Before we get started, please note that today's comments include forward looking statements, including statements regarding future financial guidance. 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. We are very pleased with our team's execution in the second quarter, delivering revenue and Adjusted EBITDA within our guidance range. Despite challenging market conditions in the back half of the quarter, record revenue and continued cost discipline resulted in Adjusted EBITDA margins more than doubling year-over-year, underscoring the scale in our business model.
Second, we had another record quarter for ACV Transport and ACV Capital along with strong adoption of our value-added dealer solutions. Furthermore, we have maintained the midpoint of Adjusted EBITDA guidance reflecting our commitment to deliver significant margin expansion 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. We sold 210,000 vehicles which was 13% year-over-year growth despite the sharp market deceleration throughout 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. Beginning with our marketplace, we provide dealers with highly accurate condition-adjusted pricing guidance, enabling them to set attractive reserve prices, which increases buyer engagement and conversion. On the demand side, the buying experience is tailored across buyer personas, and we're optimizing the bidding experience by providing AI-enabled recommendations informed by dealer preferences and current market factors. Beginning with ACV Transport, the transportation team had another quarter of strong execution, setting records for both quarterly revenue and transports delivered.
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | FY2025 | $765M-$775M (midpoint $770M), growth of 20%-22% year-over-year |
| Adjusted EBITDA | FY2025 | $68M-$72M, growth of approximately 150% year-over-year |
| Adjusted EBITDA margin expansion | FY2025 | Expected to increase approximately 500 basis points year-over-year |
| Non-GAAP OpEx excluding cost of revenue growth | FY2025 | Approximately 11% year-over-year (a 200 bps increase in incremental Adjusted EBITDA margin versus prior guidance) |
| Wholesale market share gains | FY2025 | Mid-teens at the midpoint of revenue guidance |
| Dealer wholesale volumes | FY2025 | Flat to down modestly year-over-year, based on elevated trade retention rates observed in late Q2 |
| Revenue | Q3 2025 | $198M-$203M, growth of 16%-18% year-over-year against a tough Q3 2024 comparison (44% growth) |
| Adjusted EBITDA | Q3 2025 | $18M-$20M, reflecting growth of approximately 70% year-over-year |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +21% to $194M | Record revenue within guidance, driven by dealer wholesale share gains, record ACV Transport and ACV Capital results, and value-added solution adoption, despite a sharp market deceleration late in the quarter. |
| Vehicles sold (units) | +13% to 210,000 | Strong listings in line with expectations, offset by an approximate 500 bps headwind from lower-than-expected conversion rates in the back half of the quarter. |
| Adjusted EBITDA | Margin +520 bps to $19M | Record revenue plus cost discipline more than doubled EBITDA margin year-over-year; result landed at the midpoint of guidance. |
| Non-GAAP net income margin | +430 bps | At the midpoint of guidance, reflecting operating leverage and expense discipline. |
| Auction and assurance revenue | +20% (57% of total) | 13% unit growth plus ARPU of $523, up 6% year-over-year. |
| Auction and assurance ARPU | +6% to $523 | Value-added assurance products and an earlier-in-year buy-fee increase (~5%-6% ARPU contribution). |
| Marketplace Services revenue | +25% (39% of total) | Record revenue for ACV Transport and ACV Capital. |
| ACV Transport revenue margin | +370 bps | AI-optimized pricing drove growth and operating efficiency; margin now in the low-20s midterm target range. |
| ACV Capital revenue | +60%+ | Third consecutive quarter of accelerating growth as the team scales while managing risk and expands its TAM with off-platform offerings. |
| SaaS and data services revenue | Approximately flat (4% of total) | Flat year-over-year despite record ACV MAX bookings and ClearCar rooftop growth. |
| Non-GAAP cost of revenue (% of revenue) | -200 bps | Driven by auction and assurance results and by ACV Transport. |
| Non-GAAP OpEx excluding cost of revenue (% of revenue) | -300 bps | Ongoing expense discipline as the company optimizes and scales. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Dealer wholesale market share and partnerships | Consistent share gains | Continued market-share gains and dealer-network expansion via a differentiated marketplace, guiding to mid-teens share gains for the year; management stresses annual (not quarterly) comparisons show the true trajectory as absolute numbers grow. | — |
| ACV Transport | Growing service | Record quarterly revenue and transports delivered, revenue margin up 370 bps to the low-20s midterm target on AI-optimized pricing, with off-platform transportation gaining traction and increasing network density. | — |
| ACV Capital | Scaling | Over 60% revenue growth for a third straight quarter of acceleration, expanding TAM with new value-added offerings including helping dealers buy vehicles from consumers off-platform. | — |
| ACV AI, guaranteed pricing and no-reserve | Early AI/pricing capability | AI fuses inspection and market data to price vehicles in real time within ~$75 of sale price; ACV Guarantee/no-reserve reached 15%+ of units exiting Q2 with a 100% conversion rate and is expected to grow substantially over the next few years. | — |
| Pricing-as-a-service and data products (ClearCar, ACV MAX) | Building data services | Five of the top ten dealership groups (and Amazon) use ACV pricing data to appraise trade-ins; ClearCar surpassed 1,600 rooftops with strong service-drive adoption, ACV MAX bookings rose 50%, and ACV plans to bundle the Guarantee offering into ClearCar/MAX around Q4-Q1; retail-price prediction (within ~$360 in 30 days) is in beta. | — |
| Next-generation inspection tech (Project Viper, Virtual Lift 2.0) | In development | Over 10,000 vehicles run through Viper across Q2 pilots with positive feedback; the P&L carries the scaling cost this year, with commercial launch of both Viper and Virtual Lift 2.0 targeted for 2026 and revenue materializing next year. | — |
| Commercial wholesale and greenfield Remarketing Centers | Building commercial platform | Initial commercial platform (AutoIMS assignments, inspections, work orders, consigner approvals) nearing completion; first greenfield in Houston sold its first car in testing, a second greenfield is contracted to launch in Q1 2026, and management targets ~40 locations via a greenfield-led strategy plus opportunistic M&A toward a large commercial TAM. | — |
| Capital allocation and investment strategy | Profitable-growth focus | Protects a core product/technology and inspector-hiring budget (needs ~30 more inspectors) independent of quarterly EBITDA optics; greenfields consume far less capital than acquiring auctions; OpEx grows ~11% while EBITDA margin expands ~500 bps. | — |
| Macro and used-vehicle market outlook | Assumed flat market | Now assumes a flat-to-down 2025 market amid tariff uncertainty, a multi-million-unit supply gap, and trade retention up ~300 bps; management expects a healthier 2026 as off-lease and used-car inventory return and if tariffs resolve and interest rates decline. | — |