Q3 2025 ACV Auctions Inc Earnings Call

November 5, 2025

His 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 rest of relations website and with that let me turn the call over to George.

Thanks, Tim.

Good afternoon, everyone and thank you for joining us today.

We're pleased with our team delivering record revenue there.

Spite challenging market conditions during the quarter.

Our performance was driven by solid execution and our dealer wholesale business as we continue to gain market share expand our dealer partner network and leverage our value added dealer solutions.

And again this quarter HCV transport and capital delivered record revenue performance.

We also executed on our product roadmap to further differentiate <unk> marketplace experience support our commercial wholesale strategy and expand our Tam.

As Bill will detail later, we have updated our 2025 guidance to reflect continuing cross currents and the broader macro environment.

While still expecting to deliver strong top line growth of 19% year over year.

Furthermore, we expect to deliver strong adjusted EBITDA growth of over 100%, while continuing to invest in our 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.

Q3 revenue was $200 million and grew 16% year over year.

Against the tough comparison in Q3, 2024 with 44% growth.

Tim Fox: 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. With that, let me turn the call over to George.

Measures.

We sold 218000 vehicles, which was 10% year over year growth. Despite the sustained market deceleration during the quarter.

A Reconciliation of gaap to non-gaap financial measures is provided in today's earnings materials, which can also be found on restor relations website. And with that, let me turn the call over to George

Next on slide five we will again focus our discussion around the three pillars of our strategy to maximize long term shareholder value.

Thanks Tim.

Good afternoon, everyone, and thank you for joining us today.

We are pleased with our team, delivering record Revenue.

Growth innovation and scale.

Despite challenging market conditions during the quarter.

I will begin with growth.

On slide seven we highlight how ACB is leveraging AI across our suite of solutions to attract new buyers and sellers Inc.

Increased penetration of wallet share and gain traction the large dealer groups.

Our performance was driven by solid execution and our dealer wholesale business. As we continue to gain market, share expand, our dealer partner Network, and leverage, our value added dealer Solutions.

Let's begin with our marketplace.

George Chamoun: Thanks, Tim. Good afternoon, everyone, and thank you for joining us today. We are pleased with our team delivering record revenue despite challenging market conditions during the quarter. Our performance was driven by solid execution in our dealer wholesale business as we continue to gain market share, expand our dealer partner network, and leverage our value-added dealer solutions. This quarter, ACV Transport and Capital delivered record revenue performance. We also executed on our product roadmap to further differentiate ACV's marketplace experience, support our commercial wholesale strategy, and expand our TAM. As Bill will detail later, we have updated our 2025 guidance to reflect continuing cross-currents in the broader macro environment, while still expecting to deliver strong top-line growth of 19% year-over-year. Furthermore, we expect to deliver strong adjusted EBITDA growth of over 100% while continuing to invest in our long-term growth objectives.

For sellers, we provide highly accurate condition adjusted pricing guidance, enabling them to better inform reserve prices increasing buyer engagement.

And again this quarter ACV transport and capital delivered record, Revenue performance.

Flexible auction durations and scheduling allows dealers to customize their marketplace experience.

We also executed on our product roadmap to further differentiate AC's, Marketplace, experience support, our commercial wholesale strategy, and expand our tabs.

Given the challenging market conditions with vehicle price depreciation above normal seasonal patterns.

As Bill will detail later. We have updated our 2025 guidance to reflect continuing cross-currents in the broader macro environment.

Dealers are increasing leaning into Acd's technology.

The buying experience on ACB is tailored across buyer personas and we optimize the bidding experience by providing AI enabled recommendations informed by dealer preferences and current market factors.

While still expecting to deliver strong, Topline growth of 19% year-over-year.

We expect to deliver strong adjusted. Eva growth of over 100% while continuing to invest and our long-term growth objectives.

Our differentiated marketplace experience, it's showing up in the numbers.

In Q3, we achieved new quarterly milestones with over 10000 sellers and 14000 buyers transacting in our marketplace.

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 4.

Our franchise rooftop penetration also achieved a new milestone reaching 35% in the quarter.

2, 3 Revenue was million dollars in grew 16% year-over-year.

And our major account team delivered impressive results with rooftop penetration within this segment, increasing 300 basis points year over year.

In Q3 2024 with 44% growth.

George Chamoun: 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. Q3 revenue was $200 million and grew 16% year-over-year, against a tough comparison in Q3 2024 with 44% growth. We sold 218,000 vehicles, which was 10% year-over-year growth despite the sustained market deceleration during the quarter. Next, on slide five, we will again focus our discussion around the three pillars of our strategy to maximize long-term shareholder value: growth, innovation, and scale. I will begin with growth. On slide seven, we highlight how ACV is leveraging AI across our suite of solutions to attract new buyers and sellers, increase penetration and wallet share, and gain traction with large dealer groups. Let's begin with our marketplace.

Lastly from a geographic perspective, we delivered solid growth in our more established regions for <unk>.

We sold 218,000 Vehicles, which was 10% year-over-year growth, despite the sustained Market deceleration during the quarter.

<unk> has built significant market share.

We also delivered accelerating growth in several emerging regions like in southern California, and the Midwest, where unit growth exceeded 20% in Q3.

Next on slide 5, we will again focus our discussion around the 3ar of our strategy to maximize long-term shareholder value.

Growth Innovation and scale.

I'll begin with growth.

While we are very pleased with this performance there are certain emerging regions, where we are enhancing our field engagement model to accelerate growth.

I'm 57. We highlight how ACV is leveraging AI across our suite of solutions, to attract new buyers and sellers.

These efforts will continue in 2026, and we are confident in the medium term growth outlook for these emerging regions.

Increase penetration at wallet, share and gain traction, the large dealer groups.

Let's begin with our Marketplace.

Next on slide eight.

I'll provide some highlights on our data services.

Market traction for cleared car remained strong.

For sellers, we provide highly accurate condition, adjusted pricing guidance, enabling them to set better. Informed Reserve prices increasing by buying engagement.

<unk> are leveraging cleared car service to generate consumer appraisals and offers and their service lines.

Flexible auction durations, and scheduling allow dealers to customize their Marketplace experience.

Creating a valuable sourcing channel and the current supply constrained environment.

While this is great for our dealer partners clear cards also becoming effective lever to increase wholesale wallet share and attract new dealers to our marketplace.

given the challenging market conditions with vehicle price depreciation above normal, seasonal patterns,

Dealers are increasingly leaning into AC's technology?

George Chamoun: For sellers, we provide highly accurate condition-adjusted pricing guidance, enabling them to set better-informed reserve prices, increasing buyer engagement. Flexible auction durations and scheduling allow dealers to customize their marketplace experience. Given the challenging market conditions, with vehicle price depreciation above normal seasonal patterns, dealers are increasingly leaning into ACV's technology. The buying experience on ACV is tailored across buyer personas, and we optimize the bidding experience by providing AI-enabled recommendations informed by dealer preferences and current market factors. Our differentiated marketplace experience is showing up in the numbers. In Q3, we achieved new quarterly milestones with over 10,000 sellers and 14,000 buyers transacting in our marketplace. Our franchised rooftop penetration also achieved a new milestone, reaching 35% in the quarter. Our major account team delivered impressive results, with rooftop penetration within the segment increasing 300 basis points year-over-year.

Dealers that recently launched Claire car increase their wholesale volumes by over 30% after going live.

The buying experience and ACV is tailored across buyer. Personas and we optimize the bidding experience by providing AI enabled recommendations, informed by dealer preferences and current market factors.

And 50% of recent cleared card customers.

I also became new sellers on our marketplace.

Our differentiated Marketplace experience is showing up in the numbers.

ACM acts is gaining further traction in the industry.

With dealers now using AI to accurately price retail and wholesale inventory.

In Q3, we achieved new quarterly Milestones with over 10,000 Sellers and 14,000 buyers transacting in our Marketplace.

And we're seeing the same cross sell dynamic when bundling ACD Max with wholesale.

Our franchise rooftop penetration also achieved a new Milestone, reaching 35% in the quarter.

Our recent cohort of new HCV Max dealers increased their wholesale vehicle sales on our marketplace by an average of 40% within one quarter of launching Max.

And our major account team delivered, impressive results, with rooftop penetration within the segment, increasing 300 basis, points year-over-year.

We're excited to see that our strategy to offer a broader set of solutions is creating another long term growth lever for ACB.

From a geographic perspective, we delivered solid growth in our more established regions.

For ACV has built significant market share.

We also delivered accelerating growth in several emerging regions.

Turning to slide nine.

To review, our marketplace service offerings, beginning with ACD transportation.

like in Southern California and the Midwest where unit growth exceeded 20% in Q3

The transportation team had strong execution in Q3.

Again, setting records for both quarterly revenue and transports delivered.

While we are very pleased with this performance, there are certain emerging regions where we are. Enhancing our field engagement model to accelerate growth.

George Chamoun: Lastly, from a geographic perspective, we delivered solid growth in our more established regions, where ACV has built significant market share. We also delivered accelerating growth in several emerging regions, like in Southern California and the Midwest, where unit growth exceeded 20% in Q3. While we are very pleased with this performance, there are certain emerging regions where we are enhancing our field engagement model to accelerate growth. These efforts will continue in 2026, and we are confident in the medium-term growth outlook for these emerging regions. Next, on slide eight, I'll provide some highlights on our data services. Market traction for ClearCar remains strong. Dealers are leveraging ClearCar service to generate consumer appraisals and offers in their service links, creating a valuable sourcing channel in the current supply-constrained environment.

AI optimized pricing continues to drive strong growth and operating efficiency.

Revenue margin expanded 200 basis points year over year in Q3 and was in line with our medium term target in the low twenty's.

These efforts will continue in 2026, and we are confident in the medium-term growth outlook for these emerging regions.

Next on slide 8.

I'll provide some highlights on our data services.

And our off platform Transportation service continues to gain traction from our dealer partners, creating additional long term growth opportunities.

Market traction for Clear Car remains strong.

Lastly, I'll wrap up the growth section on slide 10, with HCV capital highlights.

Consumer appraisals and offers in their service links.

Creating a valuable sourcing channel in the current Supply constrained environment.

<unk> capital team delivered strong revenue performance with 70% growth in Q3, which.

Which was the fourth quarter in a row of accelerated growth.

While this is great for our dealer Partners. Clear car is also becoming an effective lever to increase wholesale, wallet, share, and attract new dealers to our Marketplace.

In terms of managing risk.

And in light of the bankruptcy of a former customer <unk>.

We conducted a review of our loan portfolio.

Dealers that recently launched Clear Car increased their wholesale volume by over 30% after going live.

Based on our review and current macro factors, we're lowering our exposure to higher risk customer segments Andrew.

In 50% of recent Clear Car customers.

Also became new sellers on our Marketplace.

And reducing our Q4 ACB capital revenue forecast.

ACM, Max is gaining further, Traction in the industry.

George Chamoun: While this is great for our dealer partners, ClearCar is also becoming an effective lever to increase wholesale wallet share and attract new dealers to our marketplace. Dealers that recently launched ClearCar increased their wholesale volumes by over 30% after going live. Fifty percent of recent ClearCar customers also became new sellers on our marketplace. ACV Max is gaining further traction in the industry, with dealers now using AI to accurately price retail and wholesale inventory. We're seeing the same cross-sell dynamic when bundling ACV Max with wholesale. A recent cohort of new ACV Max dealers increased their wholesale vehicle sales on our marketplace by an average of 40% within one quarter of launching Max. We're excited to see that our strategy to offer a broader set of solutions is creating another long-term growth lever for ACV.

Overall, we are confident they used me capital will remain an important value added service for our dealers and long term growth opportunity.

We dealers Now using AI to accurately price retail and wholesale inventory.

and we're seeing the same crosselle Dynamic when bundling ACB Max with wholesale,

Next on slide 11 I.

I will address the second element of our strategy to drive long term shareholder value innovation.

Turning to slide 12.

Let's go deeper into how we are leveraging ACB AI to drive growth and deliver value to our dealer and commercial partners.

A recent cohort of new ACV, Max dealers, increase their wholesale vehicle sales on our Marketplace by an average of 40% within 1 quarter of launching Max.

Using machine learning, we fused inspection and dynamic market data to provide real time pricing for every vehicle within HCV pricing platform.

We're excited to see that our strategy to offer a broader set of solutions is creating another long-term growth lever for ACV.

Attorney slide 9.

Let's review our Marketplace service offerings. Beginning with ACV, transportation.

Last quarter, we highlighted how we're leveraging our pricing platform to offer ACB guarantee to sellers and deliver a no reserve auction format to buyers.

The transportation team had strong execution in Q3.

Again, setting records for both quarterly, revenue and transports delivered.

This offering is the fastest growing channel in our marketplace.

AI optimized pricing continues to drive, strong growth and operating efficiency.

We were pleased to see ACB guarantee increase from 11% units sold in Q2 to 18% in Q3.

Revenue margin expanded 200 basis points year-over-year in Q3 and was in line with our medium-term Targets in the low 20s.

George Chamoun: Turning to slide nine, let's review our marketplace service offerings, beginning with ACV Transportation. The transportation team had strong execution in Q3, again setting records for both quarterly revenue and transports delivered. AI-optimized pricing continues to drive strong growth and operating efficiency. Revenue margin expanded 200 basis points year-over-year in Q3 and was in line with our medium-term targets in the low 20s. Our off-platform transportation service continues to gain traction from our dealer partners, creating additional long-term growth opportunities. Lastly, I'll wrap up the growth section on slide 10 with ACV Capital highlights. The ACV Capital team delivered strong revenue performance with 70% growth in Q3, which was the fourth quarter in a row of accelerated growth. In terms of managing risk, and in light of the bankruptcy of a former customer, TriColor, we conducted a review of our loan portfolio.

As a reminder, our guaranteed sale is a win win win for buyers sellers and HCV.

And our off platform transportation service continues to gain traction from our dealer partners.

Creating additional long-term growth opportunities.

This offering accelerates better engagement.

Increases buyer satisfaction and delivers a 100% conversion rate, while removing seller market risk.

Lastly I'll wrap up the growth section on slide 10 with ACV, Capital highlights.

A3 Capital team delivered. Strong Revenue performance with 70% growth in Q3

We're confident this highly differentiated offering will be another key driver of continued market share gains.

Which was the fourth quarter in a row of accelerated growth.

in terms of managing risk,

On slide 13, we highlight how we're expanding our competitive edge with AI driven next generation products like project Viper and virtual left to that out.

and in light of the bankruptcy of a former customer tricolor

We conducted a review of our loan portfolio.

Since launching our first few pilots in Q2, we added new dealers and our own remarketing centers to the pilot program.

Based on a review and current macro factors. We're lowering our exposure to higher risk customer segments.

And reducing our Q4 ACV, Capital revenue forecast.

To date over 60000 vehicles have been inspected by Viper and virtual lift and our team is leveraging this data to fine tune the product.

Overall, we are confident. The ECB Capital will remain an important value added service for our dealers and long-term growth opportunities.

We are receiving tremendous feedback from dealer and commercial partners as our imaging and AI models are maturing and identifying key inspection data.

Next on, slide 11.

I will address the second element of our strategy to drive long-term shareholder value innovation.

George Chamoun: Based on our review and current macro factors, we're lowering our exposure to higher-risk customer segments and reducing our Q4 ACV Capital revenue forecast. Overall, we are confident that ACV Capital will remain an important value-added service for our dealers, and long-term growth opportunity. Next, on slide 11, I will address the second element of our strategy to drive long-term shareholder value: innovation. Turning to slide 12. Let's go deeper into how we're leveraging ACV AI to drive growth and deliver value to our dealer and commercial partners. Using machine learning, we've used inspection and dynamic market data to provide real-time pricing for every vehicle within ACV's pricing platform. Last quarter, we highlighted how we're leveraging our pricing platform to offer ACV Guarantee to sellers and deliver a no-reserve auction format to buyers. This offering is the fastest-growing channel in our marketplace.

Turning to slide 12.

We are looking forward to the commercial launch of project Viper and virtual left to do in 2020.

Wrapping up on innovation, let's turn to our commercial wholesale strategy on slide 14.

Let's go deeper into how we're leveraging. ACV AI to drive growth and deliver value to our dealer and Commercial partners.

Using machine learning.

Our first greenfield or a marketing center in Houston successfully completed a soft launch and volumes are beginning to ramp.

We've used inspection and dynamic Market data to provide real-time pricing for every vehicle with an ATV pricing platform.

Our team has deployed a range of capabilities developed over the past year.

Including vehicle assignments for motto Imas <unk>.

Commercial inspection applications.

Last quarter, we highlighted how we're leveraging. Our pricing platform to offer ACV guarantee to Sellers and deliver a no Reserve auction format to buyers.

Work order and repair estimates and integration with Acd's wholesale marketplace.

This offering is the fastest growing channel on our Marketplace.

We believe this new digital model and end to end experience will transform commercial vehicle remarketing.

We are pleased to see ACV guarantee increase from 11% units sold in Q2 to 18% in Q3.

We also look forward to launching additional greenfield locations to expand our footprint.

With that I'll hand, it over to Bill to take you through our financial results and how we're driving growth at scale.

As a reminder, our guaranteed sale is a win-win-win for buyers Sellers and ACV.

This offering accelerates bitter engagement.

Thanks, George and thank you for joining us today.

Increases buyer satisfaction.

We are pleased with our Q3 financial performance.

And delivers 100% conversion rate, while removing seller Market risk?

Along with record revenue, we continued to deliver strong adjusted EBITDA margin expansion and growth.

George Chamoun: We are pleased to see ACV Guarantee increase from 11% units sold in Q2 to 18% in Q3. As a reminder, our guarantee sale is a win-win-win for buyers, sellers, and ACV. This offering accelerates bidder engagement, increases buyer satisfaction, and delivers a 100% conversion rate while removing seller market risk. We're confident this highly differentiated offering will be another key driver of continued market share gains. On slide 13, we highlight how we're expanding our competitive edge with AI-driven next-generation products like Project Viper and Virtual Lift 2.0. Since launching our first few pilots in Q2, we added new dealers and our own remarketing centers to the pilot program. To date, over 60,000 vehicles have been inspected by Viper and Virtual Lift, and our team is leveraging this data to fine-tune the product.

We're confident this highly differentiated offering will be another key driver of continued market, share gains.

Demonstrating the strength of our business model.

On slide 16, let's begin with a recap of our third quarter results.

Revenue of $200 million grew 16% year over year.

On slide 13. We highlight how we're expanding our Competitive Edge with AI driven Next. Generation products like project Viper and virtual lift 2.0

Is that the midpoint of our guidance range.

Despite market headwinds in the last two months of the quarter.

Adjusted EBITDA of $19 million was at the midpoint of guidance with margin improving 280 basis points year over year.

Since launching our first few pilots in Q2 we added new dealers and our own remarketing centers to the pilot program.

Note that adjusted EBITDA benefited from a $7 6 million class action lawsuit settlement.

Today over 60,000 vehicles have been inspected by Viper and virtual lift. And our team is leveraging this data to fine-tune the product.

I guess the data services vendor.

We are receiving tremendous feedback from dealer and Commercial partners.

However, this benefit was almost entirely offset by approximately $7 million in ACD capital reserves.

Occurring and identifying key inspection data.

As George discussed earlier during our quarterly review of capital loss reserves, we factored in current macro conditions and exposure to higher risk customer segments, which yielded a higher level of reserves booked in Q3.

We are looking forward to the commercial launch of project Viper and virtual lift 2.0 in 2026.

Wrapping up an innovation, let's turn to our commercial wholesale strategy on, slide 14.

Adjusted EBITDA also excludes $18 7 million of operating expenses related to the Tricolore bankruptcy.

Our first Greenfield or marketing Center in Houston successfully completed, its soft launch in volumes are beginning to ramp.

George Chamoun: We are receiving tremendous feedback from dealer and commercial partners as our imaging and AI models are maturing and identifying key inspection data. We are looking forward to the commercial launch of Project Viper and Virtual Lift 2.0 in 2026. Wrapping up on innovation, let's turn to our commercial wholesale strategy on slide 14. Our first greenfield remarketing center in Houston successfully completed its soft launch, and volumes are beginning to ramp. Our team has deployed a range of capabilities developed over the past year, including vehicle assignments from AutoIMS, commercial inspection applications, work order and repair estimates, and integration with ACV's wholesale marketplace. We believe this new digital model and end-to-end experience will transform commercial vehicle remarketing. We also look forward to launching additional greenfield locations to expand our footprint.

Our team has deployed a range of capabilities developed over the past year.

Finally, non-GAAP net income of $11 million was also at the midpoint of guidance.

Including vehicle assignments from Auto IMS.

Commercial inspection applications.

non-GAAP net income includes the net impact from the legal settlement and ACB capital reserves.

Work order and repair estimates and integration with the acvs wholesale Marketplace.

It excludes the $18 7 million bankruptcy related reserves.

Next on Slide 17, let's review additional revenue details.

We believe this new Digital model and end-to-end experience will transform commercial vehicle remarketing.

Option on assurance revenue was 56% of total revenue and grew 10% year over year.

We also look forward to launching additional Greenfield locations to expand our footprint.

The very tough comparison of 52% growth in Q3 'twenty four.

With that, I'll hand it over to Bill to take you through our financial results and how we're driving growth at scale.

Thanks, George. And thank you for joining us today.

This performance reflects 10% unit growth and auction assurance <unk> of $508.

We are pleased with our Q3 financial performance.

Which grew modestly year over year, but declined 3% quarter over quarter.

Along with record Revenue, we continue to deliver strong adjusted, even a margin expansion and growth.

The sequential decline resulted from targeted volume pricing and ACD guarantee promotions, we implemented to support our seller acquisition strategies.

Demonstrating the Str of our business model.

On slide 16. Let's begin with a recap of our third quarter results.

George Chamoun: With that, I'll hand it over to Bill to take you through our financial results and how we're driving growth at scale.

Revenue of 200 million grew 16% year-over-year.

We were pleased to see the promotional activity deliver early returns with unit growth accelerating in September to 13%, reflecting 16% market share gains.

And was at the midpoint of our guidance range, despite Market headwinds in the last 2 months of the quarter.

William Zerella: Thanks, George, and thank you for joining us today. We are pleased with our Q3 financial performance. Along with record revenue, we continue to deliver strong adjusted EBITDA margin expansion and growth, demonstrating the strength of our business model. On slide 16, let's begin with a recap of our third quarter results. Revenue of $200 million grew 16% year-over-year and was at the midpoint of our guidance range, despite market headwinds in the last two months of the quarter. Adjusted EBITDA of $19 million was at the midpoint of guidance, with margin improving 280 basis points year-over-year. Note that adjusted EBITDA benefited from a $7.6 million class action lawsuit settlement against a data services vendor. However, this benefit was almost entirely offset by approximately $7 million in ACV Capital reserves.

Note that we're expecting auction and assurance <unk> to increase sequentially in Q4.

Adjusted Eva of 19 million was at the midpoint of Guidance with margin improving 280 basis points year-over-year.

Marketplace services revenue was 40% of total revenue and grew 28% year over year.

That adjusted yield of benefited from a 7.6 million class action lawsuit settlement.

Against the data services. Vendor

Collecting record revenue for ACB transport and <unk> capital.

Lastly, our SaaS and data services products comprised 4% of total revenue and grew 2% year over year.

However, this benefit was almost entirely offset by approximately 7 million in ACV, Capital Reserves.

Next I'll review Q3 costs on slide 18.

non-GAAP cost of revenue as a percentage of revenue decreased approximately 100 basis points year over year.

As George discussed. Earlier during our quarterly review of capital loss reserves. We factored in current macro conditions and exposure to higher risk, customer segments, which yielded a higher level of reserves booked in Q3

Note that cost of revenue benefited from a $7 6 million credit related to the class action lawsuit settlement.

Adjusted either to also excludes 18.7 million of operating expenses related to the TriCore bankruptcy.

Excluding the credit cost of revenue as a percentage of revenue would have increased approximately 300 basis points.

Finally non-gaap net income. 11 million was also at the midpoint of guidance.

William Zerella: As George discussed earlier, during our quarterly review of capital loss reserves, we factored in current macro conditions and exposure to higher-risk customer segments, which yielded a higher level of reserves booked in Q3. Adjusted EBITDA also excludes $18.7 million of operating expenses related to the TriColor bankruptcy. Finally, non-GAAP net income of $11 million was also at the midpoint of guidance. Non-GAAP net income includes the net impact from the legal settlement and ACV Capital reserves, and excludes the $18.7 million bankruptcy-related reserves. Next, on slide 17, let's review additional revenue details. Auction and assurance revenue was 56% of total revenue and grew 10% year-over-year against a very tough comparison of 52% growth in Q3 2024. This performance reflects 10% unit growth and auction and assurance RPU of $508, which grew modestly year-over-year but declined 3% quarter over quarter.

The increased cost of revenue was primarily driven by increased arbitration costs within a specific cohort of customers.

Given the pressure dealers are facing in the current market environment, we expect arbitration costs to remain elevated in Q4.

Non-gaap. Net income. Includes the net impact from the legal settlement, and ACV, Capital reserves, and excludes the 18.7 million bankruptcy related Reserves.

Next on slide 17, let's review additional Revenue details.

But are taking steps to mitigate the impact and expect trends to normalize in 2026.

non-GAAP operating expense, excluding cost of revenue as a percentage of revenue decreased approximately 100 basis points year over year.

Auction and insurance Revenue was 56% of total revenue and grew 10% year-over-year against the very tough comparison of 52% growth in Q3 24.

This performance reflects 10% unit growth.

Note that Q3 non-GAAP operating expenses included the increase in HCV capital reserves, resulting from our loan portfolio review.

And auction and insurance are Pooh of 508.

Which grew modestly year-over-year but declined, 3% quarter over quarter.

Moving to slide 19 ill framework investment strategy as we drive profitable growth.

In 2025, we expect Opex growth of approximately 12% to support our remarketing center strategy and commercial platform investments.

The sequential decline resulted from targeted volume pricing and ACV. Guarantee promotions, we implemented to support our seller acquisition strategies.

Even with these growth investments adjusted EBITDA margin is expected to increase by approximately 400 basis points year over year.

We were pleased to see the promotional activity deliver early returns, with unit growth accelerating in September to 13%, reflecting 16% market share gains.

Next I will highlight our strong capital structure on slide 20.

Note that we're expecting auction and insurance are food to increase sequentially in Q4.

We ended Q3 with $316 million in cash and cash equivalents and marketable securities.

William Zerella: The sequential decline resulted from targeted volume pricing and ACV Guarantee promotions we implemented to support our seller acquisition strategies. We were pleased to see the promotional activity deliver early returns, with unit growth accelerating in September to 13%, reflecting 16% market share gains. Note that we're expecting auction and assurance RPU to increase sequentially in Q4. Marketplace services revenue was 40% of total revenue and grew 28% year-over-year, reflecting record revenue for ACV Transport and ACV Capital. Lastly, our SaaS and data services products comprise 4% of total revenue and grew 2% year-over-year. Next, I'll review Q3 costs on slide 18. Non-GAAP cost of revenue, as a percentage of revenue, decreased approximately 100 basis points year-over-year. Note that cost of revenue benefited from a $7.6 million credit related to the class action lawsuit settlement.

Marketplace Services Revenue was 40% of total revenue and grew 28% year-over-year.

$220 million of debt.

Revenue for ACV transport and ACV capital.

Note that our cash balance includes $200 million of marketplace float.

In the figure on the right, we highlight our strong year to date operating cash flow.

Lastly, our SAS and data services products comprise 4% of total revenue and grew 2% year-over-year.

Which reflects adjusted EBITDA growth and margin expansion.

On, slide 18.

Now turning to guidance on slide 21.

Following two months of the year over year declines in the dealer wholesale market in August and September.

non-gaap cost of Revenue as a percentage of Revenue decreased approximately 100 basis points year-over-year,

Market conditions continued to weaken October.

Dealer wholesale price depreciation has been tracking above normal seasonal patterns.

that cost of Revenue benefited from a 7.6 million credit related to the class action lawsuit settlement,

Which has pressured industry conversion rates.

Excluding the credit cost of Revenue as a percentage of Revenue would have increased the approximately 300 basis points.

As such we're expecting the dealer wholesale markets a decline in the mid single digits in Q4, which is more than previously anticipated.

The increased cost of Revenue was primarily driven by increased arbitration costs within a specific cohort of customers.

Our updated guidance factors in this more challenging market environment, and a $2 million reduction in projected ACD capital revenue.

Given the pressure dealers are facing in the current market environment. We expect arbitration costs to remain elevated in Q4.

Reflecting a more cautious approach in Q4 as we prepare to further scale in 2026.

William Zerella: Excluding the credit, cost of revenue as a percentage of revenue would have increased approximately 300 basis points. The increased cost of revenue was primarily driven by increased arbitration costs within a specific cohort of customers. Given the pressure dealers are facing in the current market environment, we expect arbitration costs to remain elevated in Q4, but are taking steps to mitigate the impact and expect trends to normalize in 2026. Non-GAAP operating expense, excluding cost of revenue as a percentage of revenue, decreased approximately 100 basis points year-over-year. Note that Q3 non-GAAP operating expenses included the increase in ACV Capital reserves resulting from our loan portfolio review. Moving to slide 19, I'll frame our investment strategy as we drive profitable growth. In 2025, we expect OPEX growth of approximately 12% to support our remarketing center strategy and commercial platform investments.

We are now expecting fourth quarter revenue in the range of $180 million to $184 million.

Non-gaap operating expense excluding cost of Revenue as a percentage of Revenue decreased approximately 100 basis points year-over-year.

Both of 13% to 15%.

Fourth quarter adjusted EBITDA is now expected to be in the range of $5 million to $7 million.

Reflecting the impact of the market conditions on dealer wholesale volumes plus higher expected arbitration costs discussed earlier.

That Q3 non-gaap operating expenses. Included the increase in ACV Capital reserves resulting from our loan portfolio review.

Moving to slide 19. I'll frame our investment strategy as we drive profitable growth.

Based on the revised Q4 outlook 2025 revenue is now expected to be $756 million to $760 million.

In 2025, we expect Opex growth of approximately 12% to support our remarketing Center strategy, and Commercial platform Investments.

Growth of 19% year over year.

Adjusted EBITDA is now expected to be 56 to 58 million growth of approximately a 100% year over year.

Even with these growth Investments, adjusted ebit and margin is expected to increase by approximately 400 basis points year-over-year.

We are expecting non-GAAP opex, excluding cost of revenue to grow approximately 12% year over year.

We will highlight our strong capital structure on slide 20.

Something in the 24% incremental adjusted EBITDA margin at the midpoint of guidance.

We added Q3 with 316 million in cash and cash, equivalents and marketable securities.

And 220 million of debt.

Before handing it back to George I would like to share some initial planning assumptions for 2026.

Note that our cash balance includes 200 million of marketplace float.

First based on an uncertain backdrop for automotive retail and elevated trade retention rates. We believe it's prudent to assume that the dealer wholesale market is flat in 2026.

In the figure on the right, we highlight our strong year-to-date operating cash flow.

William Zerella: Even with these growth investments, adjusted EBITDA margin is expected to increase by approximately 400 basis points year-over-year. Next, I will highlight our strong capital structure on slide 20. We entered Q3 with $316 million in cash and cash equivalents and marketable securities, and $220 million of debt. Note that our cash balance includes $200 million of marketplace float. In the figure on the right, we highlight our strong year-to-date operating cash flow, which reflects adjusted EBITDA growth and margin expansion. Now turning to guidance on slide 21. Following two months of year-over-year declines in the dealer wholesale market in August and September, market conditions continued to weaken in October. Dealer wholesale price depreciation has been tracking above normal seasonal patterns, which has pressured industry conversion rates. As such, we're expecting the dealer wholesale market to decline in the mid-single digits in Q4, which is more than previously anticipated.

Which reflects adjusted EV but a growth and margin expansion.

Now turning to guidance on slide 21.

Second as George discussed earlier, we are enhancing our field engagement model in certain emerging regions and rolling out a host of new innovations next year, which will be key factors in re accelerating market share gains over time.

Following 2 months of year-over-year declines in the dealer wholesale Market in August and September.

Market conditions, continued to weaken, October.

Dealer wholesale. Price depreciation has been tracking above normal seasonal patterns,

And third we expect to balance margin expansion, while investing for growth.

Which has pressured industry conversion rates.

And with that let me turn it back to George.

Thanks, Bill before we take your questions I will summarize.

As such, we're expecting the dealer wholesale markets to decline in the mid single digits in Q4, which is more than previously anticipated.

We are pleased with our record revenue performance in Q3.

And accelerated market share gains.

All while navigating through challenging market conditions.

We are quickly overcoming these market challenges by continuing to enhance our technology and operating models.

Our updated guidance factors in this more challenging Market environment and a million dollar reduction, in ejected, ACV, Capital Revenue reflecting a more cautious approach in Q4, as we prepare to further scale in 2026.

We are now expecting fourth quarter, Revenue in the range of 180 to 184 million.

Italy, making us even more resilient.

Growth of 13 to 15%.

We continue to attract new dealer and commercial partners to our marketplace.

Fourth quarter, adjusted e, but is now expected to be in the range of 5 to 7 million.

And expand our addressable market.

William Zerella: Our updated guidance factors in this more challenging market environment and a $2 million reduction in projected ACV Capital revenue, reflecting a more cautious approach in Q4 as we prepare to further scale in 2026. We are now expecting fourth quarter revenue in the range of $180 to $184 million, growth of 13% to 15%. Fourth quarter adjusted EBITDA is now expected to be in the range of $5 to $7 million, reflecting the impact of the market conditions on dealer wholesale volumes, plus higher expected arbitration costs discussed earlier. Based on the revised Q4 outlook, 2025 revenue is now expected to be $756 to $760 million, growth of 19% year-over-year. Adjusted EBITDA is now expected to be $56 to $58 million, growth of approximately 100% year-over-year.

Which positions <unk> for attractive growth as market conditions improve.

Reflecting the impact of the market conditions on dealer, wholesale, volumes plus higher expected. Arbitration costs discussed earlier,

We are delivering and an exciting product roadmap.

By ACB AI to further differentiate <unk> and drive operating efficiencies.

We are focused on achieving strong adjusted EBITDA growth and delivering on our mid term targets that we believe will drive significant shareholder value.

based on the revised Q4 Outlook, 2025 revenue is now expected to be 756 to 760 million growth of 19% year-over-year,

Adjusted, I was now expected to be $56 to $58 million, a growth of approximately 100% year-over-year.

We are committed to achieving these results while building a world class team to deliver on our goals.

With that I'll turn the call over to the operator to begin the Q&A.

We are expecting non-gaap Opex, excluding cost of Revenue to grow approximately, 12% year-over-year, resulting in a 24%, incremental adjusted. Even the margin at the midpoint of guidance.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Before handing it back to George, I would like to share some initial planning assumptions for 2026.

A confirmation tone will indicate your line is in the question queue.

You May press star two to remove yourself from the queue.

For participants using speaker equipment.

First based on an uncertain backdrop for automotive retail and elevated, trade retention rates, we believe it's prudent to assume that the dealer wholesale Market is flat in 2026.

William Zerella: We are expecting non-GAAP OpEx, excluding cost of revenue, to grow approximately 12% year-over-year, resulting in a 24% incremental adjusted EBITDA margin at the midpoint of guidance. Before handing it back to George, I would like to share some initial planning assumptions for 2026. First, based on an uncertain backdrop for automotive retail and elevated trade retention rates, we believe it's prudent to assume that the dealer wholesale market is flat in 2026. Second, as George discussed earlier, we are enhancing our field engagement model in certain emerging regions, and rolling out a host of new innovations next year, which will be key factors in re-accelerating market share gains over time. Third, we expect to balance margin expansion while investing for growth. With that, let me turn it back to George.

It may be necessary to pick up the handset before pressing the star keys.

One moment, please while we poll for question.

Second, as George discussed earlier, we are enhancing our field engagement model in certain emerging regions and rolling out a host of new Innovations. Next year, which will be key factors in react market, share gains over time

Our first question comes from the line of Chris <unk> with Needham <unk> Company.

And third, we expect to balance margin expansion, while investing for growth.

Please proceed with your question.

And with that, let me turn it back to George.

Hey, good afternoon guys.

Is it fair to ask I mean, do you guys think it's possible the wholesale market. The dealer wholesale market has changed like structurally and dealers are just going to hold onto trade ins at a much higher rate or I, just kind of want to think about because you know its been a choppy couple of years, just kind of how you guys think about this going forward and then I just had one on competitive landscape as well.

Thanks Bill. Before we take your questions, I will summarize.

We are pleased with our record Revenue performance in Q3

And accelerated market share gains.

all while navigating through challenging market conditions,

Sure Chris.

I don't think we should assume that there is a long term structural change.

We are quickly overcoming these Market challenges by continuing to enhance our technology and operating models ultimately making us even more resilient.

I think the dealer wholesale market.

George Chamoun: Thanks, Bill. Before we take your questions, I will summarize. We are pleased with our record revenue performance in Q3, and accelerated market share gains, all while navigating through challenging market conditions. We are quickly overcoming these market challenges by continuing to enhance our technology and operating models, ultimately making us even more resilient. We continue to attract new dealer and commercial partners to our marketplace, and expand our addressable market, which positions ACV for attractive growth as market conditions improve. We are delivering on an exciting product roadmap powered by ACV AI to further differentiate ACV, and drive operating efficiencies. We are focused on achieving strong adjusted EBITDA growth, and delivering on our midterm targets that we believe will drive significant shareholder value. We are committed to achieving these results while building a world-class team to deliver on our goals.

We continue to attract new dealer and Commercial Partners to our Marketplace.

And expand our addressable Market.

It's still.

Should should recover I think when you look at all the factors off lease really hasnt come back in a significant way.

Which positions ACV for attractive growth as market conditions, improved.

We are delivering on an exciting product roadmap.

Where we haven't seen interest rates come down you haven't seen all the macro factors plan.

So I think at the end of the day, where it would be way too early to say with all the macro events that the dealer market has structurally changed.

We are focused on achieving strong, adjusted bit of growth and delivering on our mid-term targets that we believe will drive significant shareholder value.

Okay. So we've got this choppiness right now against this backdrop and maybe a truer number two competitor emerging have competitive dynamics changed in the pound. When you go to market to talk to dealers are dealers thinking they need to have a second source more I'm just curious if you're hearing anything different from dealers that you are hearing maybe 18 months ago.

We are committed to achieving these results while building a world-class team to deliver on our goals.

With that, I'll turn the call over to the operator to begin the Q&A.

Yeah, Chris, let's but we'll be very specific.

Quarter over quarter.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

We grew by 8000 units.

You may press star 2 to remove yourself from the queue.

When you look at 8000 units quarter over quarter I believe.

For participants using speaker equipment.

That was significantly more than any other competitor that had U S growth. So that'll be I think fact number one so that shows pretty significant quarter over quarter growth.

And may be necessary to pick up the handset before pressing the star keys.

1 moment, please while you pull for questions.

George Chamoun: With that, I'll turn the call over to the operator to begin the Q&A.

In addition.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while you pull for a question. Our first question comes from the line of Chris Pierce with Needham & Company. Please proceed with your question.

When you look at it we went from our share gains.

Our first question comes from the line of Chris Pierce with needam and Company.

You know became double digits again in Q3 for the whole quarter.

Please proceed with your question.

And then last but not least in September.

According to auction that.

With the market being down 3%.

We will therefore have had 16% therefore at mid teens growth.

So the way I look at is yes, the market is softer in the market and being 3% down dealer wholesale market being down obviously made the quarter challenging and that started this quarter more challenging.

Hey, good afternoon guys uh is it fair to ask? I mean, do you do you guys think it's possible? The wholesale Market, the dealer wholesale Market has changed like structurally, and dealers are just going to hold on to trade-ins at a much higher rate, or I just kind of want to think about because, you know, it's been a choppy couple years, just kind of how you guys think about this going forward and then I just had 1 on competitive landscape as well.

Uh, sure Chris. Um,

But when you look at the fact that we've always had competitors from day one.

I don't think we should assume that. There's a long-term structural change.

Chris Pierce: Hey, good afternoon, guys. Is it fair to ask, I mean, do you guys think it's possible the wholesale market, the dealer wholesale market, has changed structurally and dealers are just going to hold on to trade-ins at a much higher rate? I just kind of want to think about, because it's been a choppy couple of years, just kind of how you guys think about this going forward, if then I just had one on competitive landscape as well.

And we grew 8000 units quarter over quarter.

uh, I think the dealer, uh, wholesale Market,

And had ended the month ended the quarter right around that as mid teens objectives for that month.

Is still, uh, should should recover. I think when you look at all the factors Off Lease, really hasn't come back in in a significant way.

Yes, I would say, we've always had competitors, we still have competitors and we believe we have the best solution.

Where we haven't seen interest rates come down. You haven't seen all the macro factors play in.

Okay I appreciate the detail and good luck. Thank you.

George Chamoun: Sure, Chris. I don't think we should assume that there's a long-term structural change. I think the dealer wholesale market should recover. I think when you look at all the factors, off-lease really hasn't come back in a significant way. We haven't seen interest rates come down. You haven't seen all the macro factors play in. I think at the end of the day, it'd be way too early to say, with all the macro events, that the dealer market has structurally changed.

Thank you guys.

Thank you.

So, I think at the end of the day, we're it'd be way too early to say, with all the macro events that the dealer Market structurally changed.

Our next question comes from the line of Ryan <unk> with J P. Morgan. Please proceed with your question.

Great. Thanks for the question I just have a couple.

Could you unpack, a little bit probably third quarter auction our booth.

No moderation from second quarter.

Okay. So we've got this choppiness right now and and against this backdrop and maybe a truer number 2 competitor emerging have competitive Dynamics changed on the ground. When you go to market to talk to dealers our dealers thinking, they need to have a second Source more. I'm just curious, if you're hearing anything different from dealers that you were hearing, maybe 18 months ago,

Hum.

Appreciate it like your market share a common cause I'm curious that if there were any price actions that were being taken.

Yeah, Chris, let's, we'll, we'll be very specific. Uh, quarter over quarter.

We grew by 8000 units.

To maintain that a is that like a change in strategy I know you've talked about like putting more boots on the ground. So I'm curious like you know if you could talk about that a little bit on I have a quick follow up.

Chris Pierce: Okay, we've got this choppiness right now. Against this backdrop, and maybe a truer number two competitor emerging, have competitive dynamics changed on the ground when you go to market to talk to dealers? Are dealers thinking they need to have a second source more? I'm just curious if you're hearing anything different from dealers that you were hearing maybe 18 months ago.

We look at 8,000 units quarter over quarter, I believe.

That would significantly more than any other competitor that had us growth.

Yeah, I'll start and then bill can chime in.

<unk>.

So that would be I think fact number 1 so that shows pretty significant quarter over quarter growth

We I think mentioned in the call that we have targeted regional pricing campaigns, where we are being a bit more aggressive.

Um, in addition.

When you look at it, we went from our share gains.

Think about that more on the supply side.

George Chamoun: Yeah, Chris, let's be very specific. Quarter over quarter, we grew by 8,000 units. We look at 8,000 units quarter over quarter. I believe that was significantly more than any other competitor that had US growth. That would be, I think, fact number one. That shows pretty significant quarter over quarter growth. In addition, when you look at it, we went from our share gains, became double digits again in Q3 for the whole quarter. Last but not least, in September, according to AuctionNet, with the market being down 3%, we would therefore have had 16%, therefore mid-teens growth. The way I look at it is, yes, the market's softer. With the market ending 3% down, dealer wholesale market being down, obviously made the quarter challenging and the start of this quarter more challenging.

So where were still new and we're still emerging we are attacking the market and it is helping us win share.

You know, became double digits again in Q3 for the whole quarter.

And then last but not least in September.

I think Bill also mentioned in the call that we expect Q4 for our food.

According to auction, net.

you know, with the market being down 3%,

Hi.

Yeah, So what I mentioned I'll, let Paul was that we expect Q4 <unk> to actually go back up.

We would therefore have had 16% therefore mid teens growth.

So.

It went down 3%.

In Q3, but that's kind of more more just.

So the way I look at it, is you ask the markets software and with the market ending 3% down dealer wholesale Market being down, obviously made the quarter challenging and the start of this quarter more challenging.

A result of some of the activities in that quarter. So at the end of the day, we got to where we're going to go out and win share.

but when you look at the fact that we've always had competitors from day 1,

We are using pricing, especially where ACB has low volume certain regions, we are being a bit more aggressive.

And we grew 8,000 units quarter of a quarter.

Think that Thats.

Definitely one one part of your question the other part is.

And and had, you know, the end of the month end of the quarter, you know, right around that is mid teens objectives for that month.

I'm still very confident in our mid term model. We've given you is for pricing. So look at those as you know when you look at our mid term model and where we've been hovering and I think I feel very confident in our booth for Q4.

Because I would say we've always had competitors, we still have competitors and we believe we have the best solution.

Okay, I appreciate the detail and good luck. Thank you.

Thank you, Chris.

Thank you.

George Chamoun: When you look at the fact that we've always had competitors from day one, we grew 8,000 units quarter over quarter and had the end of the month, end of the quarter, right around those mid-teens objectives for that month. Chris, I would say we've always had competitors, we still have competitors, and we believe we have the best solution.

But we will use pricing in certain regions to gain Marcia.

Our next question comes from the line of rajat Gupta with JP Morgan, please proceed with your question.

Got it got it and you briefly touched upon the 'twenty 'twenty six wholesale market outlook.

I'm curious if there's any more color.

Uh, great thanks for taking the question, just have a couple. Um, could you unpack a little bit, um, on the third quarter auction, or to, uh, you know, moderation from second quarter?

You want to like I mean, maybe provide some sort of a soft guidance.

Should we shouldnt.

Chris Pierce: Okay, appreciate the detail. Good luck. Thank you.

Should investors expect the same kind of share trajectory or should we expect.

Um, you know, I I appreciate like your market share comment. I'm curious that if there were any price actions that were being taken.

George Chamoun: Thank you, Chris.

Operator: Thank you. Our next question comes from the line of Rajat Gupta with JP Morgan. Please proceed with your question.

Acceleration, given they're putting more boots on the ground.

Maybe if you could give us some sense of market share expectations going forward and also like what kind of incremental margins.

Uh to maintain that uh is that like a a change in strategy? I know you talked about like putting more boots on the ground. So curious like you know, if you could talk about that a little bit and I have and I have a quick follow-up.

Rajat Gupta: Great, thanks for taking the question. Just have a couple. Could you unpack a little bit on the third quarter auction RPU moderation from second quarter? I appreciate your market share comments. I'm curious if there were any price actions that were being taken to maintain that. Is that a change in strategy? I know you talked about putting more boots on the ground. Curious if you could talk about that a little bit. I have a quick follow-up.

Yeah, I'll start. And then build can chime in Rashad, uh, we

Is it reasonable to assume at this point as you attack more share.

Yes, so again I'll start and Bill chime in is as you mentioned I think assuming flat helps us all so that.

Basically just to be very open we don't have analysts assuming right now dealer wholesale goes up next year I, just think we'd rather just put it out there, let's not assume that there's too many macro factors going on I think better for all of US just assume flat, we none of us really know.

George Chamoun: Yeah, I'll start, then Bill can chime in, Rajat. We mentioned in the call that we have targeted regional pricing campaigns where we are being a bit more aggressive. Think about that more on the supply side. Where we're still new and we're still emerging, we are attacking the market, and it is helping us win share. I think Bill also mentioned in the call that we expect Q4 for RPU. How did you? Yeah. What I mentioned on the call was that we expect Q4 RPU to actually go back up. It went down 3% in Q3, but that's kind of more just a result of some of the activities in that quarter. At the end of the day, Rajat, we're going to go out and win share. We are using pricing, especially where ACV has low volume in certain regions.

But if we just assume that I think that would be prudent for all of us as we start to think about next year too.

you know, uh, it went down, you know, 3% and, uh, in Q3, but, you know, that's kind of more more just, uh,

I would look at share gains.

And how we've operated.

In most.

Of our months and quarters, we've been hovering right around the double digits, you know you've seen us range.

Granted last quarter, we were high single digits.

This past quarter, we were double digits are we ended the quarter.

In that mid teens, so when you look at that range of our execution.

Just to be fair I would say our range has been on execution had been.

And then in that lower double digit range has probably been our our true execution. Our objective is to get back to mid teens, but I would say we need to go out there and prove that and that that would be a way to sort of maybe restate. What bill said, maybe just you know I think I basically said the same thing he said a few minutes ago, but it's a way to think about you know.

A result of some of the activities in that quarter. So, you know, at the end of the day, it was out. We're we're going to go out and win, share. Um, we are using pricing especially where ACV has low volume. Certain regions we are being a bit more aggressive, so I think that that's, um, definitely, uh, 1 1, part of your question. And the other part is I'm still very confident in our midterm model. We've given you eyes for pricing. So look at those as you know, we, you know, when you look at our midterm model and where we've been hovering, and I I think I feel very confident in our who for Q4, um, but we will use pricing in certain regions to to gain more share.

George Chamoun: We are being a bit more aggressive. I think that that's definitely one part of your question. The other part is I'm still very confident in our midterm model we've given you guys for pricing. Look at those as, when you look at our midterm model and where we've been hovering. I think I'm still very confident in RPU for Q4. We will use pricing in certain regions to gain more share.

Got it. Got it. And, you know, you you briefly touched upon the 2026 wholesale Market Outlook.

Uh, I'm curious if there's any more color.

We we need to more consistently hit that mid teens, which we havent yet proved we can do each and every month.

You want to like, I mean, maybe provide some sort of a soft guidance, um, you know, should we, you know, should investors still expect the same kind of share trajectory, or should we expect?

Having said all of that.

Some acceleration given you're putting more boots on the ground.

I'm really proud that if you look at the quarter over quarter.

Grew more than anyone else last quarter. So I would separate those two things of like how we grew last quarter was better than anyone else in the market.

Rajat Gupta: Got it. Got it. You briefly touched upon the 2026 wholesale market outlook. I'm curious if there's any more color you want to, I mean, maybe provide some sort of a soft guidance. Should investors still expect the same kind of share trajectory? Should we expect some acceleration given you're putting more boots on the ground? Maybe if you could give us some sense of market share expectations going forward. Also, what kind of incremental margins is reasonable to assume at this point as you attack more share. Thanks.

Uh maybe you know if you could give us some sense of market, share expectations, going forward and also like what kind of incremental margins?

Is is reasonable to assume at this point uh as you attack more share. Thanks.

But in terms of just the incremental sorry go ahead.

No that's it.

One other thing I would just add.

Again in Q3 of this year was our biggest quarter of the year.

yeah, so again I'll start and build chime in is as you mentioned, you know, I think assuming flat helps us all so that

And if you remember like historically.

At least part of last year typically are.

Our growth in unit volume would follow seasonal patterns.

First half would be relatively strong and in Q3 would be a bit weaker than Q4 would be the weakest quarter.

So last year for the first time since we went public our Q3 volume and revenue was actually the highest award the entire year.

George Chamoun: Yeah. Again, I'll start and Bill will chime in. As you mentioned, I think assuming flat helps us all. Basically, just to be very open, we don't have analysts assuming right now dealer wholesale goes up next year. I just think we'd rather just put it out there. Let's not assume that. There are too many macro factors going on. I think better for all of us just to assume flat. None of us really know. If we just assume that, I think that would be prudent for all of us as we start to think about next year. Two, I would look at share gains and how we've operated. In most of our months and quarters, we've been hovering right around the double digits. You've seen us range. Granted, last quarter we were high single digits. This past quarter we were double digits.

Basically just be very open. We don't have analysts assuming right now, dealer wholesale goes up next year. I just think we'd rather just put it out there. That's not assume that there's too many macro factors going on. I think better for all of us just assume flat, we none of us really know. Um, but if we just assume that I think that would be prudent for for all of us as we start to think about next year 2,

And the same thing occurred this year. So that you know the growth rate might have been a bit different since we came off of a very very strong quarter last year, but again, we had record revenue in Q3.

Record volume for the full year.

The Q1 or Q2, so I guess, that's the other context to just give you in terms of our Q3 performance.

Oh, Yeah, I just wanted to follow up on leverage.

Given you know some pricing actions or low double your chair.

Should we assume you know like a little lower than 30% for now as reasonable before you get back to the 14th on incremental margins. Just curious if that is is that it's been a bit of a change in the operations as well.

I would look at share gains and and how we've operated, you know, in most, um, of our months and quarters we've been, you know, hovering right around the double digits, you know, you've seen us range, um, granted last quarter, we were high single digits, uh, this past quarter. We were, uh, double digits. We ended the quarter, um, you know, in that mid teens. So when you look at that range of our execution, you know, just to be fair, I would say our range has been an an execution has been in.

Yeah, I don't think we're ready to comment on that at this point.

George Chamoun: We ended the quarter in that mid-teens. When you look at that range of our execution, just to be fair, I would say our range has been, and execution has been, in that lower double-digit range has probably been our true execution. Our objective is to get back to mid-teens, but I would say we need to go out there and prove that. That would be a way to sort of maybe restate what Bill said. Maybe I think I basically said the same thing he said a few minutes ago, but it's a way to think about it. We need to more consistently hit that mid-teens, which we haven't yet proved we can do each and every month. Having said all that, I'm really proud that if you look at the quarter over quarter, we grew more than anyone else last quarter.

Or is that.

Yeah, we're in the middle of obviously, putting our planning together for next year.

Yeah, you can kind of assume some marginal improvement.

Um, in the, you know, in that lower double digit range is probably been our, our true execution. Our objective is to get back to Mid teens, but I would say we need to go out there and prove that and that, that would be a way to sort of maybe restate what Bill said. Maybe just, you know, I think I basically said the same thing, he said, a few minutes ago, but it's a way to think about, you know, we, we need to more consistently hit that mid teens, which we haven't yet proved, we can do each and every month, but having said all that

But beyond that there's nothing else for me to call. It a thought at this point until we have our plan is finalized.

Understood appreciate the color and good luck.

Thank you.

I'm really proud that if you look at the quarter over quarter, you know, we grew more than anyone else last quarter. So I would separate those 2 things of like, you know, how we grew last quarter was better than anyone else in the market.

Thank you Aaron.

Question comes from the line of Bob <unk> with CJS Securities. Please proceed with your question.

But and and in terms of just the incremental, sorry, go ahead.

Good afternoon, thanks for taking our questions.

Hey, Bob Thank you and ask.

Sure I want to ask a question about kind of ARPA is where I'm going to get to a hopefully I can make this makes sense. It kind of recent J D. Power's analysis analysis showed the spread between retail prices and wholesale wholesale prices has widened from like $9000 $15000 over the last five years and this seems to confirm earlier point you guys are saying that fuel.

George Chamoun: I would separate those two things. How we grew last quarter was better than anyone else in the market.

Rajat Gupta: In terms of just the incremental, sorry, go ahead.

Or keeping more cars and better cars and retailing those versus wholesaling them right. That's kind of part of the problem now because there's no off lease to happen et cetera et cetera.

George Chamoun: No, I was going to say just, Rajat, one other thing I would just add. Again, Q3 of this year was our biggest quarter of the year. If you remember, historically, at least prior to last year, typically our growth and unit volume would follow seasonal patterns. The first half would be relatively strong, and then Q3 would be a bit weaker, and then Q4 would be the weakest quarter. Last year, for the first time since we went public, our Q3 volume and revenue was actually the highest it was the entire year. The same thing occurred this year. The growth rate might have been a bit different since we came off of a very, very strong quarter last year. Again, we had record revenue in Q3 and record volume for the full year, bigger than Q1 or Q2.

So the question is like what does this mean for your <unk> going forward, if retailers or I'm, sorry viewers are going to keep the highest value cars and wholesale lower ones. How should we think about this trend and when does it kind of start to reverse itself.

No, I was going to say just over 1. Other thing I would just add you know again Q3 of this year was our biggest quarter of the year. Um, and if you remember like historically, you know, at least prior to last year, typically, um, you know, our our growth in unit volume would follow seasonal patterns, you know, the first half would would be relatively strong and then Q3 would be a bit weaker than Q4, would be the weakest quarter. Um, so last year, for the first time, since we went public, or Q3 volume and, uh, and revenue was actually the highest, it was the entire year, um, and the same thing occurred this year. So the, you know, the growth rate might have been a bit different since we came off of a, you know, very, very strong.

Yeah, I think it's a great question.

Last year, but again, we had record Revenue in Q3 um, and record volume for the full year, uh, bigger than q1 or Q2. So, I guess that's the other context to, to just give you in terms of our Q3 performance.

Difficult one to answer because youre predicting are obviously macro with everything else.

I think the simple thing to do is just to look at our revenue range and our <unk> range that youre hearing us.

Yeah, I just wanted to like follow up on Leverage uh you know given you know the pricing actions, you know like a little double your chair.

You'd be comfortable with a certain ARPA range and you saw our execution in Q2 Q3.

A bit later, we're trying to give you guys a little bit of an indication on Q4, but I think for right now just to keep everyone's expectations in line.

You know, should we assume, you know, like lower than 30% for now, uh, as we reasonable, uh, before you get back to the 40s on incremental, margins, uh, just curious, if that is, if that has been a, a bit of a change, uh, in in, in the operations as well. Thanks.

George Chamoun: I guess that's the other context to just give you in terms of our Q3 performance.

Rajat Gupta: Yeah, I just wanted to follow up on leverage. Given some pricing action, like low double-digit share, should we assume lower than 30% for now as reasonable before you get back to the 40s on incremental margins? Just curious if that has been a bit of a change in the operations as well. Thanks.

I would just not have ARPA going up materially next year at all.

Yeah, I don't think we're ready to comment on that, uh, at this point Rashad, um, you know, we're in the middle of, obviously, putting our planning together for next year. Um,

Because to your point with all of these factors going on I, just would rather just put it out there that keep our pool and this sort of moderate area for now there will be a quarter or two that it might bump up.

You know, you can kind of assume some marginal Improvement um but beyond that there's nothing else for for me to comment on at this point until we have our plans finalized.

Understood the color and good luck.

Thank you.

You know you may see a little bit of that.

But I think.

We will go into next year, and I think better to keep.

George Chamoun: Yeah. I don't think we're ready to comment on that at this point, Rajat. We're in the middle of obviously putting our planning together for next year. You can kind of assume some marginal improvement, but beyond that, there's nothing else for me to comment on at this point until we have our plan finalized.

Thank you. All right, next question comes from the line of Bob. Uh, Elizabeth with CJs Securities. Please receive with your question.

Keep the expectations of our Pune and a reasonable area per analysts never one to think about the year.

Good afternoon. Thanks for taking our questions.

Um, hey Bob, thank you. I wanted to ask

And then to your point and a more medium term outlook. There probably is some argue that maybe in the next one to three years whenever that happens Bob to your point, we could start to see <unk> bump up even more.

Rajat Gupta: Understood. Appreciate the color, and good luck.

George Chamoun: Thank you.

And I, just don't want to be wrong at this point, Brian put too much out there. So I just think let's.

Operator: Thank you. Our next question comes from the line of Bob Lubbock with CJS Securities. Please proceed with your question.

Take this correction and say it.

Youre right, there will be a correction and it would mean, we'd have a higher ARPA I just don't want to think I don't want to guess, it's going to happen next year. If it happens it takes a little bit longer.

Bob Lubbock: Good afternoon. Thanks for taking our questions.

Sure, I want to ask a question about um kind of RPO is where I'm going to get to. I hopefully I can make this make sense, it kind of recent JD Powers now is analysis showed the spread between retail prices and hotel. Wholesale prices has widened from like 9,000 to 15,000 over the last 5 years. And this seems to, you know, confirm earlier points. You guys are seeing that dealers are keeping more cars and better cars and retailing those versus wholesaling them. Right. That's kind of part of the problem now, because there's no Off Lease to have etc. Etc,

George Chamoun: Hey, Bob. Thank you.

Bob Lubbock: Sure. I wanted to ask a question about kind of RPU is where I'm going to get to. Hopefully, I can make this make sense. Recent J.D. Power's analysis showed the spread between retail prices and wholesale prices has widened from $9,000 to $15,000 over the last five years. This seems to confirm earlier points you guys are saying that dealers are keeping more cars, and better cars, and retailing those versus wholesaling them. Right? That's kind of part of the problem now because there's no off-lease to have, etc., etc. The question is, what does this mean for your RPU going forward if retailers—I'm sorry, if dealers are going to keep the highest value cars and wholesale lower ones? How should we think about this trend? When does it kind of start to reverse itself?

Right No absolutely fair I mean, I think you just need you know.

Do you like to start.

So the question is like, what does this mean for your rug? Go forward, if retailers, I'm sorry, dealers are going to keep the highest value cars and wholesale lower ones. How should we think about this trend and when does it kind of start to reverse itself?

I'm a better well.

And therefore off lease to come back so that they have other things to sell et cetera. Okay.

Great and then you talked about you know lower conversion rate for the industry in Q4 based on the accelerated depreciation of.

Yeah, but I think it's a great question. Uh difficult 1 to answer uh because you're you're you're predicting obviously macro with everything else.

Or values.

But at the same time you guys have.

Increasing your guaranteed pricing I think you said it was.

18% during the quarter that's higher.

I think the simple thing to do is just to look at a revenue range and our poo range that you're hearing us, you know?

<unk>, obviously, so kind of looking into next year, how should we think about you know corrosion at auction.

Those little factors.

George Chamoun: Yeah. Bob, I think it's a great question. Difficult one to answer because you're predicting, obviously, macro with everything else. I think the simple thing to do is just to look at a revenue range, an RPU range, that you're hearing us. Be comfortable with a certain RPU range. You saw our execution in Q2, Q3. A bit later, we're trying to give you guys a little bit of an indication on Q4. I think for right now, just to keep everyone's expectations in line, I would just not have RPU going up materially next year or at all. To your point, with all these factors going on, I just would rather just put it out there that keep RPU in this sort of moderate area for now. There will be a quarter or two that it might bump up.

I think conversion rates.

Be comfortable with a certain rpu range and you saw our execution, um, in Q2 Q3, um, a bit later, we're trying to give you guys a little bit of an indication on Q4, but I think for right now, just to keep everyone's expectations in line.

But my biggest goal for next year, it's just not as crazy right. We've seen some ups and downs this year, even within a quarter.

I, I would just not have our P&L going up materially next year or at all.

That's pretty significant.

When you think about this year with everything from tariffs and everything else going on.

Because to your point with all these factors going on, I just would rather just put it out there that keep our poo, in this sort of moderate area for. Now, there will be a quarter or 2 that it might bump up.

We we've really hard.

A challenging year for dealers to absorb the value of the car and that and then what is that value what is that depreciation like all of these factors, it's been a very difficult year for dealers.

I hear sentiment from dealers, saying you know.

Some of this will normalize.

What I'm hearing I believe that's what many of you others are hearing which the normal is it having the value of these vehicles normalize.

Um, you know, and you may see a little bit of that. Um, but I think, um, we'll go into next year and I think better to keep, you know, keep the expectations of our poo, in a, in a, in a reasonable area for analysts, never want to think about the year. Um, and then to your point in a more medium-term Outlook there, probably is some art who that maybe in the next 1 to 3 years, whenever that happens, Bob to your point,

Would mean that we would we'd see the bid and the ask between sellers and buyers also start to normalize and we won't have this up and down on conversion rates.

George Chamoun: You may see a little bit of that. I think we'll go into next year, and I think it's better to keep the expectations of RPU in a reasonable area for analysts, everyone to think about the year. To your point, in a more medium-term outlook, there probably is some RPU that maybe in the next one to three years, whenever that happens, Bob, to your point, we could start to see RPU bump up even more. I just don't want to be wrong at this point, right, and put too much out there. I just think let's take this correction and say, I think you're right. There will be a correction, and it would mean we'd have a higher RPU. I just don't want to guess it's going to happen next year if it takes a little bit longer.

We could start to see our poo, bump up people more and I just don't want to be wrong at this point, right? And put too much out there. So I just think let's

That we've seen.

So.

I think next year conversion rates you know.

Would we see EBIT more consistency and can the coverage or encourage rents across the industry I wish it all depends on the hunt all the macro factors.

Take this um correction and say it's your I think you're right, there will be a correction and it would mean we'd have a higher our food. I just don't want to think I don't want to guess it's going to happen next year. If it happens, it takes a little bit longer.

I think some of the stuff starts to work itself out I don't know Bill if you have any more on that topic, but it's a hard it's a hard one Bob as you know for us to predict next year as it relates to conversion rates, but I think you and others have also heard you are saying things should start to normalize that some of these other factors start to take place.

All right. No. Absolutely fair. I mean, I think you just need, you know, deal to start wholesaling the better as well as you know, and therefore awfully to come back so that they have other things to sell Etc. Okay. Um, great. And then you talked about, you know, lower conversion rate for the industry and Q4 based on the accelerated depreciation of uh, of values. Um, but at the same time you guys are

Got it okay. Thank you very much.

Bob Lubbock: Right. No, absolutely fair. I mean, I think you just need dealers to start wholesaling the better as well. Therefore, off-lease to come back so that they have other things to sell, etc. Okay. Great. You talked about lower conversion rate for the industry in Q4 based on the accelerated depreciation of values. At the same time, you guys are increasing your guaranteed pricing. I think you said it was 18% during the quarter, and that's higher.

Thank you.

Our next question comes from the line of Andrew Boone with citizens. Please proceed with your question.

You know, increasing your guaranteed pricing. I think you said it was 18% during the quarter, and that's higher. Yeah. Uh, conversion, obviously. So, kind of looking into next year, how should we think about, you know, conversion at auction with, you know, those little factors?

Thanks for taking my questions I wanted to ask about capital and just the return to normalization of blending can you guys. Just help us understand the guardrails outside of macro of what you guys need to do to be able to return that business.

I think conversion rates, um,

but my biggest goal for next year is, it's just not as crazy, right? We've seen some ups and downs this year, even within a quarter

And then again going just back to top of top of funnel demand can you guys talk about cohorts and is there anything you're seeing within the cohorts as we think about just the.

um, that's you know, a pretty significant

George Chamoun: Yes.

Bob Lubbock: Conversion, obviously. Kind of looking into next year, how should we think about conversion at auction with those little factors?

and when you think about this year, with everything, from tariffs and everything else going on,

Kind of change the dynamic of macro and what you guys are saying or is this just widespread thanks so much.

we we've really had, um,

Yeah. This is Phil so I'll start with HCV capital and then I'll turn it over to George.

George Chamoun: I think conversion rates. My biggest goal for next year is it's just not this crazy, right? We've seen some ups and downs this year, even within a quarter. That's pretty significant. When you think about this year with everything from tariffs and everything else going on, we've really had a challenging year for dealers to absorb the value of a car. Then what is that value? What is that depreciation? All these factors. It's been a very difficult year for dealers. I hear sentiment from dealers saying some of this will normalize. I mean, that's what I'm hearing. I believe that's what many of you others are hearing, which the normal is having the value of these vehicles normalize. Would mean that we'd see the bid and the ask between sellers and buyers also start to normalize.

So maybe first a little bit of context with reservation capital so.

A challenging year for dealerships, absorbed the value of a car and that and then what is that value? What is that depreciation? Like all these factors that's that's been a very difficult year for dealers.

As part of our planning we have historically planned and historical loss rate, that's that's slightly higher than some of the bigger players out there you know typically we model a 3% loss rate.

I hear sentiment from dealers saying, you know, some of this will normalize.

I mean, that's what I'm hearing. I believe. That's what many of you others are hearing which the normal is having the value of these vehicles, normalized

Based on the fact that we're in a high growth phase for the business and we're certainly not as mature as some of the bigger players out there. So that's what's been baked into our.

Financial models for ACP capital historically.

So despite what.

What occurred in Q3, and I'll get into that in a minute.

Our view of that.

The loss ratio hasn't changed in terms of our modeling going forward into next year.

You see the bed in the ass between sellers and buyers. Also start to normalize, and we won't have this up and down on conversion rates, um, that we've seen. So I, I think next year, conversion rates, you know, um, you know, would we we'd see a bit more consistency and can the coverage coverage across the industry? I would see it all depends upon all the macro factors.

That said you know as I mentioned on the call as a result of this large bankruptcy that.

That occurred in which we've we've reserved.

George Chamoun: We won't have this up and down on conversion rates that we've seen. I think next year, conversion rates would, we'd see a bit more consistency in conversion rates across the industry. I would say it all depends upon all the macro factors. I think some of this stuff starts to work itself out. I don't know, Bill, if you have any more on that topic. It's a hard one, Bob, as you know, for us to predict next year as it relates to conversion rates. I think you and others have also heard dealers saying things should start to normalize as some of these other factors start to take place.

Basically over $18 million for that bankruptcy I'm not sure what the ultimate outcome will be in terms of recovery. We did do a very thorough portfolio review.

But I I think it, you know, some of the stuff starts to work itself out. I don't know. Bill, if you have any more on that topic but it's a hard, it's a hard 1 Bobby. As you know, for us to predict next year, as it relates to conversion rates, but I I I think you and others have also heard dealers saying things should start to normalize as some of these other factors start to take place.

Yep. Got it. Okay, thank you very much.

And as a result, we've.

Thank you.

Look at our internal controls or processes.

And.

Our next question comes from the line of Andrew bun with citizens. Please, proceed with your question.

You know we're in the process of making a number of improvements.

Going forward, so that we can scale with us with comfort next year in terms of the.

Contrast that with.

So we're going to stay within our planned target in terms of those those loss ratios.

Thanks for taking the questions. Um I wanted to ask about AC capital and just the return to normalization of lending. Can you guys just help us understand the guard rails outside of macro of what you guys need to do to be able to return that business?

But as a result of that there were certain higher risk credits.

Credits that we had outstanding that.

Bob Lubbock: Yep, got it. Okay, thank you very much.

We concluded it was prudent to book some reserves in Q3, which as you know what.

Operator: Thank you. Our next question comes from the line of Andrew Boone with Citizens. Please proceed with your question.

So through the quarter.

It was approximately $7 million in terms of the go forward plan. There is still a lot of upside opportunity for us. This.

And then again going just back to top of top of funnel demand. Can you guys talk about cohorts? And is there anything you're seeing within the cohorts as we think about just the the kind of the change in Dynamic of macro and what you guys are seeing? Or is this just widespread? Thanks so much.

Bob Lubbock: Thanks for taking the questions. I wanted to ask about ACV Capital and just the return to normalization of lending. Can you guys just help us understand the guardrails outside of macro of what you guys need to do to be able to return that business? Going just back to top of funnel demand, can you guys talk about cohorts? Is there anything you're seeing within the cohorts as we think about just kind of the change in dynamic of macro and what you guys are seeing? Or is this just widespread? Thanks so much.

This is very synergistic, obviously with our auction business. So it's very strategic.

And you can expect this business to continue to grow next year at a good clip, albeit maybe.

It may be at somewhat of a slower rate than we experienced this year and we are.

Taking our ACD capital revenue down a couple of million for Q4 as I mentioned just to ensure that before we start to scale next year, where we've got the right processes and controls in place. So hopefully that gives you a little bit of color in terms of the Bay City Council and maybe just two.

George Chamoun: Yeah. This is Bill. I'll start with ACV Capital, then I'll turn it over to George. Maybe first, a little bit of context in terms of ACV Capital. As part of our planning, we have historically planned a historical loss rate that's slightly higher than some of the bigger players out there. Typically, we model a 3% loss rate, based on the fact that we're in a high growth phase for the business, and we're certainly not as mature as some of the bigger players out there. That's what's been baked into our financial models for ACV Capital historically. Despite what occurred in Q3, and I'll get into that in a minute, our view of that loss ratio hasn't changed in terms of our modeling going forward into next year. That said, as I mentioned on the call, as a result of.

Two more things on that.

Even with that bit of caution.

We're still going to be executing on attach rates in the high teens.

So look at this is it's still very strong execution, even with having you know this mitigated risk and being a bit more careful.

Yeah, this is Bill. So I'll start with ACV capital and then I'll turn it over to George. Um, so maybe first a little bit of context in terms of ACV Capital. So, um, as part of our planning, we have uh, historically planned and historical loss rate. Um that's that's slightly higher than you know, some of the bigger players out there, you know, typically we model 3, 3%, loss rate uh based on the fact that we're in a high growth uh, phase for the business. And we're certainly not as mature as some of the bigger players out there. So that's what's been baked into our, you know, uh, Financial models for for ACV, Capital historically. Um, so you know despite you know what what occurred in Q3 and I'll get into that in a minute. You know, our view of that uh, loss ratio hasn't changed in terms of our modeling going forward into next year.

The mid tier model assumed 25% attach rates. So when you just kind of look I. The way I look at this is listening you learn a moment like this you sometimes just add some more controls Hugh Hugh you take moments like this obviously theres other major banks in the world that had the same common customer this.

You know make us even a better company in the you know in the mid term and where you really become I think a more more durable company in moments like that when you. When you when you have a situation like this tree cooler, but I would say I have the same confidence.

You know that said, you know as I mentioned on the call, as a result of you know, this large bankruptcy uh that occurred uh in which you know we we we've reserved a you know basically over 18 million dollars for that bankruptcy you know not sure what the ultimate outcome will be in terms of recovery we did do a very thorough portfolio review. Um and as a result we've um looked at our internal controls our processes and uh you know, we're in the process of making a number of improvements.

George Chamoun: This large bankruptcy that occurred in which we've reserved basically over $18 million for that bankruptcy, not sure what the ultimate outcome will be in terms of recovery. We did do a very thorough portfolio review, and as a result, we've looked at our internal controls, our processes, and we're in the process of making a number of improvements. Going forward, so that we can scale with comfort next year in terms of the confidence that we're going to stay within our planned target in terms of those loss ratios. As a result of that, there were certain higher risk credits that we had outstanding that we concluded it was prudent to book some reserves in Q3, which is what flowed through the quarter, and that was approximately $7 million. In terms of the go-forward plan, there's still a lot of upside opportunity for us.

going forward, so that we can scale with uh with Comfort next year, in terms of, you know, the confidence that we've

And getting back to the 25% attach rate goals in the mid tier model. Yeah. This is a small period of time.

That we're going to stay within our planned Target in terms of those those loss ratios. Um,

We have a lot of demand for HCV capital, we've got a great product you saw us execute really well and up until.

That moment, right and I would say one step backwards I think will then take three steps forward. So that was your all on your first question. Your second question I believe was about other cohorts and other things ran the business can you repeat that one just to make sure because it was so long ago. We it took us a while it's such a long time to answer your question there.

I remember your first one but I want to make sure is that going on right now make sure I got it right.

It was a great first answer so let me let me try the second one again, okay. If I think about macro just overlaying in terms of results is there anything you want to call out in terms of specific cohorts or geographies that may have may help us better understand kind of what's going on across the industry.

But as a result of that, you know, there were certain higher risk, you know, credits that we had outstanding that, um, you know, we concluded it was prudent to to book some reserves in Q3, which is, you know, what flows through the quarter and that was, you know, approximately 7 million dollars in terms of the go forward plan. Uh, there's still a lot of upside opportunity for us. Uh, this is very synergistic, obviously, with our auction business. Uh, so it's very strategic, um, and you can expect, you know, this business to continue to grow, you know, next year, at a good clip, albeit, you know, maybe a somewhat of a slower rate than we experienced this year, and we are, um, you know, taking our ATV Capital Revenue down a couple of million for Q4, as I mentioned,

George Chamoun: This is very synergistic, obviously, with our auction business. It is very strategic. You can expect this business to continue to grow next year at a good clip, albeit maybe at somewhat of a slower rate than we experienced this year. We are taking our ACV Capital revenue down a couple of million for Q4, as I mentioned, just to ensure that before we start to scale next year, we've got the right processes and controls in place. Hopefully, that gives you a little bit of color in terms of ACV Capital.

Yeah, just to ensure that before we start to scale next year, we've, you know, we've got the right, uh, processes and controls in place. So, hopefully that gives you a little bit of color in terms of ACD capital and maybe just to, you know, 2 more things on that. Um,

Yeah.

Even with that bit of caution.

Yeah, I'll try to give a little color on this.

We mentioned on the call that.

You know, we're still, you know, going to be executing on a tax rates in the High Teens.

Two of the regions that we were probably known to be weaker and you know had 20.

20% plus growth.

Year over year, and we were really excited about that.

If you look at our largest regions.

A cohort perspective.

Most of our large regions are still graph.

George Chamoun: Maybe just two more things on that. Even with that bit of caution, we're still going to be executing on attached rates in the high teens. Look at this as it's still very strong execution, even with having this mitigated risk and being a bit more careful. The mid-term model assumed 25% attached rates. The way I look at this is, listen, you learn on moments like this. You sometimes just add some more controls. You take moments like this. Obviously, there are other major banks in the world that had the same common customer. This will make us even a better company in the midterm. You really become, I think, a more durable company in moments like that when you have a situation like this, TriColor. I would say I have the same confidence.

And there is only one and the one that it still grew.

It grew but it didnt grow as much with one where we've got.

So look at this as it's still very strong execution, even with having, you know, this mitigated risk and being a bit more careful. Um the you know the mid-term model assumed 25%, attach rates. So when you just kind of look, I the way I look at, this is listen, you learn A Moment Like This, you sometimes just add some more controls. You, you, you take moments like this. Obviously, there's other major banks in the world that had the same common customer,

Nearly 40% market share.

And so when you look at overall the cohorts I still the reason why I remain confident in the mid term model is because in the regions, where we don't yet have the brand in support of being the dominant player in that region where emerging.

More more durable company and moments like that. When you, when you when a, when you have a a situation like this tree collar,

But I would say I have the same confidence.

And in the areas and most of the areas, where we have you know.

Very significant market share and that's significant against physical and digital like all in.

We're still growing in the majority of those region, even with big numbers.

So <unk>.

A long way to ethane I think not a lot has changed but we did mentioned on the call with a few reasons, where we need to step it up and grow even more and we're on it.

George Chamoun: Getting back to the 25% attached rate goals in the mid-term model, this is a small period of time. We have a lot of demand for ACV Capital. We've got a great product. You saw us execute really well up until that moment, right? I would say one step backwards, I think we'll then take three steps forward. That was all on your first question. Your second question, I believe, was about other cohorts and other things going on in the business. Can you repeat that one just to make sure? Because it was so long ago. It took us such a long time to answer your question that I remember your first one, but I want to make sure your second one, but I want to make sure I got it right.

Thank you.

Yes, certainly.

Thank you.

Our next question comes from the line of no mid Con with B Riley Securities. Please proceed with your question.

In getting back to the 25%, attach rate goals in the midterm model. This is a, a small period of time. You know, we have a lot of demand for ACV, Capital. We've got a great product. You saw us execute really well, um, up until this, that that moment, right? And that would say, you know, 1,000 all on your first question. Your second question, I believe was about other cohorts in other things going on the business, can you repeat that 1 just to make sure? Because it was so long ago, we it took us a while, such a long time. To answer your question that I I remember your first 1 but I want to make sure your second 1 but I want to make sure I got it right.

Great. Thank you. Thank you very much.

Maybe just.

Touching on commercial how should we be thinking about.

The volumes through the auto M S.

It was a great first answer so let me let me try the second 1 again. Um okay if I think about macro just overlaying, in terms of results, is there anything you want to call out in terms of specific cohorts or geographies that that may have may help us better understand kind of what's going on across the industry.

Relationship.

Ramping kind of exiting this year and into next year or what kind of trajectory should be assume there as well.

He kind of.

Not only just map out too far but also look at 126.

Bob Lubbock: It was a great first answer. Let me try the second one again.

And then.

George just spoke about.

George Chamoun: Okay.

Bob Lubbock: If I think about macro just overlaying in terms of results, is there anything you want to call out in terms of specific cohorts or geographies that may help us better understand kind of what's going on across the industry?

Yeah, I'll try to give a little caller on this. You know, we mentioned on the call that you know, 2 of the regions that we were probably known to be weaker in, you know, had, you know, 20% plus growth. Uh, you know year-over-year and we were really excited about that.

Being opportunistic.

With respect to discounting.

In certain markets the penetration is low.

If you look at our largest regions from a cohort perspective, um,

Most of our large regions are still growing.

What do you see from your competitors in terms of price promotions did you see any price increases.

George Chamoun: Yeah. I'll try to give a little color on this. We mentioned on the call that two of the regions that we were probably known to be weaker in had 20%+ growth year over year, and we were really excited about that. If you look at our largest regions from a cohort perspective, most of our large regions are still growing. There's only one, and the one that it still grew, it grew, but it didn't grow as much, was one where we've got nearly 40% market share. When you look at overall the cohorts, the reason why I remain confident on the mid-term model is because in the regions where we don't yet have the brand and support of being the dominant player in that region, we're emerging. In the areas, and most of the areas where we have.

Okay and then.

and there's only 1 and the 1 that it's still grew, um, it grew, but it didn't grow as much was 1 where we've got

In recent quarters, but arena environment, where pricing is not necessarily going to be a lever for a perennial payroll excluding yourself.

You know, nearly 40% market share.

Although the second one first I think the pricing between the hundreds of physical auctions and the few digital there's a lot of different pricing things going on to.

And so when you look at overall the cohorts, I still the reason why I remain confident on the midterm model is because in the regions where we're we don't yet have the brand and support of, you know, being the dominant player in that region, we're emerging

To your point some people continue to increase fees.

And some are using piece primarily on the supply side.

and in the areas, in most of the areas where we have, you know, very significant market share, and that's significantly against physical and digital like all in

To get the attention, but generally speaking by fees typically go up every year with most of the competitors, which is the majority of the ARPA.

Um, we're still growing and the majority of those regions, even with big numbers.

so,

<unk>.

And your first question on commercial.

Long wait away saying, I think not a lot has changed, but we did mention on the call. There are a few reasons why we need to step it up and grow even more, and we're on it.

Where we're gonna be hovering.

Somewhere in the.

Thank you.

You know.

yes, certainly

Mid to higher single digits, I think somewhere six 7% of our volume in commercial for a 2025 like somewhere in that range for commercial so I'm very proud of what we're doing but as I've said and and many other calls that we are we really laying out the.

Thank you.

George Chamoun: Very significant market share, and that's significant against physical and digital, like all in. We're still growing in the majority of those regions, even with big numbers. Long way away thing, I think not a lot has changed, but we did mention on the call there's a few regions where we need to step it up and grow even more, and we're on it.

Our next question comes from the line of Naveed Khan with B Riley securities.

Please proceed with your question.

Hey, thank you, thank you very much. Um,

Um, maybe just um touching on Commercial um how should we be thinking about?

Foundation right now for many years to come.

The volumes to the auto IMS.

I'll just remind you of the three things we're doing there one is the upstream digital like you said with Ottawa masked out stream digital that's.

Bob Lubbock: Thank you.

George Chamoun: Yep. Certainly.

That's one two is the greenfields like Houston being our first and.

Uh, relationship ramping kind of exiting this year and into next year. What kind of trajectory should we assume there as we kind of...

Operator: Thank you. Our next question comes from the line of Naved Khan with B. Riley Securities. Please proceed with your question.

And then we'll have a second greenfield that we launch sometime early next year.

Not only just map out Q4 but also look at 2026. Um, and then.

uh, George you spoke about

And then third is once our software is hard and we're ready to go we'll take it back to the 10 legacy locations that we acquired so that that will take us. Some time. So look at it is if you're right now of our total commercial is sort of in that six to seven ish percent range of our total volume.

Naved Khan: Great. Thank you. Thank you very much. Maybe just touching on commercial. How should we be thinking about the volume through the AutoIMS relationship ramping, kind of exiting this year and into next year? What kind of trajectory should we assume there as we kind of not only just map out Q4, but also look at 2026? George, you spoke about being opportunistically with respect to discounting in certain markets where the penetration is low. What do you see from your competitors in terms of price promotions? Did you see any price increases occur in the recent quarters, or are we in an environment where pricing is not necessarily going to be a lever for any of the players, including yourself?

Uh, being opportunistically.

With respect to discounting.

Uh, in certain markets where the penetration is low.

What do you see from your competitors in terms of price promotions are do, do you see any price increases?

And even if that increased pretty materially for next year it won't be a big number.

Uh, uh, occur in the, you know, in the recent quarters, or are we in an environment where pricing is not necessarily going to be level for any of the players, including yourself?

Right I, just want to be fair to that like it will help it all out.

We'll grow.

But dealer wholesale remain next year being a far significant piece of our overall volume, but then commercial when you think about going into out years.

Uh, I'll go to the second 1 first. Um, I think pricing, you know, between the, you know, hundreds of physical actions and the few digital. There's a lot of different pricing things going on, uh, to your point. Some people continue to increase fees.

You know into 27 and beyond it starts to really add up so hopefully it gives you a lot of color to really not yet talking about next year. Obviously a lot of these questions are about actually about trying to give you enough color, but we're going through our planning cycle right now to nail down our our objectives and so maybe that gives you a little bit of color based on the base.

Um, and some are using, um, these primarily on the supply side, um, to, you know, get the attention but generally speaking, um, by fees typically go up every year with most of the competitors which is the majority of the r code. Um,

George Chamoun: I'll go to the second one first. I think pricing between the hundreds of physical auctions and the few digital, there's a lot of different pricing things going on. To your point, some people continue to increase fees, and some are using fees primarily on the supply side to get the attention. Generally speaking, buy fees typically go up every year with most of the competitors, which is the majority of the ARPU. Your first question on commercial, we're going to be hovering somewhere in the mid to higher single digits. I think somewhere 6%, 7% of our volume in commercial for 2025, somewhere in that range for commercial. I'm very proud of what we're doing. As I've said in many other calls, we are really laying out the foundation right now for many years to come.

And your first question on commercial.

Understood. Thank you very much.

you know, we we're, we're going to be hovering, um,

Fair enough.

somewhere in the, um,

Thank you.

You know.

Our next question comes from the line of Glenn <unk> with Raymond James. Please proceed with your question.

Alright, Thanks just.

Following up with what <unk> said on commercial wholesale.

We see them broken out so we can parse out dealer wholesale versus commercial wholesale and then I've just got a quick follow up after that.

At this time, we don't know yet, but we really did it come in to the today's call with that answer I would say are ready to go but appreciate the question, but I would say, we're not sure yet.

Okay sounds good.

Proud of what we're doing. But as I've said in in many other calls that, you know, we are we really laying out the foundation right now for, for many years to come. Um, I'll just remind you of the 3. Things we're doing their 1 is the Upstream digital, like you said with auto IMS outstream digital, uh, that's uh, that's 1. Uh, 2 is the green fields like Houston being our first?

And then on <unk>.

Fiber is that still on track for a first half of 'twenty six launch or is that more just generally 26.

And then we'll have a second Green Field that we launched. Um, sometime early next year,

What have you been saying from initial demand.

Contribute.

Contribute to performance next year.

Yeah were project vibrates getting incredible feedback from dealers.

George Chamoun: I'll just remind you of the three things we're doing there. One is the upstream digital, like you said, with AutoIMS, upstream digital. That's one. Two is the greenfields, like Houston being our first. We'll have a second greenfield that we launch sometime early next year. Third is once our software is hardened and we're ready to go, we'll take it back to the 10 legacy locations that we acquired. That will take us some time. Look at it as if right now, our total commercial is sort of in that 6% to 7% range of our total volume. Even if that increased pretty materially for next year, it won't be a big number. I just want to be fair to that. It will help. It all helps, and it will grow.

<unk>.

Our our goal.

And then third, is once our software is hardened and we're ready to go, we'll take it back to the uh, 10, uh, Legacy locations that we, we acquired so that that will take us some time. So look at it as if you're right now, our total commercial is sort of in that 6 to 7% range of our total volume.

Do you still go out and hit this call I'll just speak to be open but our goal is to start taking orders by and that's why it would be to start actually taking orders by dealers, which would be in February and start shipping units.

And even if that increase pretty materially for next year, it won't be a big number.

Sort of that middle of the year those are the internal goal so.

I don't have any reason why we're not going to hit those goals is starting to take orders by an 88.

Right? I just want to be fair to that like it. It will help it all helps um and I it will grow. Um, but dealer wholesale will remain next year being a far significant piece of our overall volume but then commercial when you think about going into out years,

um,

I think next year will be primarily launching you know.

As you know too.

Sure enough dealer groups get the feedback and any kind of then start scaling at the following year, but I would say so far so good.

Getting great feedback planned to go live.

you know, into 27 and Beyond it, it starts to really add up. So hopefully that gives you a lot of color to really not yet talking about next year. Obviously, a lot of these questions are about next year, but trying to give you enough color but we're going to that planning cycle right now to nail down our our objectives. And but maybe that gives you a little bit of color based on the base.

And we'll go from there.

George Chamoun: Dealer wholesale will remain next year being a far significant piece of our overall volume. Commercial, when you think about going into out years, into 2027 and beyond, it starts to really add up. Hopefully, it gives you a lot of color because we're really not yet talking about next year. Obviously, a lot of these questions are about next year, but trying to give you enough color. We're going through that planning cycle right now to nail down our objectives. Maybe that gives you a little bit of color based on the base.

Understood, thank you very much.

Alright, thank you.

Right right.

Thank you.

Your next question comes from the line of Jeff <unk> with Stephens Inc. Please proceed with your question.

Our next question comes from the line of Glenn shell with Raymond James, please proceed with your question.

Good evening, thanks for taking the question.

George I was wondering if you could talk about what you guys. Obviously have a pretty robust novel set of services and features.

Clear car Ts to be Max data services.

Okay. Thanks just, uh, following up with what Ned said on Commercial wholesale. Uh, well, we see that broken out so we can parse out dealer wholesale versus commercial wholesale. And then, I just got a quick follow up after that.

Viper is up and coming if you just look at the places that you're winning.

Naved Khan: Understood. Thank you very much.

Are disproportionately doing better than the average could you talk about this.

George Chamoun: Certainly.

Operator: Thank you. Our next question comes from the line of Glenn Chell with Raymond James. Please proceed with your question.

Where you were really.

You know, at this time, we don't know yet. We really um didn't come into the today's call uh, with that answer I would say ready to go but you know, appreciate the question but I I I would say we're not sure yet.

Getting traction in the dealer just looks you said hey look this is.

This is a great partnership where you clearly have an advantage in your win.

Glenn Chell: Hey, thanks. Just following up with what Naved said on commercial wholesale. Will we see that broken out so we can parse out dealer wholesale versus commercial wholesale? I just got a quick follow-up after that.

Okay.

Yes, certainly I will try to give you a little bit of color without mentioning the dealers names.

Okay. Sounds good. Um and then on Project Viper is that still on track for a first half of 26 launch? Or is that more? Just generally 26. And then what have you been seeing from initial demand?

Just to get a little closer to this but.

Yeah, we mentioned in the call that you know dealers that have recently launched clearer car and Max where we won a higher proportion of the wholesale volume than our average across the board.

Contribute to Performance next year.

George Chamoun: At this time, we don't know yet. We really didn't come into today's call with that answer, I would say, ready to go. I appreciate the question. I would say we're not sure yet.

Yeah we're um projects like we're getting incredible feedback from dealers. Uh, we

And if you kind of get like the why you you're you're now a strategic partner that that dealership groups.

Glenn Chell: Okay. Sounds good. On Project Viper, is that still on track for a first half of 2026 launch, or is that more just generally 2026? What have you been seeing from initial demand? Contribute to performance next year?

And if they're using us for Claire car <unk>, Max Azria, Max and soon hopefully Viper then they're using it to price their inventory, where we're predicting the retail price for predicting the wholesale price, we're helping them make better decisions.

George Chamoun: Yeah. Project Viper is getting incredible feedback from dealers. Our goal, and we need to still go out and hit this goal, I just speak to be open, but our goal is to start taking orders by NADA. That's when we'd start actually taking orders by dealers, which would be in February, and start shipping units in sort of that middle of the year. Those are the internal goals. I don't have any reason why we're not going to hit those goals of starting to take orders by NADA. I think next year we'll be primarily launching to enough dealer groups, get the feedback, and then you kind of then start scaling it the following year. I would say so far, so good. Getting great feedback, plan to go live. We'll go from there.

Our our goal and we we need to still go out and hit this goal. I just speak to be open but our goal is to start taking orders by an ADA, that's when we start, you know, actually taking orders by dealers which would be in February and start shipping units and sort of that middle of the year. Uh, those are the internal goals. So, um, I don't have any reason why we're not going to hit those goals. So, starting to take orders by an ADA. Um,

And so we were the ones to predict the trade value before they even bought the car.

I think next year will be primarily, um, launching you know.

So youre not going to sit here and make the wrong decision on having wholesale values that are too high because you actually bought the car right.

um,

Way upfront during the trade.

So when you think about what.

I can do for this entire industry is take all of these manual decisions that a lot of these dealers are working harder or these are people across the country, who just don't have the right tools today.

These, you know, uh, to enough dealer groups, get the feedback. And then you kind of, then start scaling at the following year, but I would say so far so good. Uh, getting great feedback plan to go live. Um, and uh, we'll go from there.

Okay, thank you.

Thank you.

Who got prices going down and in here. We are we're predicting the retail price of what the cars can itself or in the next 30 days within a few hundred Bucks.

All right, the next question comes from the line of Jeff Liquid at Stevens Inc. Please proceed with your question.

But predicting the wholesale price on average within a 100 docs.

That's really significant cause now is your sourcing and you're deciding what recondition you do there it's a big deal. So some of the data we mentioned during the call.

You know about dealers.

Glenn Chell: All right, thank you.

Now selling more wholesale of HCV to happen at Clair car and happened at Max it's partially because they're actually making better decisions and by the way they're retailing more cars.

George Chamoun: Certainly.

Operator: Thank you. Our next question comes from the line of Jeff Lick with Stephens Inc. Please proceed with your question.

And typically having better margin versus our competitor sort of SaaS equivalent companies that we compete again hopefully that gives you what you're looking for.

Jeff Lick: Good evening. Thanks for taking the question. George, I was wondering if you could talk about you guys obviously have a pretty robust and novel set of services and features: ClearCart, ACV MAX, data services, obviously Viper, up-and-coming. If you just look at the places that you're winning that are disproportionately doing better than the average, could you talk about just where you're really getting traction and the dealer just looks at you and says, hey, look, this is a great partnership, and where you clearly have an advantage and you're winning?

Good evening. Yeah thanks for taking the question. Um George. I was wondering if you could talk about like you guys obviously have a pretty robust and novel set of services and features, you know. Um you know, Clear Car ACB, Max data services. Uh obviously Viper gets up and coming. If you just look at the places that you're winning, you know, that are disproportionately doing better than the average. Could you talk about this, you know, where you're really, you know, getting Traction in the in the dealer just looks you and says, hey look, this is a, this is a great partnership and you know, where you clearly have an advantage in your winning.

It does and then a.

Yeah, certainly. I'll try to give you a little bit of color without mentioning the dealers' names. Um, yeah. Just to get a little closer for this, but...

A quick follow up for either you or bill.

As it relates to you know what you guys referred to as kind of targeted volume pricing on the on the supply side or after it was seller I was just curious because usually that's a pretty low priced to begin with.

How does that work in terms of.

You're probably talking that you're saving 50, 75 Bucks does it.

Yeah, we mentioned. And on the call that, you know, dealers that um, have recently launched clear car and Max where we've won a higher proportion of the wholesale of volume than our average across the board. And and if you kind of get like the why you you're you're now a strategic partner that that dealership group

Is it kind of short lived in terms of hey, Okay. I'll give you this.

George Chamoun: Yeah, certainly. I'll try to give you a little bit of color without mentioning the dealers' names just to get a little closer to this. We mentioned on the call that dealers that have recently launched ClearCart and MAX, where we've won a higher proportion of the wholesale volume than our average across the board. If you kind of get the why, you're now a strategic partner to that dealership group. If they're using us for ClearCart and/or MAX, ACV MAX, and soon, hopefully, Viper, then they're using us to price their inventory. We're predicting the retail price, we're predicting the wholesale price, we're helping them make better decisions, and so we were the one to predict the trade value before they even bought the car.

It would seem like Youre going to eventually have to provide a little more for them than just pricing and the dealers really motivated by 50 to 75 Bucks.

AC Max and soon, hopefully Viper, then they're using it to price their inventory. We're we're predicting the retail price for predicting the wholesale price, we're helping them make better decisions.

You know first of all I agree with your question 50, or 75 Bucks for 100 Bucks shouldn't matter, where we're a better solution.

And and so we were the 1 to predict the trade value before they even bought the car.

And we're helping them sell the car for more money, but when you do give one of these sell side promotions youre getting their attention again to try it you're getting them into the family and some of these guys have been using these legacy auctions for a very long time.

So you're not going to sit here and make the wrong decision on having wholesale values that are too high because you actually bought the car, right?

Way up front during the trade.

So look at it you're just trying to get.

Their attention and then what you do is you start to say Hey. This is good for so long extra time or Y amount of volume. So you just start to set some parameters about it and none of those parameters makes me worry about our mid term model.

So, we think about what AI can do for this entire industry: it can take all these manual decisions that a lot of these dealers are working hard on. These are people across the country who just don't have the right tools today.

George Chamoun: You're not going to sit here and make the wrong decision on having wholesale values that are too high because you actually bought the car right, way up front during the trade. When you think about what AI can do for this entire industry, it's take all these manual decisions that a lot of these dealers are working hard. These are people across the country who just don't have the right tools today, who have got prices going down. Here we are. We're predicting the retail price of what the car is going to sell for in the next 30 days within a few hundred bucks, or we're predicting the wholesale price, on average, within $100. That's really significant because now, as you're sourcing and you're deciding what reconditioning to do, it's a big deal. Some of the data we mentioned during the call.

Who, you know, got prices going down. And here we are, we're predicting the retail price of what the car is going to sell for in the next 30 days within a few hundred bucks.

Okay, great. Thanks, very much and best of luck in the next quarter.

For a prediction and the wholesale price on average within $100.

Thank you.

Our next question comes from the line of Gary <unk> with Barrington Research. Please proceed with your question.

That's really significant because now, as your sourcing and you're deciding what reconditioning you need to do, it's a big deal. So, some of the data we mentioned during the call,

Hi, good evening, everyone Hey.

Last quarter, there was a big Delta between listings and cars sold did you still see.

Pretty good listings, but the conversion rate was just so much lower than expectations.

You know about dealers. Um, now selling more wholesale with ACV. They happen to have clear car and happen to have Max. It's it's partially because they're actually making better decisions. And by the way they're retailing more cars and and typically having better margin versus our competitor, sort of tasks, equivalent companies that we compete against. Hopefully that gives you what you

Yes, Gary we continue to drive listings.

looking for,

Which is listings, obviously represents the opportunity to get in front of that car and sell it.

Because and then, um, a quick follow-up for, you know, either you or bill. Um,

George Chamoun: Dealers now selling more wholesale with ACV who happen to have ClearCart and happen to have MAX, it's partially because they're actually making better decisions. By the way, they're retailing more cars and typically having better margin versus our competitor sort of SaaS equivalent companies that we compete against. Hopefully, that gives you what you're looking for.

Yeah. So we've continued to see listings growth.

Okay.

And then just a question that Bill had mentioned there was an increase in arbitration expense.

With all the the <unk>.

Technology that you've put on your inspections, what what is actually causing that to happen is it just that you're getting a car that might be a little bit lower quality.

Is it relates to, you know what, you guys referred to as kind of targeted. Volume pricing on the, you know, on the supply side or for the seller. I was just curious because usually, that's a pretty low price to begin with, you know, how, how does that work in terms of, you know, you know, probably talking your saving, you know, 5075 bucks is it, is it kind of short-lived in terms of, hey, okay, I'll give you this and you would

Jeff Lick: It does. A quick follow-up for either you or Bill. As it relates to what you guys refer to as kind of targeted volume pricing on the supply side or for the seller, I was just curious because usually that's a pretty low price to begin with. How does that work in terms of, we're probably talking you're saving $50, $75. Is it kind of short-lived in terms of, hey, okay, I'll give you this? I mean, it would seem like you're going to eventually have to provide a little more for them than just pricing. I mean, are the dealers really motivated by $50, $75?

It would seem like you're going to eventually have to provide a little more for them than just pricing. I mean, that the dealer's really motivated by, you know, $50,75 bucks.

So.

Gary most of the customers that we inspect their car and then we go out.

And when we look at the arbitration results from the well.

You know, first of all, I agree with your question. Uh 50 or 75 bucks or 100 bucks shouldn't matter. We're we're a better solution. Um

Well far majority of the customers, we had our target target arbitration and goodwill there are subsets of customers.

Where.

It's become elevated.

And what we've been doing is over the last couple of months as we're enhancing some of our dealer management tools to identify faster on what is going wrong with this one seller <unk> buyer.

You know, we’re helping them sell the car for more money. But when you do give one of these sell-side promotions, you’re getting their attention. You’re getting them to try it. You’re getting them into the family. And you know, if somebody’s guys have been using these legacy options for a very long time.

George Chamoun: First of all, I agree with your question. $50 or $75 or $100 shouldn't matter. We're a better solution, and we're helping them sell the car for more money. When you do give one of these sell-side promotions, you're getting their attention, you're getting them to try it, you're getting them into the family. Some of these guys have been using these legacy options for a very long time. Look at it as you're just trying to get their attention. What you do is you start to say, this is good for so long, X period of time, or why am I on a volume. You do start to set some parameters about it, and none of those parameters make me worry about our mid-term model.

What should we be doing differently.

Wherever it could be training or other perhaps best practices and we're starting to build like privileges and other aspects to our dealer management model.

So look at it, you're just trying to get um their attention. And then what you do is you start to say hey this is good for us so long extra time or why I'm on a volume. So you just start to set some parameters about it and none of those parameters make me worried about our midterm models.

Okay, great. Thank you very much, and best of luck in the next quarter.

Thank you.

So it's really into the details.

Thank you.

Of look at it is the far majority of the time you really you know you don't have an issue, but you got to get into those times, where you know things become elevated or diabetes again, when I look at this from a.

All right, next question comes from the line of Gary prestipino with barington research. Please receive with your question.

Going into early next year I think even by Q1, we're probably fine I think just you kind of go in there and you you you mitigate and you you really learn through some of these things as sort of crept in and then we'll our dealer management and internal sort of training. When these things go wrong, we'll be even better on top of that.

Hi, good evening, everyone. Hey, um, last quarter, there was a big delta between listings and cars sold. Did you still see that?

Um, pretty good listings, but the conversion rate was was just so much lower than expectations.

Jeff Lick: Great. Thanks very much, and best of luck in the next quarter.

George Chamoun: Thank you.

Operator: Thank you. Our next question comes from the line of Gary Prestatino with Barrington Research. Please proceed with your question.

Okay. Thank you.

Definitely.

Thank you.

Gary Prestatino: Hi. Good evening, everyone. Last quarter, there was a big delta between listings and cars sold. Did you still see pretty good listings, but the conversion rate was just so much lower than expectations?

And we have reached the end of the question and answer session I would like to turn the floor back to Tim Fox for closing remarks.

Uh, yes. Yeah we we continue to drive listings uh which is listings, obviously represents the opportunity to uh get in front of that car and sell it. Um, but yeah, so we, we've continued to see listings from

Great. Thank you operator, and I'd like to thank everybody for joining us on our call today and we look forward to seeing you on the conference circuit.

okay, and then just a question that that bill mentioned, there was an increase in arbitration expense

What?

with all the the

This quarter, we will be at a couple of conferences in November and in December.

George Chamoun: Yes. Yeah. We continue to drive listings, which is listings obviously represent the opportunity to get in front of that car and sell it. Yeah, we have continued to see listings grow.

And finally, thank you for your interest in ACB and have a great.

Um, technology that you've put on your inspections. What is actually causing that to happen? Is it just that you're getting a car that might be a little bit lower quality?

Thank you and this concludes today's conference and you may disconnect. Your lines at this time and thank you for your participation.

so,

Gary Prestatino: Okay. Just a question. Bill had mentioned there was an increase in arbitration expense. With all the technology that you've put on your inspections, what is actually causing that to happen? Is it just that you're getting a car that might be a little bit lower quality?

Gary, most of the customers that we inspect their car, and then we go out, you know, and and we look at the arbitration results. The the the well far majority of the customers, we hit our Target arbitration in Goodwill. There are subsets of customers.

where,

George Chamoun: Gary, most of the customers that we inspect their car and then we go out, we look at the arbitration results. The far majority of the customers, we hit our target arbitration in goodwill. There are subsets of customers where it's become elevated. What we've been doing over the last couple of months is we're enhancing some of our dealer management tools to identify faster on what is going wrong with this one seller and/or buyer, what should we be doing differently, where it could be training or other best practices. We're starting to build privileges and other aspects to our dealer management model. It's really into the details of look at it as the far majority of the time, you don't have an issue, but you've got to get into those times where things become elevated and we're diving in.

So it's it's really into the details. Um, of look at it is the far majority of the time. You really, you know, you don't have an issue but you got to get into those times where you know, things become elevated and we're diving. It's again, when I look at this from a you know, going into early next year. I think even by q1, we're probably fine. I think just you kind of go in there and you you you mitigate and you you really learn through some of these things that sort of crept in. And then we'll our dealer management and internal sort of a training when these things go wrong. We'll be even better on top of it.

Okay, thank you.

Thank you.

George Chamoun: Again, when I look at this from going into early next year, I think even by Q1, we're probably fine. I think you kind of go in there, you mitigate, and you really learn through some of these things that have sort of crept in. Then our dealer management and internal sort of training when these things go wrong will be even better on top of it.

And we have reached the end of the question and answer session. I would like to turn the floor back to Tim Fox for a closing remarks.

Great. Thank you, operator. And I'd like to thank everybody for joining us on the call. Today, we look forward to seeing you on the conference circuit. This quarter, we will be at a couple of conferences in November and in December. Finally, thank you for your interest in ACV, and have a great evening.

Gary Prestatino: Okay. Thank you.

George Chamoun: Yep. Certainly.

Thank you. And this concludes today's conference and you may disconnect your lines at this time.

Thank you for your participation.

Operator: Thank you. We have reached the end of the question and answer session. I would like to turn the floor back to Tim Fox for closing remarks.

Gary Prestatino: Thank you, Operator. I'd like to thank everybody for joining us on the call today. We look forward to seeing you on the conference circuit. This quarter, we'll be at a couple of conferences in November and December. Finally, thank you for your interest in ACV and have a great evening.

Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

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