What Management Said

Read the full Q3 2025 transcript ↗

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 pleased with our team delivering record revenue despite challenging market conditions during the quarter. As Bill will detail later, we have updated our 2025 guidance to reflect continuing crosscurrents 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. We're confident that executing on this profitable growth strategy will create significant long term shareholder value. 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. 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. We provide highly accurate condition-adjusted pricing guidance, enabling them to set better informed reserve prices. Our franchise rooftop penetration also achieved a new milestone, reaching 35% in the quarter, and our major account team delivered impressive results with rooftop penetration within this segment increasing 300 basis points year-over-year.

What went well
  • ACV delivered record quarterly revenue of $200 million, up 16% year-over-year against a tough Q3 2024 comparison of 44% growth, and sold 218,000 vehicles for 10% unit growth despite sustained market deceleration during the quarter.
  • Adjusted EBITDA of $19 million hit the midpoint of guidance with margin improving 280 basis points year-over-year, and management continued to guide to full-year adjusted EBITDA growth of approximately 100%.
  • ACV accelerated its market share gains, with share gains returning to double digits for the full quarter and September unit growth accelerating to 13% (reflecting 16% market share gains against a market down 3%); ACV grew 8,000 units quarter-over-quarter, which George Chamoun said was more than any competitor with U.S. growth, and franchise rooftop penetration reached a new milestone of 35% while major-account rooftop penetration rose 300 basis points year-over-year.
  • ACV Transportation set records for both quarterly revenue and transports delivered, with revenue margin expanding 200 basis points year-over-year to the medium-term target range in the low 20s.
  • ACV Capital delivered strong revenue with 70% growth in Q3, its fourth consecutive quarter of accelerated growth, and management reiterated confidence in returning to the 25% attach-rate midterm goal from the current high-teens execution.
  • ACV Guarantee, the fastest-growing channel in the marketplace, increased from 11% of units sold in Q2 to 18% in Q3 while delivering a 100% conversion rate and removing seller market risk.
  • Value-added dealer solutions drove cross-sell wallet-share gains: dealers that recently launched ClearCar increased wholesale volumes by over 30% (and 50% of recent ClearCar customers became new marketplace sellers), a recent ACV MAX cohort increased wholesale sales by an average of 40% within one quarter, and the marketplace hit new milestones of over 10,000 sellers and 14,000 buyers transacting.
What went wrong
  • The dealer wholesale market weakened, with year-over-year declines in August and September and October price depreciation above normal seasonal patterns pressuring conversion rates; ACV now expects the dealer wholesale market to decline mid-single digits in Q4, more than previously anticipated, and assumes a flat market in 2026.
  • The bankruptcy of former customer Tricolor drove $18.7 million of operating expenses excluded from adjusted EBITDA and prompted approximately $7 million of ACV Capital reserves in Q3 (which almost entirely offset a $7.6 million legal settlement benefit); ACV lowered exposure to higher-risk customer segments and cut projected Q4 ACV Capital revenue by $2 million.
  • Arbitration costs rose within a specific cohort of customers; excluding a $7.6 million class-action settlement credit, non-GAAP cost of revenue as a percentage of revenue would have increased approximately 300 basis points, and management expects arbitration costs to remain elevated in Q4.
  • Auction & Assurance ARPU of $508 grew only modestly year-over-year and declined 3% quarter-over-quarter, a result of targeted volume pricing and ACV Guarantee promotions used to win share.
  • ACV lowered its 2025 guidance, now expecting full-year revenue of $756 million-$760 million (19% growth) and Q4 revenue of $180 million-$184 million; management also flagged certain emerging regions where growth needs to be re-accelerated via an enhanced field engagement model in 2026.

Guidance Changes

MetricPeriodCurrent guidance
Total revenueQ4 2025$180 million-$184 million, growth of 13%-15% year-over-year
Adjusted EBITDAQ4 2025$5 million-$7 million, reflecting weaker dealer wholesale volumes and higher arbitration costs
Total revenueFY2025Lowered to $756 million-$760 million, growth of 19% year-over-year
Adjusted EBITDAFY2025$56 million-$58 million, growth of approximately 100% year-over-year
Adjusted EBITDA marginFY2025Expected to increase approximately 400 basis points year-over-year
Non-GAAP OpEx excluding cost of revenueFY2025Expected to grow approximately 12% year-over-year, yielding a 24% incremental adjusted EBITDA margin at the midpoint of guidance
ACV Capital revenueQ4 2025Reduced by $2 million to reflect a more cautious approach before scaling in 2026
Dealer wholesale marketQ4 2025Now expected to decline mid-single digits, more than previously anticipated
Dealer wholesale market (planning assumption)FY2026Prudent to assume flat, given an uncertain automotive-retail backdrop and elevated trade-retention rates

Performance Breakdown

MetricYoYNote
Total revenue +16% to $200M Record quarterly revenue at the midpoint of guidance, driven by solid dealer wholesale execution, market share gains, and record ACV Transport and ACV Capital revenue, against a tough Q3 2024 comparison of 44% growth.
Vehicles sold (units) +10% to 218,000 Unit growth held up despite sustained market deceleration, with growth accelerating to 13% in September reflecting 16% market share gains; ACV grew 8,000 units quarter-over-quarter.
Adjusted EBITDA +280 bps margin to $19M At the midpoint of guidance; benefited from a $7.6M class-action settlement that was almost entirely offset by approximately $7M of ACV Capital reserves; excludes $18.7M of Tricolor bankruptcy-related operating expenses.
Non-GAAP net income $11M At the midpoint of guidance, including the net impact of the legal settlement and ACV Capital reserves and excluding the $18.7M bankruptcy-related reserves.
Auction & Assurance revenue +10% 56% of total revenue; reflected 10% unit growth and ARPU of $508, against a very tough 52% growth comparison in Q3 2024.
Auction & Assurance ARPU +modest YoY / -3% QoQ to $508 Sequential decline driven by targeted volume pricing and ACV Guarantee promotions used to support seller acquisition; expected to increase sequentially in Q4.
Marketplace Services revenue +28% 40% of total revenue, reflecting record revenue for ACV Transport and ACV Capital.
SaaS and Data Services revenue +2% 4% of total revenue.
ACV Capital revenue +70% Fourth consecutive quarter of accelerated growth.
ACV Transportation revenue margin +200 bps Record revenue and transports delivered; AI-optimized pricing drove growth and operating efficiency into the low-20s medium-term target range.
Non-GAAP cost of revenue (% of revenue) -100 bps (approx. +300 bps ex-credit) Benefited from a $7.6M class-action settlement credit; excluding the credit, cost of revenue would have risen approximately 300 bps on increased arbitration costs within a specific cohort of customers.
Franchise rooftop penetration New milestone of 35% Continued expansion of the dealer partner network; major-account rooftop penetration rose 300 basis points year-over-year.

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Dealer wholesale market and share gainsChoppy, decelerating marketMarket deceleration continued (down 3% in September, mid-single-digit decline expected in Q4), but ACV kept gaining share (double digits in Q3, mid-teens in September) and grew 8,000 units quarter-over-quarter; George Chamoun said it is too early to conclude the market has structurally changed and expects a recovery as off-lease supply, interest rates, and other macro factors normalize.—
ACV CapitalHigh-growth, synergistic lending productGrew 70% in Q3 (fourth straight quarter of acceleration) but the Tricolor bankruptcy triggered a portfolio review, ~$7M of Q3 reserves, control/process improvements, lower higher-risk exposure, and a $2M Q4 revenue cut; management modeled a 3% loss rate, kept that assumption, expects continued (if slower) 2026 growth, and reaffirmed the 25% attach-rate midterm goal versus current high-teens attach rates.—
ACV TransportationScaling marketplace serviceRecord quarterly revenue and transports delivered, revenue margin up 200 bps year-over-year into the low-20s medium-term range on AI-optimized pricing, with an off-platform transportation service gaining traction as an additional long-term growth opportunity.—
ClearCarConsumer appraisal / sourcing toolStrong traction as a service-lane sourcing channel in a supply-constrained environment; dealers launching ClearCar increased wholesale volumes over 30% and 50% of recent ClearCar customers became new marketplace sellers, making it a lever for wholesale wallet share and new-dealer acquisition.—
ACV MAX / MAX DigitalRetail/wholesale inventory pricing SaaSGaining further traction with dealers using AI to price retail and wholesale inventory; a recent cohort of new ACV MAX dealers increased wholesale sales on the marketplace by an average of 40% within one quarter of launching, showing the same wholesale cross-sell dynamic as ClearCar.—
AI and inspection technologyAI-enabled pricing and recommendationsAI is fused with inspection and dynamic market data for real-time pricing across the platform, powering ACV Guarantee (up from 11% to 18% of units sold with 100% conversion) and next-generation products Project Viper and Virtual Lift 2.0, which have inspected over 60,000 vehicles in pilots ahead of a 2026 commercial launch (order-taking targeted by NADA in February, shipping mid-2026).—
Commercial / off-lease wholesale strategyBuilding commercial remarketing capabilityFirst greenfield remarketing center in Houston completed its soft launch and is ramping, supported by AutoIMS vehicle assignments, commercial inspection apps, and marketplace integration; commercial is roughly 6%-7% of total volume in 2025, a second greenfield launches early 2026, and legacy locations follow once software is hardened, with material contribution expected in 2027 and beyond; off-lease supply has not yet meaningfully returned.—
Value-added products and pricing strategyExpanding dealer solution suiteACV is using targeted regional/supply-side pricing promotions where it has low volume to win share (pressuring ARPU 3% QoQ) while positioning ClearCar, ACV MAX, and soon Viper as strategic pricing tools that make ACV the dealer's decisioning partner and lift wholesale wallet share; management remains confident in the midterm ARPU model and expects Q4 ARPU to rise sequentially.—
Capital structure and investmentProfitable-growth investment strategyEnded Q3 with $316M in cash, equivalents, and marketable securities (including $200M of marketplace float) and $220M of debt; OpEx is guided to grow ~12% to fund the remarketing-center and commercial-platform strategy while still expanding adjusted EBITDA margin ~400 bps, with 2026 planned to balance margin expansion against growth investment.—

Q&A Summary

Chris Pierce (Needham & Company) asked whether the dealer wholesale market has structurally changed, with dealers holding trade-ins at a higher rate going forward.
George Chamoun said investors should not assume a long-term structural change and that the dealer wholesale market should still recover, noting that off-lease supply has not come back in a significant way and interest rates have not come down; with all the macro events, he said it is far too early to conclude the dealer market has structurally changed.
Chris Pierce (Needham & Company) followed up on the competitive landscape, asking whether competitive dynamics on the ground have changed and whether dealers now feel they need a second source.
George Chamoun said ACV grew 8,000 units quarter-over-quarter, which he believed was significantly more than any other competitor with U.S. growth, that share gains returned to double digits in Q3, and that September growth was in the mid-teens (about 16%) against a market down 3%; he emphasized ACV has always had competitors and believes it has the best solution.
Rajat Gupta (JPMorgan) asked ACV to unpack the sequential moderation in Auction ARPU from Q2 and whether price actions were being taken to maintain share as a change in strategy.
George Chamoun said ACV is running targeted regional pricing campaigns, being more aggressive on the supply side where it is still emerging and low-volume to win share; Bill Zerella added that ARPU declined 3% in Q3 as a result of those activities and is expected to go back up in Q4, and Chamoun reaffirmed confidence in the midterm ARPU model.
Rajat Gupta (JPMorgan) asked for more color on the 2026 wholesale market outlook and whether investors should expect the same or accelerating share trajectory, plus reasonable incremental margins as ACV attacks more share.
George Chamoun said assuming a flat dealer wholesale market for 2026 is prudent given too many macro factors, described ACV's true execution as lower-double-digit share gains with an objective to get back to mid-teens (which it still needs to prove monthly), and again highlighted that Q3 quarter-over-quarter unit growth beat everyone else in the market.
Rajat Gupta (JPMorgan) followed up on operating leverage, asking whether to assume below-30% incremental margins for now before returning to the 40s.
Bill Zerella said ACV is not ready to comment while finalizing next year's plan, adding that investors can assume some marginal improvement but nothing further until the plans are finalized; he also noted Q3 was the biggest revenue and volume quarter of the year, as it was in 2024, breaking historical seasonal patterns.
Bob Labick (CJS Securities) cited a J.D. Power analysis showing the retail-to-wholesale price spread widening from roughly $9,000 to $15,000 over five years and asked what dealers keeping higher-value cars means for ARPU going forward.
George Chamoun said it is a difficult, macro-dependent question and advised assuming ARPU stays in a moderate range and does not go up materially next year, with occasional quarters bumping up; he acknowledged that in a medium-term (roughly one-to-three-year) outlook a market correction bringing off-lease supply back could lift ARPU, but he did not want to guess it happens in 2026.
Bob Labick (CJS Securities) asked how to think about auction conversion into next year given lower industry conversion in Q4 from accelerated depreciation alongside ACV's rising guaranteed-sale mix.
George Chamoun said his biggest goal for next year is for conversion rates to be less volatile, noting a very challenging year for dealers to absorb vehicle values amid tariffs and depreciation; he hears dealer sentiment that conditions should normalize, which would reduce the swings between buyers and sellers and produce more consistent conversion rates, though it remains hard to predict.
Andrew Boone (Citizens) asked about ACV Capital's return to normalized lending, the guardrails needed beyond macro, and whether specific cohorts were driving the issue.
Bill Zerella explained ACV models a 3% loss rate (higher than larger players given its high-growth phase) and that this assumption is unchanged; the Tricolor bankruptcy drove over $18 million of reserves and a thorough portfolio review, prompting improved internal controls and processes, ~$7 million of Q3 reserves on higher-risk credits, and a $2 million Q4 revenue reduction before scaling in 2026. George Chamoun added ACV is still executing on high-teens attach rates versus a 25% midterm goal, framing it as one step back to take three steps forward.
Andrew Boone (Citizens) followed up asking whether any specific cohorts or geographies were worth calling out to understand what is happening across the industry.
George Chamoun said two historically weaker regions grew over 20% year-over-year, most of ACV's largest regions are still growing, and the only large region that grew but grew less was one where ACV already has nearly 40% market share; he remains confident in the midterm model because ACV is still emerging in regions where it lacks a dominant brand.
Naved Khan (B. Riley Securities) asked about the trajectory of commercial volume through the AutoIMS relationship exiting 2025 and into 2026, and what ACV sees from competitors on price promotions and fee increases.
George Chamoun said buy fees typically go up every year with most competitors (the majority of ARPU) while some use supply-side fees to gain attention, and that commercial volume will be roughly 6%-7% of total volume in 2025; he reiterated the three-part commercial strategy (AutoIMS upstream digital, greenfield centers like Houston plus a second in early 2026, and eventually the 10 acquired legacy locations), noting dealer wholesale will remain the far larger piece next year with commercial adding up meaningfully in 2027 and beyond.
Glenn Shell (Raymond James) asked whether ACV will break out commercial wholesale separately from dealer wholesale.
George Chamoun said ACV has not yet decided and did not come into the call with that answer, so it is unsure at this time.
Glenn Shell (Raymond James) asked whether Project Viper is still on track for a first-half 2026 launch and what initial demand looks like.
George Chamoun said Project Viper is getting incredible dealer feedback, with a goal to start taking orders by NADA in February and begin shipping units around mid-year; he sees no reason ACV will miss those goals and expects next year to be primarily about launching to enough dealer groups before scaling the following year.
Jeff Lick (Stephens Inc) asked where ACV is disproportionately winning and where its ClearCar, ACV MAX, Data Services, and Viper solution set gives it a clear partnership advantage.
George Chamoun said dealers using ClearCar and ACV MAX give ACV a higher-than-average share of their wholesale volume because ACV becomes a strategic pricing partner, predicting retail prices within a few hundred dollars and wholesale prices on average within $100, helping dealers make better sourcing, reconditioning, and trade decisions; those dealers both wholesale more with ACV and retail more cars at better margins.
Jeff Lick (Stephens Inc) followed up on how targeted supply-side (seller) volume pricing works when the savings are only about $50-$75 and whether it is short-lived.
George Chamoun agreed $50-$75-$100 should not matter because ACV is a better solution that helps dealers sell for more, but said sell-side promotions get a dealer's attention and into the family; ACV sets parameters such as a limited time period or volume, and none of those parameters worry him about the midterm model.
Gary Prestopino (Barrington Research) asked whether ACV still saw good listings last quarter given the large gap between listings and cars sold from the lower conversion rate.
George Chamoun said ACV continues to drive listings, which represent the opportunity to get in front of and sell a car, and that listings have continued to grow.
Gary Prestopino (Barrington Research) asked what is causing the increase in arbitration expense despite all the inspection technology ACV has deployed.
George Chamoun said the far majority of inspected customers hit ACV's arbitration and goodwill targets, but a subset has become elevated; ACV is enhancing dealer-management tools to identify problem sellers and buyers faster and applying training, best practices, and privileges, and he expects the situation to be largely fine by roughly Q1 next year.

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Q3 2025 call
Reported 2025-11-05 · figures from the ACV Auctions Inc. Q3 2025 earnings call.

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