10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on May 13, 2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 7, 2021, there were
Table of Contents
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Page |
PART I. |
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Item 1. |
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4 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
5 |
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6 |
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7 |
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8 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
9 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 |
Item 3. |
31 |
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Item 4. |
31 |
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PART II. |
32 |
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Item 1. |
32 |
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Item 1A. |
32 |
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Item 2. |
57 |
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Item 3. |
58 |
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Item 4. |
58 |
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Item 5. |
58 |
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Item 6. |
59 |
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61 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
You should not rely on forward-looking statements as predictions of future events. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described under the header “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained herein. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our
1
statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made, and we undertake no obligation to update them to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
Unless the context otherwise indicates, references in this report to the terms “ACV Auctions,” “ACV,” “the Company,” “we,” “our” and “us” refer to ACV Auctions Inc. and its subsidiaries.
We may announce material business and financial information to our investors using our investor relations website (www.investors.acvauto.com). We therefore encourage investors and others interested in ACV to review the information that we make available on our website, in addition to following our filings with the Securities and Exchange Commission, webcasts, press releases and conference calls.
2
SUMMARY RISK FACTORS
Investing in our Class A Common Stock involves numerous risks, including the risks described in “Part II—Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below are some of our principal risks, any one of which could materially adversely affect our business, financial condition, results of operations and prospects
3
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
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Three months ended March 31, |
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2021 |
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2020 |
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Revenue: |
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Marketplace and service revenue |
$ |
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$ |
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Customer assurance revenue |
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Total revenue |
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Operating expenses: |
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Marketplace and service cost of revenue (excluding |
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Customer assurance cost of revenue (excluding |
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Operations and technology |
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Selling, general, and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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Other income (expense): |
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Interest income |
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Interest expense |
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( |
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( |
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Total other income (expense) |
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( |
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Loss before income taxes |
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( |
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( |
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Provision for income taxes |
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Net loss |
$ |
( |
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$ |
( |
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Weighted-average shares - basic and diluted |
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Net loss per share - basic and diluted |
$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
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Three months ended March 31, |
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2021 |
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2020 |
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Net loss |
$ |
( |
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$ |
( |
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Other comprehensive income (loss): |
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Foreign currency translation (loss) gain |
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( |
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Comprehensive loss |
$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
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March 31, |
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December 31, |
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Assets |
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Current Assets : |
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Cash and cash equivalents |
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$ |
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$ |
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Trade receivables (net of allowance of $ |
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Finance receivables (net of allowance of $ |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Acquired intangible assets, net |
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Internal-use software costs, net |
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Operating lease right-of-use assets |
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Other assets |
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Total assets |
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Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit) |
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Current Liabilities : |
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Accounts payable |
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Accrued payroll |
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Accrued other liabilities |
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Deferred revenue |
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Operating lease liabilities |
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Total current liabilities |
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Long-term operating lease liabilities |
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Long-term debt |
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Other long-term liabilities |
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Total liabilities |
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$ |
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$ |
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Commitments and Contingencies (Note 6) |
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Convertible Preferred Stock : |
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Convertible preferred stock; $ |
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Stockholders' Equity (Deficit) : |
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Preferred Stock; $ |
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Common stock; $ |
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Common stock - Class A; $ |
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Common Stock - Class B; $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders' equity (deficit) |
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( |
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Total liabilities, convertible preferred stock and stockholders' equity (deficit) |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share data)
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Convertible Preferred Stock |
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Common Stock |
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Common Stock Class A |
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Common Stock Class B |
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Accumulated |
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Total |
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Additional |
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Other |
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Stockholders' |
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Par |
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Par |
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Par |
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Paid-In |
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Accumulated |
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Comprehensive |
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Equity |
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Shares |
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Amount |
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Shares |
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Value |
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Shares |
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Value |
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Shares |
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Value |
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Capital |
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Deficit |
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Loss |
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(Deficit) |
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Balance, December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Issuance of common stock in |
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Issuance of common stock from the |
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Stock-based compensation |
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Conversion of redeemable convertible |
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( |
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$ |
( |
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Sale of Class B common stock to |
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( |
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( |
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Reclassification of common stock to |
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( |
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( |
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Other comprehensive income |
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Net Loss |
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( |
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( |
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Balance as of March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Convertible Preferred Stock |
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Common Stock |
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Common Stock Class A |
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Common Stock Class B |
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Accumulated |
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Total |
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Additional |
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Other |
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Stockholders' |
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Par |
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Par |
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Par |
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Paid-In |
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Accumulated |
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Comprehensive |
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Equity |
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Shares |
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Amount |
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Shares |
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Value |
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Shares |
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Value |
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Shares |
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Value |
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Capital |
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Deficit |
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Loss |
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(Deficit) |
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Balance, December 31, 2019 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Issuance of common stock from the |
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Stock-based compensation |
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Other comprehensive income |
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( |
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( |
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Net Loss |
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( |
) |
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( |
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Balance as of March 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
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Three months ended March 31, |
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2021 |
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2020 |
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Cash Flows from Operating Activities |
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Net income (loss) |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash provided by (used in) |
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Depreciation and amortization |
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Stock-based compensation expense |
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Provision for bad debt |
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Non-cash operating lease costs |
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( |
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Other non-cash, net |
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Changes in operating assets and liabilities, net of effects from purchases of |
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Trade receivables |
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( |
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Other current assets |
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( |
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( |
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Accounts payable |
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( |
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Accrued payroll |
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Accrued other liabilities |
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( |
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Deferred revenue |
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( |
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Other long-term liabilities |
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Other assets |
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( |
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( |
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Net cash provided by (used in) operating activities |
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( |
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Cash Flows from Investing Activities |
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Net increase in finance receivables |
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( |
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( |
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Purchases of property and equipment |
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( |
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( |
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Capitalization of software costs |
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( |
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( |
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Net cash provided by (used in) investing activities |
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( |
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( |
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Cash Flows from Financing Activities |
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||
Proceeds from issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and other offering costs |
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Proceeds from long term debt |
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Proceeds from exercise of common stock options |
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||
Other financing activities, net |
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( |
) |
|
Net cash provided by (used in) financing activities |
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|
||
Net increase (decrease) in cash and cash equivalents |
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( |
) |
|
Cash and cash equivalents, beginning of period |
|
|
|
|
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|
||
Cash and cash equivalents, end of period |
|
$ |
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$ |
|
||
Supplemental disclosure of cash flow information |
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||
Cash paid (received) during the period for: |
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Interest expense |
|
$ |
|
|
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|
||
Income taxes |
|
$ |
( |
) |
|
|
|
|
Cash paid included in the measurement of operating lease liabilities |
|
$ |
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||
Non-cash investing and financing activities: |
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||
Stock issuance costs in accounts payable |
|
$ |
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||
Purchase of property and equipment in accounts payable |
|
$ |
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
ACV Auctions Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business—ACV Auctions Inc. (“the Company”) was formed on December 31, 2014. The Company operates in
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 included in Form 424B4 ("Prospectus"), filed with the SEC on March 24, 2021. 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
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, $
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.
9
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.
Stock-Based Compensation—The Company uses the fair value recognition provisions of ASC 718, Compensation – Stock Compensation. The estimated fair value of each Common Stock option award is calculated on the date of grant using the Black-Scholes option pricing model. Application of the Black-Scholes option pricing model requires significant judgment, and involves the use of subjective assumptions including:
Expected Term—The expected term represents the period that the stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of the stock option awards granted, the simplified method was used to determine the expected term for awards issued to employees.
Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury constant maturity notes with terms approximately equal to the stock-based awards’ expected term.
Expected Volatility—Since the Company is newly public and does not have a trading history of common stock, the expected volatility is derived from the average historical volatilities of the common stock of several public companies considered to be comparable to the Company over a period equivalent to the expected term of the stock-based awards.
Dividend Rate—The expected dividend rate is zero as the Company has not paid and does not anticipate paying any dividends in the foreseeable future.
Fair Value of Common Stock—Prior to the IPO, the Company estimated the fair value of common stock. The Board of Directors, with input from management, considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards were approved. Subsequent to the IPO, the fair value of the underlying common stock is determined by the closing price, on the date of grant, of the Company’s Class A common stock, which is traded publicly on the Nasdaq Global Select Market.
The Company measures all stock options and other stock-based awards granted to employees, directors, consultants and other nonemployees based on the fair value on the date of the grant. The options vest based on a graded scale over the stated vesting period, and compensation expense is recognized based on their grant date fair value on a straight-line basis over the vesting period. Forfeitures are recognized as they occur.
The fair value of restricted stock awards and units are determined based on the estimated market price of the Company’s Common Stock on the grant date. The awards and units vest over time and compensation expense is recognized based on their grant date fair value ratably over the vesting period.
The Company classifies stock-based compensation expense in its Condensed Consolidated Statements of Operations in the same way the payroll costs or service payments are classified for the related stock-based award recipient.
10
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 |
Effect on consolidated |
Accounting Standards Adopted |
|||
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15) |
This guidance outlines the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract, along with clarified presentation guidance.
|
January 1, 2021
Early adoption permitted |
This guidance was early adopted as of January 1, 2018 utilizing the retrospective method and did not have a material impact to the consolidated financial statements. |
Leases (ASU 2016-02, 2018-01, 2018-10, 2018-11, 2018-20, 2019-01) |
The new guidance requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions.
|
January 1, 2021
Early adoption permitted |
The guidance was early adopted as of January 1, 2019 utilizing the modified retrospective method, and elected the practical expedients listed in ASC 842-10-65-1(f).
|
Simplifying the Test for Goodwill Impairment (ASU 2017-04) |
This guidance simplifies the goodwill impairment test by eliminating Step 2.
|
January 1, 2023
Early adoption permitted |
The guidance was early adopted as of January 1, 2019 and did not have a material impact on the consolidated financial statements.
|
Simplifying the Accounting for Income Taxes (ASU 2019-12) |
The guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740.
|
January 1, 2022
Early adoption permitted |
The guidance was early adopted on January 1, 2021 on a prospective basis and did not have a material impact to the 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.
11
2. 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.
|
Three months ended March 31, |
|
|||||
|
2021 |
|
|
2020 |
|
||
Beginning balance |
$ |
|
|
$ |
|
||
Provision for bad debt |
|
|
|
|
|
||
Net write-offs |
|
|
|
|
|
||
Write-offs |
|
( |
) |
|
|
( |
) |
Recoveries |
|
|
|
|
|
||
Net write-offs |
|
( |
) |
|
|
( |
) |
Ending balance |
$ |
|
|
$ |
|
Changes in the allowance for doubtful finance receivables for the three months ended March 31, 2021 and 2020 were as follows (in thousands):
|
Three months ended March 31, |
|
|||||
|
2021 |
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|
2020 |
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||
Beginning balance |
$ |
|
|
$ |
|
||
Provision for bad debt |
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||
Net write-offs |
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|
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||
Write-offs |
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( |
) |
|
|
( |
) |
Recoveries |
|
- |
|
|
|
- |
|
Net write-offs |
|
( |
) |
|
|
( |
) |
Ending balance |
$ |
|
|
$ |
|
3. 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
The recognized probable loss contingency, in excess of vehicle condition guarantees recognized, presented in Accrued other liabilities was $
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, 2021 and December 31, 2020.
12
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 our marketplace from transactions that originated from one seller. The complaint seeks statutory damages under such laws and other relief. 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 range of any 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.
4. Borrowings
The Company’s outstanding long-term debt consisted of the following at March 31, 2021 (in thousands):
|
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|
|
|
|
March 31, |
|
|
December 31, |
|
||
|
|
Interest Rate |
|
Maturity Date |
|
2021 |
|
|
2020 |
|
||
Revolving credit facility |
|
|
|
$ |
|
|
$ |
|
||||
Total long-term debt |
|
|
|
|
|
$ |
|
|
$ |
|
As of March 31, 2021 and December 31, 2020, the Company had outstanding $
Revolving credit facility
On December 20, 2019, the Company entered into a revolving credit facility with a maximum principal amount of $
The revolving feature on the facility ends on
The Company’s ability to borrow under the credit facility is subject to ongoing compliance with a combination of financial covenants and non-financial collateral performance metrics. As of March 31, 2021, the Company was in compliance with all of its covenants and collateral performance metrics.
13
5. Convertible Preferred Stock and Stockholders' Deficit
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
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
6. 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, |
|
|||||
|
2021 |
|
|
2020 |
|
||
Auction marketplace revenue |
$ |
|
|
$ |
|
||
Transportation, data, and other services revenue |
|
|
|
|
|
||
Marketplace and service revenue |
$ |
|
|
$ |
|
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.
7. 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 our 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, 2021,
14
The following table summarizes the stock option activity for the three months ended March 31, 2021 (in thousands, except for share and per share amounts):
|
|
Number of |
|
|
Weighted- |
|
|
Intrinsic |
|
|
Weighted- |
|
||||
Outstanding, December 31, 2020 |
|
|
|
|
$ |
|
|
$ |
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
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( |
) |
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|
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|
|||
Forfeited |
|
|
( |
) |
|
|
|
|
|
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|
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|
|||
Expired |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Outstanding, March 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
|
|
||||
Exercisable, March 31, 2021 |
|
|