Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 6, 2023

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

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: 001-40256

 

ACV Auctions Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-2415221

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

640 Ellicott Street, #321

Buffalo, New York

14203

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (800) 553-4070

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.001 per share

 

ACVA

 

The Nasdaq Stock Market LLC

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 ☒ No ☐

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). Yes ☒ No ☐

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

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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 No ☒

As of October 30, 2023, there were 136,166,962 shares of the registrant's Class A common stock, and 25,272,052 shares of Class B common stock, each with a par value of $0.001, outstanding.

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

 

Condensed Consolidated Statements of Operations

3

Condensed Consolidated Statements of Comprehensive Loss

4

 

Condensed Consolidated Balance Sheets

5

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity

6

Condensed Consolidated Statements of Cash Flows

8

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

 

 

 

PART II.

OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 3.

Defaults Upon Senior Securities

36

Item 4.

Mine Safety Disclosures

36

Item 5.

Other Information

36

Item 6.

Exhibits

38

Signatures

40

 

 


 

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:

 

our expectations regarding our revenue, operating expenses and other operating results, including our key metrics and our ability to meet previously announced earnings guidance;
our ability to effectively manage our growth and expand our business;
our ability to grow the number of marketplace participants on our platform;
our ability to acquire new customers and successfully retain existing customers and capture a greater share of wholesale transactions from our existing customers;
our ability to increase usage of our platform and generate revenue from our value-added services;
anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
our ability to achieve or sustain our profitability;
future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;
the costs and success of our marketing efforts, and our ability to promote our brand;
the effects of macroeconomic conditions on our business;
our reliance on key personnel and our ability to identify, recruit and retain skilled personnel, especially as we establish new offerings;
our ability to compete effectively with existing competitors and new market entrants;
our ability to obtain, maintain, protect and enforce our intellectual property rights and any costs associated therewith;
our ability to predict, prepare and respond to new kinds of technology innovations, market developments and changing customer needs;
our ability to expand internationally;
our ability to identify and complete acquisitions that complement and expand our reach and platform;
our decision to not declare or pay dividends for the foreseeable future;
our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business in the United States and other jurisdictions where we elect to do business; and
the growth rates of the markets in which we compete.

 

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)

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Marketplace and service revenue

$

104,537

 

 

$

90,852

 

 

$

318,760

 

 

$

276,951

 

Customer assurance revenue

 

14,477

 

 

 

14,567

 

 

 

44,097

 

 

 

46,605

 

Total revenue

 

119,014

 

 

 

105,419

 

 

 

362,857

 

 

 

323,556

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Marketplace and service cost of revenue (excluding
   depreciation & amortization)

 

47,928

 

 

 

46,255

 

 

 

145,732

 

 

 

143,400

 

Customer assurance cost of revenue (excluding
   depreciation & amortization)

 

12,464

 

 

 

12,221

 

 

 

38,081

 

 

 

40,432

 

Operations and technology

 

35,132

 

 

 

34,328

 

 

 

106,180

 

 

 

103,877

 

Selling, general, and administrative

 

40,797

 

 

 

34,701

 

 

 

123,689

 

 

 

106,897

 

Depreciation and amortization

 

4,980

 

 

 

3,004

 

 

 

12,086

 

 

 

7,868

 

Total operating expenses

 

141,301

 

 

 

130,509

 

 

 

425,768

 

 

 

402,474

 

Loss from operations

 

(22,287

)

 

 

(25,090

)

 

 

(62,911

)

 

 

(78,918

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

4,489

 

 

 

1,936

 

 

 

12,505

 

 

 

2,618

 

Interest expense

 

(439

)

 

 

(235

)

 

 

(1,205

)

 

 

(683

)

Total other income (expense)

 

4,050

 

 

 

1,701

 

 

 

11,300

 

 

 

1,935

 

Loss before income taxes

 

(18,237

)

 

 

(23,389

)

 

 

(51,611

)

 

 

(76,983

)

Provision for income taxes

 

1

 

 

 

279

 

 

 

409

 

 

 

695

 

Net loss

$

(18,238

)

 

$

(23,668

)

 

$

(52,020

)

 

$

(77,678

)

Weighted-average shares - basic and diluted

 

160,427,987

 

 

 

157,264,153

 

 

 

159,541,286

 

 

 

156,747,507

 

Net loss per share - basic and diluted

$

(0.11

)

 

$

(0.15

)

 

$

(0.33

)

 

$

(0.50

)

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)

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

$

(18,238

)

 

$

(23,668

)

 

$

(52,020

)

 

$

(77,678

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on available-for-sale securities

 

210

 

 

 

(1,810

)

 

 

237

 

 

 

(2,920

)

Foreign currency translation (loss) gain

 

(377

)

 

 

(1,004

)

 

 

(113

)

 

 

(2,513

)

Comprehensive loss

$

(18,405

)

 

$

(26,482

)

 

$

(51,896

)

 

$

(83,111

)

 

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)

 

 

September 30,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current Assets :

 

 

 

 

 

 

Cash and cash equivalents

 

$

226,236

 

 

$

280,752

 

Marketable securities

 

 

224,010

 

 

 

215,926

 

Trade receivables (net of allowance of $3,356 and $4,860)

 

 

168,796

 

 

 

168,732

 

Finance receivables (net of allowance of $2,673 and $2,275)

 

 

105,832

 

 

 

78,047

 

Other current assets

 

 

16,859

 

 

 

11,317

 

 Total current assets

 

 

741,733

 

 

 

754,774

 

Property and equipment (net of accumulated depreciation of $4,519 and $6,986)

 

 

5,167

 

 

 

5,710

 

Goodwill

 

 

117,830

 

 

 

91,755

 

Acquired intangible assets (net of amortization of $15,686 and $11,990)

 

 

21,457

 

 

 

19,291

 

Capitalized software (net of amortization of $12,797 and $6,930)

 

 

52,745

 

 

 

36,992

 

Other assets

 

 

20,152

 

 

 

6,400

 

Total assets

 

 

959,084

 

 

 

914,922

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current Liabilities :

 

 

 

 

 

 

Accounts payable

 

 

338,137

 

 

 

323,661

 

Accrued payroll

 

 

12,369

 

 

 

10,052

 

Accrued other liabilities

 

 

16,861

 

 

 

14,504

 

 Total current liabilities

 

 

367,367

 

 

 

348,217

 

Long-term debt

 

 

105,000

 

 

 

75,500

 

Other long-term liabilities

 

 

19,619

 

 

 

5,481

 

Total liabilities

 

 

491,986

 

 

 

429,198

 

Commitments and Contingencies (Note 5)

 

 

 

 

 

 

Stockholders' Equity :

 

 

 

 

 

 

Preferred Stock; $0.001 par value; 20,000,000 shares authorized;
   
0 and 0 shares issued and outstanding at September 30, 2023 and
   December 31, 2022, respectively

 

 

-

 

 

 

-

 

Common Stock - Class A; $0.001 par value; 2,000,000,000 shares authorized;
   
135,757,008 and 121,214,275 shares issued and outstanding at September 30, 2023
   and December 31, 2022, respectively

 

 

136

 

 

 

121

 

Common Stock - Class B; $0.001 par value; 160,000,000 shares authorized;
  
25,210,995 and 37,241,952 shares issued and outstanding at September 30, 2023
   and December 31, 2022, respectively

 

 

25

 

 

 

37

 

Additional paid-in capital

 

 

869,962

 

 

 

836,695

 

Accumulated deficit

 

 

(399,374

)

 

 

(347,354

)

Accumulated other comprehensive loss

 

 

(3,651

)

 

 

(3,775

)

Total stockholders' equity

 

 

467,098

 

 

 

485,724

 

Total liabilities and stockholders' equity

 

$

959,084

 

 

$

914,922

 

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)

 

 

 

Three Months September 30, 2023

 

 

 

Common Stock Class A

 

 

Common Stock Class B

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

 

 

 

Par

 

 

 

 

 

Par

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance, June 30, 2023

 

 

134,717,291

 

 

$

135

 

 

 

25,610,643

 

 

$

26

 

 

$

860,628

 

 

$

(381,136

)

 

$

(3,484

)

 

$

476,169

 

Conversion of Class B common
    stock to Class A common
    stock

 

 

474,343

 

 

 

1

 

 

 

(474,343

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

-

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,238

)

 

 

 

 

 

(18,238

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(167

)

 

 

(167

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,176

 

 

 

 

 

 

 

 

 

13,176

 

Exercise of common stock options

 

 

243,358

 

 

 

-

 

 

 

 

 

 

 

 

 

802

 

 

 

 

 

 

 

 

 

802

 

Vested restricted stock units

 

 

322,016

 

 

 

-

 

 

 

74,695

 

 

 

-

 

 

 

(4,644

)

 

 

 

 

 

 

 

 

(4,644

)

Balance as of September 30, 2023

 

 

135,757,008

 

 

$

136

 

 

 

25,210,995

 

 

$

25

 

 

$

869,962

 

 

$

(399,374

)

 

$

(3,651

)

 

$

467,098

 

 

 

 

Nine Months Ended September 30, 2023

 

 

 

Common Stock Class A

 

 

Common Stock Class B

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

 

 

 

Par

 

 

 

 

 

Par

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance, December 31, 2022

 

 

121,214,275

 

 

$

121

 

 

 

37,241,952

 

 

 

37

 

 

$

836,695

 

 

$

(347,354

)

 

$

(3,775

)

 

$

485,724

 

Conversion of Class B common
    stock to Class A common
    stock

 

 

12,269,282

 

 

 

12

 

 

 

(12,269,282

)

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

-

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(52,020

)

 

 

 

 

 

(52,020

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

124

 

 

 

124

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39,641

 

 

 

 

 

 

 

 

 

39,641

 

Exercise of common stock options

 

 

1,080,034

 

 

 

1

 

 

 

 

 

 

 

 

 

3,576

 

 

 

 

 

 

 

 

 

3,577

 

Vested restricted stock units

 

 

1,017,490

 

 

 

1

 

 

 

238,325

 

 

 

-

 

 

 

(11,280

)

 

 

 

 

 

 

 

 

(11,279

)

Issuance of shares for employee
     stock purchase plan

 

 

175,927

 

 

 

1

 

 

 

 

 

 

 

 

 

1,330

 

 

 

 

 

 

 

 

 

1,331

 

Balance as of September 30, 2023

 

 

135,757,008

 

 

$

136

 

 

 

25,210,995

 

 

$

25

 

 

$

869,962

 

 

$

(399,374

)

 

$

(3,651

)

 

$

467,098

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

6


 

 

 

Three Months Ended September 30, 2022

 

 

 

Common Stock Class A

 

 

Common Stock Class B

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

 

 

 

Par

 

 

 

 

 

Par

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance, June 30, 2022

 

 

114,933,675

 

 

$

115

 

 

 

42,613,583

 

 

$

42

 

 

$

817,338

 

 

$

(299,171

)

 

$

(2,659

)

 

$

515,665

 

Conversion of Class B common
    stock to Class A common
    stock

 

 

2,198,667

 

 

 

2

 

 

 

(2,198,667

)

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

-

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,668

)

 

 

 

 

 

(23,668

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,814

)

 

 

(2,814

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,242

 

 

 

 

 

 

 

 

 

10,242

 

Exercise of common stock options

 

 

138,033

 

 

 

-

 

 

 

 

 

 

 

 

 

239

 

 

 

 

 

 

 

 

 

239

 

Vested restricted stock units

 

 

130,057

 

 

 

-

 

 

 

79,274

 

 

 

-

 

 

 

(926

)

 

 

 

 

 

 

 

 

(926

)

Issuance of shares for employee
     stock purchase plan

 

 

368

 

 

 

-

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

-

 

Balance as of September 30, 2022

 

 

117,400,800

 

 

$

117

 

 

 

40,494,190

 

 

$

40

 

 

$

826,893

 

 

$

(322,839

)

 

$

(5,473

)

 

$

498,738

 

 

 

 

Nine Months Ended September 30, 2022

 

 

 

Common Stock Class A

 

 

Common Stock Class B

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

 

 

 

Par

 

 

 

 

 

Par

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance, December 31, 2021

 

 

106,420,843

 

 

$

106

 

 

 

49,661,126

 

 

 

50

 

 

$

801,142

 

 

$

(245,161

)

 

$

(40

)

 

$

556,097

 

Conversion of Class B common
    stock to Class A common
    stock

 

 

9,246,210

 

 

 

10

 

 

 

(9,246,210

)

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

-

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(77,678

)

 

 

 

 

 

(77,678

)

Other comprehensive loss