0000950170-22-009378 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2022	May 04, 2022
Document Information [Line Items]
Entity Registrant Name	ACV Auctions Inc.
Entity Central Index Key	0001637873
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Trading Symbol	ACVA
Amendment Flag	false
Title of 12(b) Security	Class A common stock, par value $0.001 per share
Security Exchange Name	NASDAQ
Entity File Number	001-40256
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-2415221
Entity Address, Address Line One	640 Ellicott Street, #321
Entity Address, City or Town	Buffalo
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	14203
City Area Code	800
Local Phone Number	553-4070
Document Quarterly Report	true
Document Transition Report	false
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		112,868,576
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		44,447,723

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Total revenue	$ 103,065	$ 69,086
Operating expenses:
Operations and technology	32,829	21,591
Selling, general, and administrative	36,052	23,965
Depreciation and amortization	2,385	1,768
Total operating expenses	132,154	86,219
Loss from operations	(29,089)	(17,133)
Other income (expense):
Interest income	44	26
Interest expense	(210)	(210)
Total other income (expense)	(166)	(184)
Loss before income taxes	(29,255)	(17,317)
Provision for income taxes	240	58
Net loss	$ (29,495)	$ (17,375)
Weighted-average shares - basic and diluted	156,104,971	34,288,035
Basic and diluted	$ (0.19)	$ (0.51)
Marketplace And Service Cost [Member]
Operating expenses:
Cost of revenue	$ 47,252	$ 29,509
Customer Assurance Cost [Member]
Operating expenses:
Cost of revenue	13,636	9,386
Marketplace And Service Revenue [Member]
Total revenue	88,347	58,392
Customer Assurance Revenue [Member]
Total revenue	$ 14,718	$ 10,694

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Net loss	$ (29,495)	$ (17,375)
Other comprehensive income (loss):
Net unrealized gains (losses) on available-for-sale securities	(73)	0
Foreign currency translation (loss) gain	31	50
Comprehensive loss	$ (29,537)	$ (17,325)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current Assets :
Cash and cash equivalents	$ 543,249	$ 565,994
Marketable Securities	21,081	13,765
Trade receivables (net of allowance of $3,528 and $3,724)	228,133	222,753
Finance receivables (net of allowance of $704 and $636)	63,291	44,278
Other current assets	16,792	10,623
Total current assets	872,546	857,413
Property and equipment (net of accumulated depreciation of $5,200 and $4,636)	5,579	4,916
Goodwill	97,388	78,839
Acquired intangible assets (net of amortization of $8,299 and $7,070)	16,901	18,130
Internal-use software costs (net of amortization of $4,270 and $3,837)	21,571	17,844
Operating lease right-of-use assets	2,955	3,264
Other assets	2,404	2,554
Total assets	1,019,344	982,960
Current Liabilities :
Accounts payable	389,232	395,972
Accrued payroll	11,310	11,961
Accrued other liabilities	14,878	9,806
Deferred revenue	5,331	4,317
Operating lease liabilities	1,393	1,306
Total current liabilities	422,144	423,362
Long-term operating lease liabilities	1,702	2,049
Long-term debt	60,500	500
Other long-term liabilities	1,376	952
Total liabilities	485,722	426,863
Commitments and Contingencies (Note 5)
Stockholders' Equity :
Preferred Stock; $0.001 par value; 20,000,000 and 20,000,000 shares authorized; 0 and 0 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
Additional paid-in capital	808,203	801,142
Accumulated deficit	(274,656)	(245,161)
Accumulated other comprehensive loss	(82)	(40)
Total stockholders' equity	533,622	556,097
Total liabilities and stockholders' equity	1,019,344	982,960
Common Class A [Member]
Stockholders' Equity :
Common stock	111	106
Common Class B [Member]
Stockholders' Equity :
Common stock	$ 46	$ 50

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Accounts Receivable, Allowance	$ 3,528	$ 3,724
Financing Receivable, Allowance	704	636
Accumulated Depreciation Property And Equipment	5,200	4,636
Amortization of Intangible Assets	8,299	7,070
Software Development [Member]
Amortization of Intangible Assets	$ 4,270	$ 3,837
Common Class A [Member]
Common stock, shares authorized	2,000,000,000
Common Class B [Member]
Common stock, shares authorized	160,000,000
Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common Stock [Member] \| Common Class A [Member]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, shares issued	111,040,170	106,420,843
Common stock, shares outstanding	111,040,170	106,420,843
Common Stock [Member] \| Common Class B [Member]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	160,000,000	160,000,000
Common stock, shares issued	46,010,678	49,661,126
Common stock, shares outstanding	46,010,678	49,661,126

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) $ in Thousands	Total	Convertible Preferred Stock [Member]	Common Class A [Member]	Common Class B [Member]	Additional Paid In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Common Stock [Member]	Common Stock [Member] Common Class A [Member]	Common Stock [Member] Common Class B [Member]	IPO [Member]	IPO [Member] Convertible Preferred Stock [Member]	IPO [Member] Common Class A [Member]	IPO [Member] Common Class B [Member]	IPO [Member] Additional Paid In Capital [Member]
Balance at Dec. 31, 2020		$ 366,332
Balance, Shares at Dec. 31, 2020		115,269,221
Balance at Dec. 31, 2020	$ (139,692)				$ 27,322	$ (166,979)	$ (57)	$ 22	$ 0	$ 0
Balance, Shares at Dec. 31, 2020			0	0				22,331,842
Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and other offering costs											$ 385,018		$ 17		$ 385,001
Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and other offering costs, Shares													16,550,000
Conversion of redeemable convertible preferred stock to common stock												$ (366,332)
Conversion of redeemable convertible preferred stock to common stock, Shares												(115,269,221)
Conversion of redeemable convertible preferred stock to common stock											$ 366,332			$ 115	$ 366,217
Conversion of redeemable convertible preferred stock to common stock, Shares														115,269,221
Sale of Common Stock to Underwriters	0		$ 2	$ (2)
Sale of Common Stock to Underwriters, Shares			2,482,500	(2,482,500)
Reclassification of common stock, Amount	0			$ 22				$ (22)
Reclassification of Common Stock, Shares				22,707,813				(22,707,813)
Other comprehensive income (loss)	50						50
Stock-based compensation	2,867				2,867
Exercise of common stock options	549				549			$ 0
Exercise of common stock options, Shares				119				375,971
Net loss	(17,375)					(17,375)
Balance at Mar. 31, 2021		$ 0
Balance, Shares at Mar. 31, 2021		0
Balance at Mar. 31, 2021	597,749				781,956	(184,354)	(7)	$ 0	19	135
Balance, Shares at Mar. 31, 2021			19,032,500	135,494,653				0
Balance at Dec. 31, 2021	556,097				801,142	(245,161)	(40)		106	50
Balance, Shares at Dec. 31, 2021			106,420,843	49,661,126
Conversion of Class B Common Stocks to Class A Common Stocks, Value			$ 4	$ (4)
Conversion of Class B Common Stocks to Class A Common Stocks, Shares			3,650,448	(3,650,448)
Other comprehensive income (loss)	(42)						(42)
Stock-based compensation	7,924				7,924
Exercise of common stock options	$ 411		$ 0		411
Exercise of common stock options, Shares	197,527		197,527
Vested restricted stock units	$ (1,273)				(1,273)
Vested restricted stock units, Shares			150,475
Escrowed stock awards	$ 0		$ 1		(1)
Escrowed stock awards, Shares	620,877		620,877
Net loss	$ (29,495)					(29,495)
Balance at Mar. 31, 2022	$ 533,622				$ 808,203	$ (274,656)	$ (82)		$ 111	$ 46
Balance, Shares at Mar. 31, 2022			111,040,170	46,010,678

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash Flows from Operating Activities
Net income (loss)	$ (29,495)	$ (17,375)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	2,515	1,891
Stock-based compensation expense, net of amounts capitalized	7,549	2,867
Provision for bad debt	1,793	777
Other non-cash, net	659	162
Changes in operating assets and liabilities, net of effects from purchases of businesses:
Trade receivables	(6,603)	(85,136)
Other current assets	(5,356)	(4,805)
Accounts payable	(7,526)	138,430
Accrued payroll	(1,057)	3,750
Accrued other liabilities	5,042	3,078
Deferred revenue	1,001	2,281
Other long-term liabilities	99	80
Other assets	(77)	(136)
Net cash provided by (used in) operating activities	(31,456)	45,864
Cash Flows from Investing Activities
Net increase in finance receivables	(19,420)	(7,570)
Purchases of property and equipment	(748)	(692)
Capitalization of software costs	(3,942)	(2,296)
Purchases of marketable securities	(7,411)	0
Acquisition of businesses (net of cash acquired)	(18,913)	0
Net cash provided by (used in) investing activities	(50,434)	(10,558)
Cash Flows from Financing Activities
Proceeds from issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and other offering costs	0	388,359
Proceeds from long term debt	60,000	1,750
Proceeds from exercise of stock options	411	548
Payment of RSU tax withholdings in exchange for common shares surrendered by RSU holders	(1,274)	0
Net cash provided by (used in) financing activities	59,137	390,657
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	8	0
Net increase (decrease) in cash, cash equivalents, and restricted cash	(22,745)	425,963
Cash, cash equivalents, and restricted cash, beginning of period	565,994	233,725
Cash, cash equivalents, and restricted cash, end of period	543,249	659,688
Cash paid (received) during the period for:
Interest (income) expense	63	74
Income taxes	16	(10)
Cash paid included in the measurement of operating lease liabilities	299	219
Non-cash investing and financing activities:
Stock issuance costs in accounts payable	0	2,673
Stock-based compensation included in capitalized software development costs	375	0
Purchase of property and equipment and internal use software in accounts payable	$ 1,064	$ 594

Nature of Business and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Nature of Business and Summary Significant Accounting Policies

Note 1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business—ACV Auctions Inc. (“the Company” or "ACV") was formed on December 31, 2014. The Company operates in one industry segment, providing a digital wholesale auction marketplace (the “Marketplace”) to facilitate business-to-business used vehicle sales between a selling dealership (“Seller”) and a buying dealership (“Buyer”). Customers using the Marketplace are licensed automotive dealerships or other commercial automotive enterprises. At the election of the customer purchasing a vehicle, the Company can arrange third-party transportation services for the delivery of the purchased vehicle through its wholly owned subsidiary, ACV Transportation LLC. The Company can also provide the customer financing for the purchased vehicle through its wholly owned subsidiary, ACV Capital LLC. ACV also provides data services that offer insights into the condition and value of used vehicles for transactions both on and off the Company's Marketplace, which help dealerships, their end customers, and commercial partners make more informed decisions to transact with confidence and efficiency. Customers using data services are licensed automotive dealerships or other commercial automotive enterprises. All services are provided in the United States and certain data services are also provided internationally. Services provided are supported by the Company’s operations in the United States, Canada and France.

Basis of Consolidation —The consolidated financial statements include the accounts of ACV Auctions Inc. and all of its controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Basis of Preparation—The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission ("SEC"). The Company has condensed or omitted certain information and notes normally included in complete annual financial statements prepared in accordance with GAAP. These financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company's financial information. The unaudited interim consolidated financial statements should therefore be read in conjunction with the audited consolidated financial statements and accompanying notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 23, 2022 (the "Annual Report"). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Initial Public Offering—On March 26, 2021, the Company completed its initial public offering (“IPO”), in which the Company issued and sold 16,550,000 shares of its Class A common stock at a public offering price of $25.00 per share, which resulted in net proceeds of $388.9 million after deducting underwriting discounts and commissions. On March 26, 2021, the underwriters exercised their option to purchase an additional 2,482,500 shares of Class A common stock at $25.00 per share from selling stockholders identified in the Prospectus. The Company did not receive any of the proceeds from the sale of any shares of Class A common stock by the selling stockholders upon such exercise. Immediately prior to the closing of the IPO, all shares of common stock then outstanding were reclassified as Class B common stock and all shares of the convertible preferred stock then outstanding automatically converted into 115,269,221 shares of Class B common stock.

Prior to the IPO, deferred offering costs, which consist of direct incremental legal, accounting, and consulting fees relating to the IPO, were capitalized in prepaid expenses and other current assets in the condensed consolidated balance sheets. Upon the consummation of the IPO, $3.9 million of net deferred offering costs were reclassified into stockholders’ equity as an offset against IPO proceeds.

Emerging Growth Company—The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the "Securities Act"), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Fair Value Measurements and Financial Instruments - Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation of these assets or liabilities are as follows:

Level 1: Observable inputs such as quoted prices in active markets for identical assets and liabilities.

Level 2: Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data which require the Company to develop its own assumptions.

The Company’s financial instruments primarily consist of cash and cash equivalents, short term debt securities, trade and finance accounts receivable and accounts payable whose carrying values approximate fair value due to the short-term nature of those instruments.

Accounting Pronouncements—The following table provides a description of accounting standards that were adopted by the Company as well as standards that are not yet adopted that could have an impact to the consolidated financial statements upon adoption.


Accounting Standard Update	Description	Required date of adoption	Effect on consolidated financial statements
Accounting Standards Not Yet Adopted
Measurement of Credit Losses on Financial Instruments (ASU 2016-13, 2018-19, 2019-04, 2019-05, 2019-10, 2019-11, 2020-02, 2020-03)	The guidance changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.	January 1, 2023 Early adoption permitted	The Company is currently evaluating the impact this guidance may have on the consolidated financial statements.

The Company reviewed all other recently issued accounting standards and concluded that they were not applicable to the consolidated financial statements.

Marketable Securities

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

2. Marketable Securities

The following is a summary of available-for-sale marketable securities, excluding those securities classified within cash and cash equivalents on the Condensed Consolidated Balance Sheet as of March 31, 2022 and December 31, 2021 were as follows (in thousands):


	March 31, 2022
	Amortized Cost		Unrealized Gain		Unrealized Losses			Fair Value
Commercial paper	$	6,282	$	-	$	-		$	6,282
Corporate bonds		2,822	$	-	$	(8	)		2,814
U.S. treasury securities		12,054	$	-	$	(69	)		11,985
Marketable securities	$	21,158	$	-	$	(77	)	$	21,081


	December 31, 2021
	Amortized Cost		Unrealized Gain		Unrealized Losses			Fair Value
Commercial paper	$	5,580	$	-	$	-		$	5,580
Corporate bonds		2,129	$	-	$	(1	)		2,128
U.S. treasury securities		6,060	$	-	$	(3	)		6,057
Marketable securities	$	13,769	$	-	$	(4	)	$	13,765

As of March 31, 2022, the fair values of available-for-sale marketable securities, by remaining contractual maturity, were as follows (in thousands):


Due within one year	$	20,380
Due in one to two years	$	701
Total	$	21,081

The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio.

The Company does not believe that any unrealized losses are attributable to credit-related factors based on its evaluation of available evidence. To determine whether a decline in value is related to credit loss, the Company evaluates, among other factors: the extent to which the fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency and any adverse conditions specifically related to an issuer of a security or its industry. Unrealized gain and losses on marketable securities are presented net of tax.

The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at March 31, 2022 and December 31, 2021.

Fair Value Measurement

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurement

3. Fair Value Measurement

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):


	March 31, 2022
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	329,678	$	—	$	—	$	329,678
Short-term securities:
Commercial paper		—		6,282		—		6,282
Corporate bonds		—		2,814		—		2,814
U.S. treasury securities		11,985		—		—		11,985
Total financial assets	$	341,663	$	9,096	$	—	$	350,759


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	412,070	$	—	$	—	$	412,070
Short-term securities:
Commercial paper		—		5,580		—		5,580
Corporate bonds		—		2,128		—		2,128
U.S. treasury securities		6,057		—		—		6,057
Total financial assets	$	418,127	$	7,708	$	—	$	425,835

The Company classifies its highly liquid money market funds and U.S treasury securities within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its commercial paper and corporate bonds within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.

The Company records guarantees accounted for under ASC 460 at fair value when issued. The fair value of guarantees outstanding as of March 31, 2022 and December 31, 2021 was $2.3 million and $1.2 million, respectively. The estimated fair value of the guarantees outstanding is determined based on historical guarantee claim costs, adjusted for qualitative factors and a market participant estimated margin. Historical claim costs and qualitative factors are assumptions that are not readily observable in the marketplace, and the related nonrecurring fair value measurement adjustments have been generally classified as Level 3.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Accounts Receivables & Allowance for Doubtful Receivables

3 Months Ended

Mar. 31, 2022

Accounts Receivable, after Allowance for Credit Loss [Abstract]

Accounts Receivables & Allowance for Doubtful Receivables

4. Accounts Receivables & Allowance for Doubtful Receivables

The Company maintains an allowance for doubtful receivables that in management’s judgement reflects losses inherent in the portfolio. Changes in the allowance for doubtful trade receivables for the three months ended March 31, 2022 and 2021 were as follows (in thousands):


	Three months ended March 31,
	2022			2021
Beginning balance	$	3,724		$	2,093
Provision for bad debt		1,386			750
Net write-offs
Write-offs		(2,460	)		(1,754	)
Recoveries		878			1,502
Net write-offs		(1,582	)		(252	)
Ending balance	$	3,528		$	2,591

Changes in the allowance for doubtful finance receivables for the three months ended March 31, 2022 and 2021 were as follows (in thousands):


	Three months ended March 31,
	2022			2021
Beginning balance	$	636		$	40
Provision for bad debt		407			27
Net write-offs
Write-offs		(369	)		(6	)
Recoveries		30			-
Net write-offs		(339	)		(6	)
Ending balance	$	704		$	61

Guarantees, Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Guarantees, Commitments and Contingencies

5. Guarantees, Commitments and Contingencies

The Company provides certain guarantees to Sellers in the Marketplace in the ordinary course of business, which are accounted for under ASC 460 as a general guarantee.

Vehicle Condition Guarantees—Sellers must attach a vehicle condition report in the Marketplace for every auction; this vehicle condition report is used by Buyers to inform bid decisions. The Company offers guarantees to Sellers in qualifying situations where the Company performed a vehicle inspection and prepared the vehicle condition report. Sellers must pay an additional fee in exchange for this guarantee. The guarantee provides Sellers protection from paying remedies to Buyers related to a Buyer’s claim that the vehicle condition report did not accurately portray the condition of the vehicle purchased on the Marketplace. The guarantee provides the Company with the right to retain proceeds from the subsequent liquidation of the vehicle covered under the guarantee. The guarantee is typically provided for 10 days after the successful sale of the vehicle on the Marketplace. The fair value of vehicle condition guarantees issued is estimated based on historical results and other qualitative factors. The vehicle condition guarantee revenue is recognized on the earlier of the guarantee expiration date or the guarantee settlement date. The maximum potential payment is the sale price of the vehicle. The total sale price of vehicles for which there was an outstanding guarantee was $317.5 million and $257.6 million at March 31, 2022 and December 31, 2021, respectively. The carrying amount of the liability presented in Accrued other liabilities was $2.3 million and $1.2 million at March 31, 2022 and December 31, 2021, respectively.

The recognized probable loss contingency, in excess of vehicle condition guarantees recognized, presented in Accrued other liabilities was $1.2 million and $1.0 million at March 31, 2022 and December 31, 2021, respectively.

Other Price Guarantees—The Company provides Sellers with a price guarantee for vehicles to be sold on the Marketplace from time to time. If a vehicle sells below the guaranteed price, the Company is responsible for paying the Seller the difference between the guaranteed price and the final sale price. The term of the guarantee is typically less than one week. No material unsettled price guarantees existed at March 31, 2022 and December 31, 2021.

Litigation—The Company and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and matters in which claims for monetary damages are asserted. On an on-going basis management, after consultation with legal counsel, assesses the Company's liabilities and contingencies in connection with such proceedings. For those matters for where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent pending or threatened litigation could result in exposure in excess of the recorded liability, the amount of such excess is not currently estimable.

On March 19, 2021, a putative class action was filed against ACV Auctions Inc., et al. in the U.S. District Court for the Western District of New York, alleging violations of the federal antitrust laws and New York State law related to an alleged conspiracy to set bids on the Company's Marketplace from transactions that originated from one seller. The complaint seeks statutory damages under such laws and other relief. In January 2022, the Court heard arguments on the motion to dismiss that the defendant had previously filed and dismissed the federal claims with leave for the plaintiff to amend their complaint. The Company intends to vigorously defend itself in this case. Due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome and cannot estimate the potential loss at this time. However, the Company believes that the resolution of this matter will not have a material adverse effect on its consolidated financial position.

Borrowings

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Borrowings

6. Borrowings

2019 Revolver

On December 20, 2019, the Company entered into a revolving credit facility (the "2019 Revolver"). The 2019 Revolver was established to provide debt financing in support of the short-term finance receivable product offered to eligible customers purchasing vehicles through the Marketplace and is fully secured by the underlying financing receivable assets. On June 25, 2021, the Company entered into the First Amendment to Loan and Security Agreement ("the First Amendment"), which modified the interest rate to LIBOR (or a benchmark replacement in accordance with the First Amendment) + 3.75% and extended the maturity date to June 25, 2024. The First Amendment maintains a maximum borrowing principal amount of $50.0 million.

The amount available for borrowing under the 2019 Revolver is based on the size of the finance receivable portfolio. As of March 31, 2022, $49.5 million of the revolving line of credit was unused.

The revolving feature on the facility ends on June 25, 2023. Amounts owed at that time will amortize and be due on or before June 25, 2024, depending on the collection of the outstanding finance receivables securing the facility. The facility carried an interest rate of 4.75% as of March 31, 2022.

2021 Revolver

On August 24, 2021, the Company entered into a revolving credit facility (the "2021 Revolver"). The 2021 Revolver was established to provide general financing to the Company. The 2021 Revolver is secured by substantially all of the Company's assets. The maximum borrowing principal amount of the 2021 Revolver is $160.0 million and includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time. The 2021 Revolver matures on August 24, 2026 and is subject to a commitment fee of 0.25% per annum of the average daily undrawn portion of the revolving credit facility. The applicable interest rate is, at the Company's option, either (a) LIBOR (or a replacement rate established in accordance with the terms of the credit agreement) (subject to a 0.00% LIBOR floor), plus a margin of 2.75% per annum or (b) the Alternative Base Rate plus a margin of 1.75% per annum. The Alternative Base Rate is the highest of (a) the Wall Street Journal prime rate, (b) the NYRFB rate plus 0.5%, and (c)(i) 1.00% plus (ii) the adjusted LIBOR rate for a one-month interest period. The 2021 Revolver carried an interest rate of 5.25% as of March 31, 2022.

As of March 31, 2022, there was an outstanding letter of credit issued under the 2021 Revolver in the amount of $1.1 million, decreasing the availability under the 2021 Revolver by a corresponding amount.

The Company’s outstanding long-term debt consisted of the following at March 31, 2022 and December 31, 2021 (in thousands):


			March 31,		December 31,
	Interest Rate	Maturity Date	2022		2021
2019 Revolver	LIBOR + 3.75%	June 25, 2024	$	500	$	500
2021 Revolver	5.25%	August 24, 2026		60,000		-
Total long-term debt			$	60,500	$	500

The Company’s ability to borrow under each of the 2019 Revolver and 2021 Revolver is subject to ongoing compliance with a combination of financial and non-financial covenants. The 2019 Revolver is also subject to ongoing compliance with non-financial collateral performance metrics. As of March 31, 2022, the Company was in compliance with all of its covenants and collateral performance metrics.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

Convertible Preferred Stock and Stockholders' Equity

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Convertible Preferred Stock and Stockholders' Equity

7. Convertible Preferred Stock and Stockholders' Equity

Convertible Preferred Stock

Upon closing of the IPO on March 26, 2021, all of the then-outstanding shares of convertible preferred stock automatically converted into 115,269,221 shares of Class B common stock on a one-for-one basis. There were no shares of convertible preferred stock outstanding subsequent to the closing of the

IPO.

Common Stock

On March 11, 2021, the Board of Directors and the stockholders of the Company approved an amended and restated certificate of incorporation that implemented a dual class common stock structure where all existing shares of common stock converted to Class B common stock and a new class of common stock, Class A common stock, became authorized. The amended and restated certificate of incorporation became effective immediately prior to the closing of the IPO on March 26, 2021. The authorized share capital of Class A common stock of the Company is 2,000,000,000 and the authorized share capital for Class B common stock is 160,000,000. The Class A common stock is entitled to one vote per share and the Class B common stock is entitled to ten votes per share. The Class A and Class B common stock have the same rights and privileges and rank equally, share ratably, and are identical in all respects for all matters except for the voting, conversion, and transfer rights. The Class B common stock converts to Class A common stock at any time at the option of the holder. During the three months ended March 31, 2022, 3,650,448 Class B shares converted to an equal number of shares of Class A common stock.

Revenue

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue

8. Revenue

The following table summarizes the primary components of revenue, this level of disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors (in thousands):


	Three months ended
	March 31,
	2022		2021
Auction marketplace revenue	$	43,960	$	34,257
Other marketplace revenue		36,340		19,464
Data services revenue		8,047		4,672
Marketplace and service revenue	$	88,347	$	58,392

Revenue presented in the table above, including the subsequent cash flows, could be negatively impacted by fluctuations in the supply or demand of used vehicles, especially in the case of an economic downturn in the United States.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

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-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Stock-Based Employee Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock-Based Employee Compensation

9. Stock-Based Employee Compensation

Effective March 20, 2015, the Company adopted the ACV Auctions Inc. 2015 Long-Term Incentive Plan (the "2015 Plan"). Employees, outside directors, consultants and advisors of the Company were eligible to participate in the 2015 Plan. The Plan allowed for the grant of incentive or nonqualified common stock options to purchase shares of the Company’s common stock and also to issue restricted shares of the common stock.

Effective March 23, 2021, the Company adopted the ACV Auctions Inc. 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan became effective on the date of the underwriting agreement related to the IPO, and no further grants were made under the 2015 Plan. Employees, outside directors, consultants and advisors of the Company are eligible to participate in the 2021 Plan. The Plan allows the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards, and other forms of awards. As of March 31, 2022, 19,810,313 shares were available for future grants of the Company's common stock.

Effective March 23, 2021, the Company adopted the ACV Auctions Inc. 2021 Employee Stock Purchase Plan (the "2021 ESPP"), which became effective on the date of the underwriting agreement related to the IPO. The 2021 ESPP authorizes the issuance of shares of the Company's Class A common stock pursuant to purchase rights granted to employees. A total of 4,360,819 shares of the Company's Class A common stock have been reserved for future issuance under the 2021 ESPP, in addition to any annual automatic evergreen increases in the number of shares of Class A common stock reserved for future issuance under the 2021 ESPP. The price at which Class A common stock is purchased under the 2021 ESPP is equal to 85% of the fair market value of the Company's Class A common stock on the first or last day of the offering period, whichever is lower. The initial offering period for the ESPP began on February 1, 2022 and will end on May 31, 2022. As of March 31, 2022, no shares have been issued under the 2021 ESPP. As of March 31, 2022, unrecognized compensation expense related to the 2021 ESPP was $0.2 million and is expected to be recognized over the remaining term of the offering period.

The following table summarized the weighted-average assumptions used in estimating the fair value of ESPP for the offering period beginning on February 1, 2022, using the Black-Scholes option-pricing model:


	Three months ended
	March 31, 2022
Expected term (in years)		0.3
Expected volatility		54.4	%
Risk-free interest rate		0.28	%
Expected dividend yield		0	%

The following table summarizes the stock option activity for the three months ended March 31, 2022 (in thousands, except for share and per share amounts):


	Number of Options			Weighted- Average Exercise Price Per Share		Intrinsic Value		Weighted- Average Remaining Contractual Term (in years)
Outstanding, December 31, 2021		8,786,724		$	2.72	$	141,659		7.03
Granted		-			-
Exercised		(197,527	)		2.08
Forfeited		(73,103	)		5.11
Expired		(11,969	)		4.29
Outstanding, March 31, 2022		8,504,125		$	2.71	$	102,896		6.77
Exercisable, March 31, 2022		5,966,209		$	1.70	$	78,203		6.16
Expected to Vest, March 31, 2022		2,537,916		$	5.08	$	24,693		8.20

The following table summarizes the restricted stock unit activity for the three months ended March 31, 2022 (in thousands, except for share and per share amounts):


	Number of RSUs			Weighted- Average Grant-Date Fair Value
Outstanding, December 31, 2021		3,705,206		$	20.76
Granted		478,985			15.47
Vested		(219,493	)		21.09
Forfeited