November 6, 2023 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

Form: 10-Q

Documents

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


☐	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.

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.

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.

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.

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.

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.

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.


	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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company