them.
The data that.
you know, a hundred million dollars of GMB in Columbus, we'll make
It shows how much money they can make selling through this platform from our work in Columbus.
A really good.
Okay. Thank you.
Incremental margin, you know, in that 5 to 10 million gmv range for our first uh, highlight that's per year.
We have no further questions at this time. This concludes today's call. Thank you all for joining and you may now disconnect.
But more importantly validate for many others who have asked us who approached us.
Can I use your auction software to build my business in different parts of the country will be able to give them the data?
That shows how much money they can make selling through this platform from our work in Columbus.
Okay, thank you.
We have no further questions.
this concludes today's call, thank you all for joining and you may now disconnect
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