10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on May 10, 2023
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) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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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.
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.
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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 3, 2023, there were
Table of Contents
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PART I. |
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Item 1. |
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3 |
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5 |
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Condensed Consolidated Statements of Changes in Stockholders’ Equity |
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7 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
Item 3. |
31 |
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Item 4. |
31 |
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PART II. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
32 |
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Item 5. |
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Item 6. |
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35 |
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.
1
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 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 (the "SEC"), webcasts, press releases and conference calls.
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share data)
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Three months ended March 31, |
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2023 |
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2022 |
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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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Other income (expense): |
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Interest income |
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Interest expense |
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Total other income (expense) |
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( |
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Loss before income taxes |
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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.
3
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(in thousands)
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Three months ended March 31, |
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2023 |
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2022 |
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Net loss |
$ |
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$ |
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Other comprehensive income (loss): |
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Net unrealized gains (losses) on available-for-sale |
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Foreign currency translation gain (loss) |
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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.
4
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(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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Marketable securities |
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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 of accumulated depreciation of $ |
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Goodwill |
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Acquired intangible assets (net of amortization of $ |
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Internal-use software costs (net of amortization of $ |
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Other assets |
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Total assets |
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Liabilities and Stockholders' Equity |
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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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Total current 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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s (Note 5) |
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Stockholders' Equity : |
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Preferred 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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Accumulated other comprehensive loss |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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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.
5
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share data)
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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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Additional |
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Other |
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Total |
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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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Stockholders' |
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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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Equity |
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Balance, December 31, 2022 |
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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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Conversion of Class B common stock to Class A |
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( |
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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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Other comprehensive income (loss) |
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Stock-based compensation |
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Exercise of common stock options |
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- |
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Vested restricted stock units |
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- |
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( |
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( |
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Balance as of March 31, 2023 |
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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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Common Stock Class A |
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Common Stock Class B |
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Accumulated |
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Additional |
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Other |
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Total |
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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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Stockholders' |
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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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Equity |
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Balance, December 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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Conversion of Class B common stock to Class A |
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( |
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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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Other comprehensive income (loss) |
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( |
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( |
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Stock-based compensation |
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Exercise of common stock options |
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- |
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Vested restricted stock units |
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- |
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( | ) |
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( | ) |
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Escrowed shares |
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( |
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- |
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Balance as of March 31, 2022 |
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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.
6
ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
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Three months ended March 31, |
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2023 |
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2022 |
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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 income (loss) to net cash provided by (used in) operating |
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Depreciation and amortization |
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Stock-based compensation expense, net of amounts capitalized |
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Provision for bad debt |
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Other non-cash, net |
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( |
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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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( |
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Other operating assets |
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( |
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( |
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Accounts payable |
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( |
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Other operating liabilities |
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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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Purchases of marketable securities |
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( |
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( |
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Maturities and redemptions of marketable securities |
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Sales of marketable securities |
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Acquisition of businesses (net of cash acquired) |
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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 long term debt |
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Payments towards long term debt |
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( |
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Proceeds from exercise of stock options |
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Payment of RSU tax withholdings in exchange for common shares |
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( |
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( |
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Net cash provided by (used in) financing activities |
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Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
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Net increase (decrease) in cash, cash equivalents, and restricted cash |
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( |
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Cash, cash equivalents, and restricted cash, beginning of period |
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Cash, cash equivalents, and restricted cash, end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information |
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Non-cash investing and financing activities: |
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Stock-based compensation included in capitalized software development |
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$ |
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$ |
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Purchase of property and equipment and internal use software in accounts |
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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.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nature of Business – The Company operates in
Basis of Preparation – The accompanying unaudited interim condensed 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 condensed 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, 2022, as filed with the SEC on March 1, 2023 (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”).
The following is a summary of available-for-sale financial instruments, as of March 31, 2023 and December 31, 2022, respectively (in thousands):
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March 31, 2023 |
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Amortized Cost |
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Unrealized Gain |
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Unrealized Losses |
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Fair Value |
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Cash equivalents: |
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Corporate securities (1) |
$ |
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$ |
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$ |
( |
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$ |
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U.S. treasury and agency securities |
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Total Cash equivalents |
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$ |
( |
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Marketable securities: |
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Corporate securities (1) |
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( |
) |
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U.S. treasury and agency securities |
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( |
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Total Marketable securities |
$ |
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$ |
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$ |
( |
) |
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$ |
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(1) Comprised primarily of corporate bonds and commercial paper |
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8
|
December 31, 2022 |
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Amortized Cost |
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Unrealized Gain |
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Unrealized Losses |
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Fair Value |
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Marketable securities: |
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|
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|
|
|
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Corporate securities (1) |
$ |
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|