10-Q 1 acva-20240930.htm 10-Q acva-20240930
000163787312-31false2024Q30.33330.33330.3333156248xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesacva:industrySegmentxbrli:pureacva:agreementacva:business00016378732024-01-012024-09-300001637873us-gaap:CommonClassAMember2024-10-310001637873us-gaap:CommonClassBMember2024-10-310001637873acva:MarketplaceAndServiceMember2024-07-012024-09-300001637873acva:MarketplaceAndServiceMember2023-07-012023-09-300001637873acva:MarketplaceAndServiceMember2024-01-012024-09-300001637873acva:MarketplaceAndServiceMember2023-01-012023-09-300001637873acva:CustomerAssuranceMember2024-07-012024-09-300001637873acva:CustomerAssuranceMember2023-07-012023-09-300001637873acva:CustomerAssuranceMember2024-01-012024-09-300001637873acva:CustomerAssuranceMember2023-01-012023-09-3000016378732024-07-012024-09-3000016378732023-07-012023-09-3000016378732023-01-012023-09-3000016378732024-09-3000016378732023-12-310001637873us-gaap:CommonClassAMember2023-12-310001637873us-gaap:CommonClassAMember2024-09-300001637873us-gaap:CommonClassBMember2023-12-310001637873us-gaap:CommonClassBMember2024-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2024-06-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2024-06-300001637873us-gaap:AdditionalPaidInCapitalMember2024-06-300001637873us-gaap:RetainedEarningsMember2024-06-300001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-3000016378732024-06-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2024-07-012024-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2024-07-012024-09-300001637873us-gaap:RetainedEarningsMember2024-07-012024-09-300001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-012024-09-300001637873us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2024-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2024-09-300001637873us-gaap:AdditionalPaidInCapitalMember2024-09-300001637873us-gaap:RetainedEarningsMember2024-09-300001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2023-12-310001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-12-310001637873us-gaap:AdditionalPaidInCapitalMember2023-12-310001637873us-gaap:RetainedEarningsMember2023-12-310001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2024-01-012024-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2024-01-012024-09-300001637873us-gaap:RetainedEarningsMember2024-01-012024-09-300001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-09-300001637873us-gaap:AdditionalPaidInCapitalMember2024-01-012024-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2023-06-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-06-300001637873us-gaap:AdditionalPaidInCapitalMember2023-06-300001637873us-gaap:RetainedEarningsMember2023-06-300001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-3000016378732023-06-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2023-07-012023-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-07-012023-09-300001637873us-gaap:RetainedEarningsMember2023-07-012023-09-300001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001637873us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2023-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-09-300001637873us-gaap:AdditionalPaidInCapitalMember2023-09-300001637873us-gaap:RetainedEarningsMember2023-09-300001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-3000016378732023-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2022-12-310001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-12-310001637873us-gaap:AdditionalPaidInCapitalMember2022-12-310001637873us-gaap:RetainedEarningsMember2022-12-310001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-3100016378732022-12-310001637873us-gaap:CommonStockMemberus-gaap:CommonClassAMember2023-01-012023-09-300001637873us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-01-012023-09-300001637873us-gaap:RetainedEarningsMember2023-01-012023-09-300001637873us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300001637873us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001637873us-gaap:CommonClassAMember2023-01-012023-09-300001637873us-gaap:CorporateDebtSecuritiesMember2024-09-300001637873us-gaap:USTreasurySecuritiesMember2024-09-300001637873us-gaap:CorporateDebtSecuritiesMember2023-12-310001637873us-gaap:CashEquivalentsMember2023-12-310001637873us-gaap:CorporateDebtSecuritiesMember2023-12-310001637873us-gaap:USTreasurySecuritiesMember2023-12-310001637873us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2024-09-300001637873us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2024-09-300001637873us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Member2024-09-300001637873us-gaap:MoneyMarketFundsMember2024-09-300001637873us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2024-09-300001637873us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2024-09-300001637873us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2024-09-300001637873us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2024-09-300001637873us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2024-09-300001637873us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2024-09-300001637873us-gaap:FairValueInputsLevel1Member2024-09-300001637873us-gaap:FairValueInputsLevel2Member2024-09-300001637873us-gaap:FairValueInputsLevel3Member2024-09-300001637873us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2023-12-310001637873us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2023-12-310001637873us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Member2023-12-310001637873us-gaap:MoneyMarketFundsMember2023-12-310001637873us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2023-12-310001637873us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-12-310001637873us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2023-12-310001637873us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2023-12-310001637873us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2023-12-310001637873us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2023-12-310001637873us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2023-12-310001637873us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2023-12-310001637873us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2023-12-310001637873us-gaap:FairValueInputsLevel1Member2023-12-310001637873us-gaap:FairValueInputsLevel2Member2023-12-310001637873us-gaap:FairValueInputsLevel3Member2023-12-3100016378732023-01-012023-12-310001637873acva:AccruedOtherLiabilitiesMember2024-09-300001637873acva:AccruedOtherLiabilitiesMember2023-12-310001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMember2021-08-242021-08-240001637873us-gaap:LetterOfCreditMember2021-08-242021-08-240001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMember2023-06-012023-06-010001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMember2023-06-012023-06-010001637873acva:CreditSpreadAdjustmentOneMemberacva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMember2023-06-012023-06-010001637873acva:CreditSpreadAdjustmentTwoMemberacva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMember2023-06-012023-06-010001637873acva:CreditSpreadAdjustmentThreeMemberacva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMember2023-06-012023-06-010001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2023-06-012023-06-010001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMemberacva:NYFRBMember2023-06-012023-06-010001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2023-06-010001637873acva:FirstAmendmentToLoanAndSecurityAgreementMemberus-gaap:RevolvingCreditFacilityMember2023-06-012023-06-010001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SubsequentEventMember2024-10-070001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMember2024-09-300001637873acva:TwoThousandAndTwentyOneRevolverMemberus-gaap:RevolvingCreditFacilityMember2023-12-310001637873acva:WarehouseFacilityMemberus-gaap:RevolvingCreditFacilityMember2024-06-200001637873acva:WarehouseFacilityMemberus-gaap:RevolvingCreditFacilityMemberacva:AssetBackedCommercialPaperConduitWeightedAverageAnnualRateMember2024-06-202024-06-200001637873acva:WarehouseFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMember2024-06-202024-06-200001637873acva:WarehouseFacilityMemberus-gaap:RevolvingCreditFacilityMember2024-06-202024-06-200001637873acva:WarehouseFacilityMemberus-gaap:RevolvingCreditFacilityMemberacva:NYFRBMember2024-06-202024-06-200001637873acva:WarehouseFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2024-06-200001637873acva:WarehouseFacilityMemberus-gaap:RevolvingCreditFacilityMember2024-09-300001637873acva:AuctionMarketplaceRevenueMember2024-07-012024-09-300001637873acva:AuctionMarketplaceRevenueMember2023-07-012023-09-300001637873acva:AuctionMarketplaceRevenueMember2024-01-012024-09-300001637873acva:AuctionMarketplaceRevenueMember2023-01-012023-09-300001637873acva:OtherMarketplaceRevenueMember2024-07-012024-09-300001637873acva:OtherMarketplaceRevenueMember2023-07-012023-09-300001637873acva:OtherMarketplaceRevenueMember2024-01-012024-09-300001637873acva:OtherMarketplaceRevenueMember2023-01-012023-09-300001637873acva:DataServicesRevenueMember2024-07-012024-09-300001637873acva:DataServicesRevenueMember2023-07-012023-09-300001637873acva:DataServicesRevenueMember2024-01-012024-09-300001637873acva:DataServicesRevenueMember2023-01-012023-09-300001637873us-gaap:RestrictedStockUnitsRSUMember2023-12-310001637873us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-09-300001637873us-gaap:RestrictedStockUnitsRSUMember2024-09-300001637873acva:CommonStockOptionsRestrictedStockUnitsAndPerformanceShareUnitsMember2024-09-300001637873acva:CommonStockOptionsRestrictedStockUnitsAndPerformanceShareUnitsMember2024-01-012024-09-3000016378732024-03-310001637873acva:A2024AgreementsMember2024-03-310001637873acva:A2024AgreementsMember2024-09-300001637873acva:A2024AgreementsMember2024-01-012024-09-300001637873us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-07-012024-09-300001637873us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2024-07-012024-09-300001637873us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2024-07-012024-09-300001637873us-gaap:CommonClassAMember2024-07-012024-09-300001637873us-gaap:CommonClassBMember2024-07-012024-09-300001637873us-gaap:CommonClassAMember2023-07-012023-09-300001637873us-gaap:CommonClassBMember2023-07-012023-09-300001637873us-gaap:CommonClassAMember2024-01-012024-09-300001637873us-gaap:CommonClassBMember2024-01-012024-09-300001637873us-gaap:CommonClassBMember2023-01-012023-09-300001637873acva:UnvestedRestrictedStockAwardAndRestrictedStockUnitsMember2024-07-012024-09-300001637873acva:UnvestedRestrictedStockAwardAndRestrictedStockUnitsMember2023-07-012023-09-300001637873acva:UnvestedRestrictedStockAwardAndRestrictedStockUnitsMember2024-01-012024-09-300001637873acva:UnvestedRestrictedStockAwardAndRestrictedStockUnitsMember2023-01-012023-09-300001637873us-gaap:EmployeeStockOptionMember2024-07-012024-09-300001637873us-gaap:EmployeeStockOptionMember2023-07-012023-09-300001637873us-gaap:EmployeeStockOptionMember2024-01-012024-09-300001637873us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001637873acva:TheJune2024AcquisitionMember2024-06-172024-06-170001637873acva:TheJune2024AcquisitionMember2024-06-170001637873acva:TheMarch13th2024AcquisitionMember2024-03-132024-03-130001637873acva:TheMarch13th2024AcquisitionMember2024-03-130001637873acva:TheMarch8th2024AcquisitionMember2024-03-082024-03-080001637873acva:TheMarch8th2024AcquisitionMember2024-03-080001637873acva:AllianceAutoAuctionsMember2024-01-302024-01-300001637873acva:AllianceAutoAuctionsMember2024-01-300001637873acva:TheApril2023AcquisitionMember2023-04-242023-04-240001637873acva:TheApril2023AcquisitionMember2023-04-240001637873acva:TheAugust2023AcquisitionMember2023-08-222023-08-220001637873acva:TheAugust2023AcquisitionMember2023-08-220001637873acva:WilliamZerellaMember2024-01-012024-09-300001637873acva:WilliamZerellaMember2024-07-012024-09-300001637873acva:WilliamZerellaMember2024-09-300001637873acva:CraigAndersonMember2024-01-012024-09-300001637873acva:CraigAndersonSeptember2024PlanMemberacva:CraigAndersonMember2024-07-012024-09-300001637873acva:CraigAndersonSeptember2023PlanMemberacva:CraigAndersonMember2024-07-012024-09-300001637873acva:CraigAndersonSeptember2024PlanMemberacva:CraigAndersonMember2024-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
oTRANSITION 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 shareACVA
Nasdaq Global Select Market
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  x    No  o
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 x    No  o
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
xAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o    No  x
As of October 31, 2024, there were 158,276,243 shares of the registrant's Class A common stock, and 9,363,720 shares of Class B common stock, each with a par value of $0.001, outstanding.



Table of Contents
  Page
 
 
  


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, including providing additional channels for auction services for dealers and commercial partners;
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, such as artificial intelligence, as well as 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 (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,
 2024202320242023
Revenue:
Marketplace and service revenue$155,908 $104,537 $429,848 $318,760 
Customer assurance revenue15,421 14,477 47,794 44,097 
Total revenue171,329 119,014 477,642 362,857 
Operating expenses:
Marketplace and service cost of revenue (excluding depreciation & amortization)67,064 47,928 187,010 145,732 
Customer assurance cost of revenue (excluding depreciation & amortization)14,176 12,464 41,548 38,081 
Operations and technology42,539 35,132 120,302 106,180 
Selling, general, and administrative54,973 40,797 160,738 123,689 
Depreciation and amortization9,716 4,980 26,351 12,086 
Total operating expenses188,468 141,301 535,949 425,768 
Loss from operations(17,139)(22,287)(58,307)(62,911)
Other income (expense):
Interest income2,050 4,489 7,410 12,505 
Interest expense(1,077)(439)(2,218)(1,205)
Total other income (expense)973 4,050 5,192 11,300 
Loss before income taxes(16,166)(18,237)(53,115)(51,611)
(Benefit from) provision for income taxes(137)1 448 409 
Net loss$(16,029)$(18,238)$(53,563)$(52,020)
Weighted-average shares - basic and diluted165,723,168160,427,987164,337,209159,541,286
Net loss per share - basic and diluted$(0.10)$(0.11)$(0.33)$(0.33)
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,
2024202320242023
Net loss$(16,029)$(18,238)$(53,563)$(52,020)
Other comprehensive income (loss):
Net unrealized gains (losses) on available-for-sale securities326 210 682 237 
Foreign currency translation (loss) gain1,121 (377)678 (113)
Comprehensive loss$(14,582)$(18,405)$(52,203)$(51,896)
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,
2024
 December 31,
2023
Assets
Current Assets:
Cash and cash equivalents$252,524 $182,571 
Marketable securities35,228 228,761 
Trade receivables (net of allowance of $7,005 and $2,868)
203,728 164,009 
Finance receivables (net of allowance of $3,557 and $3,428)
130,785 119,034 
Other current assets16,967 12,524 
Total current assets639,232 706,899 
Property and equipment (net of accumulated depreciation of $4,615 and $4,462)
7,932 4,918 
Goodwill177,899 103,379 
Acquired intangible assets (net of amortization of $26,235 and $17,534)
98,971 34,192 
Capitalized software (net of amortization of $32,333 and $17,059)
66,249 55,771 
Other assets44,070 17,765 
Total assets$1,034,353 $922,924 
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable$385,696 $305,845 
Accrued payroll15,044 12,245 
Accrued other liabilities21,502 15,851 
Total current liabilities422,242 333,941 
Long-term debt115,000 115,000 
Other long-term liabilities40,899 17,455 
Total liabilities578,141 466,396 
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, 2024 and December 31, 2023, respectively
  
Common Stock - Class A; $0.001 par value; 2,000,000,000 shares authorized; 157,720,580 and 138,637,352 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
158 139 
Common Stock - Class B; $0.001 par value; 160,000,000 shares authorized; 9,325,487 and 23,205,487 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
9 23 
Additional paid-in capital932,392 880,510 
Accumulated deficit(476,178)(422,615)
Accumulated other comprehensive loss(169)(1,529)
Total stockholders' equity456,212 456,528 
Total liabilities and stockholders' equity$1,034,353 $922,924 
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 Ended September 30, 2024
Common Stock Class ACommon Stock Class B Additional
Paid-In
 Capital
Accumulated
 Deficit
Accumulated
Other
Comprehensive
 Loss
Total
Stockholders'
 Equity
SharesPar
Value
Shares Par
 Value
Balance as of June 30, 2024151,659,441$152 14,370,258$14 $919,216 $(460,149)$(1,616)$457,617 
Conversion of Class B common stock to Class A common stock5,106,9815(5,106,981)(5)
Net loss(16,029)(16,029)
Other comprehensive income (loss)1,4471,447
Stock-based compensation17,77217,772
Exercise of common stock options514,73011,8301,831
Vested restricted stock units439,42862,210(6,426)(6,426)
Balance as of September 30, 2024157,720,580$158 9,325,487$9 $932,392 $(476,178)$(169)$456,212 
Nine Months Ended September 30, 2024
 Common Stock Class ACommon Stock Class B


Accumulated
Other
Comprehensive
 Loss

 SharesPar
Value
SharesPar
 Value
Additional
Paid-In
 Capital
Accumulated
 Deficit
Total
Stockholders'
 Equity
Balance as of December 31, 2023138,637,352$139 23,205,487$23 $880,510 $(422,615)$(1,529)$456,528 
Conversion of Class B common stock to Class A common stock14,710,01715 (14,710,017)(15)— — — - 
Net loss— — — — — (53,563)— (53,563)
Other comprehensive income (loss)— — — — — — 1,360 1,360 
Stock-based compensation— — — — 52,117 — — 52,117 
Issuance of shares for acquisitions1,413,0751 — — 8,555 — — 8,556 
Exercise of common stock options1,440,7112 631,2391 8,641 — — 8,644 
Vested restricted stock units1,377,1421 198,778— (19,429)— — (19,428)
Issuance of shares for employee stock purchase plan142,283— — — 1,998 — — 1,998 
Balance as of September 30, 2024157,720,580$158 9,325,487$9 $932,392 $(476,178)$(169)$456,212 


6


Three Months Ended September 30, 2023
Common Stock Class ACommon Stock Class B
Accumulated Other Comprehensive Loss
SharesPar
Value
SharesPar
 Value
Additional
Paid-In
 Capital
Accumulated
 Deficit
Total
Stockholders'
 Equity
Balance as of June 30, 2023134,717,291$135 25,610,643$26 $860,628 $(381,136)$(3,484)$476,169 
Conversion of Class B common stock to Class A common stock474,3431 (474,343)(1)— — —  
Net loss— — — — — (18,238)— (18,238)
Other comprehensive income (loss)— — — — — — (167)(167)
Stock-based compensation— — — — 13,176 — — 13,176 
Exercise of common stock options243,358— — — 802 — — 802 
Vested restricted stock units322,016— 74,695— (4,644)— — (4,644)
Balance as of September 30, 2023135,757,008$136 25,210,995$25 $869,962 $(399,374)$(3,651)$467,098 
Nine Months Ended September 30, 2023
Common Stock Class ACommon Stock Class B


Accumulated
Other
Comprehensive
 Loss

SharesPar
Value
SharesPar
 Value
Additional
Paid-In
 Capital
Accumulated
 Deficit
Total
Stockholders'
 Equity
Balance as of December 31, 2022121,214,275$121 37,241,952$37 $836,695 $(347,354)$(3,775)$485,724 
Conversion of Class B common stock to Class A common stock12,269,28212 (12,269,282)(12)— — —  
Net loss— (52,020)— (52,020)
Other comprehensive income (loss)— — 124 124 
Stock-based compensation39,641 — — 39,641 
Exercise of common stock options1,080,0341 3,576 — — 3,577 
Vested restricted stock units1,017,4901 238,325(11,280)— — (11,279)
Issuance of shares for employee stock purchase plan175,9271 1,330 — — 1,331 
Balance as of September 30, 2023135,757,008$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.
7

ACV AUCTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine months ended September 30,
20242023
Cash Flows from Operating Activities
Net income (loss)$(53,563)$(52,020)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization26,451 12,407 
Stock-based compensation expense, net of amounts capitalized48,055 36,262 
Provision for bad debt8,161 8,530 
Other non-cash, net369 (772)
Changes in operating assets and liabilities, net of effects from purchases of businesses:
Trade receivables(16,803)10,990 
Other operating assets(2,168)(5,266)
Accounts payable55,684 (2,543)
Other operating liabilities2,430 1,023 
Net cash provided by (used in) operating activities68,616 8,611 
Cash Flows from Investing Activities  
Net increase in finance receivables(12,536)(30,991)
Proceeds from sale of real estate14,083  
Purchases of property and equipment(3,834)(1,518)
Capitalization of software costs(22,438)(19,319)
Purchases of marketable securities(21,607)(116,036)
Maturities and redemptions of marketable securities85,164 107,690 
Sales of marketable securities130,090 2,649 
Acquisition of businesses (net of cash acquired)(156,608)(28,649)
Net cash provided by (used in) investing activities12,314 (86,174)
Cash Flows from Financing Activities  
Proceeds from long term debt455,000 305,000 
Payments towards long term debt(455,000)(275,500)
Payment of debt issuance costs(1,966) 
Proceeds from exercise of stock options8,644 3,576 
Payment of RSU tax withholdings in exchange for common shares surrendered by RSU holders(19,537)(11,280)
Proceeds from employee stock purchase plan1,998 1,330 
Other financing activities(66)(74)
Net cash provided by (used in) financing activities(10,927)23,052 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(50)(5)
Net increase (decrease) in cash, cash equivalents, and restricted cash69,953 (54,516)
Cash, cash equivalents, and restricted cash, beginning of period182,571 280,752 
Cash, cash equivalents, and restricted cash, end of period$252,524 $226,236 
Supplemental disclosure of cash flow information
Non-cash investing and financing activities:
Stock-based compensation included in capitalized software development costs$3,869 $2,394 
Purchase of property and equipment and internal use software in accounts payable$886 $1,277 
The accompanying notes are an integral part of these condensed consolidated financial statements
8

ACV AUCTIONS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.    Nature of Business and Summary of Significant Accounting Policies
Nature of Business – The Company operates in one industry segment, providing a wholesale auction marketplace (the “Marketplace”) to facilitate business-to-business used vehicle sales between a selling dealership (“Seller”) and a buying dealership (“Buyer”). Customers using the Marketplace are licensed automotive dealerships or other commercial automotive enterprises. At the election of the customer purchasing a vehicle, the Company can arrange third-party transportation services for the delivery of the purchased vehicle through its wholly owned subsidiary, ACV Transportation LLC. The Company can also provide the customer financing for the purchased vehicle through its wholly owned subsidiary, ACV Capital LLC ("ACV Capital"). ACV also provides data services that offer insights into the condition and value of used vehicles for transactions both on and off the Company's Marketplace, which help dealerships, their end customers, and commercial partners make more informed decisions to transact with confidence and efficiency. Customers using data services are licensed automotive dealerships or other commercial automotive enterprises. All services are provided in the United States and certain data services are also provided internationally. Services are supported by the Company’s operations which are primarily in North America and India.
Basis of Consolidation – The condensed consolidated financial statements include the accounts of ACV Auctions Inc. and all of its controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Basis of Preparation – The accompanying unaudited interim 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, 2023, as filed with the SEC on February 21, 2024 (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”).
Seasonality – The volume of vehicles sold through the Marketplace generally fluctuates from quarter to quarter. This seasonality is caused by several factors, including holidays, weather, the seasonality of the retail market for used vehicles and the timing of federal tax returns, which affects the demand side of the automotive industry. As a result, revenue and operating expenses related to volume fluctuate accordingly on a quarterly basis. In the fourth quarter, we typically experience lower used vehicle volume on our Marketplace as well as additional costs associated with the holidays. Seasonally depressed used vehicle volume on our Marketplace typically continues during the winter months through the beginning of the first quarter. Typical seasonality trends may not be observed in periods where other external factors more significantly impact the industry.
Recent Accounting PronouncementsThe following table provides a description of accounting standards that are not yet adopted that could have an impact to the consolidated financial statements upon adoption.
9

Accounting Standard UpdateDescriptionRequired date of adoptionEffect on consolidated financial statements
Accounting Standards Not Yet Adopted
Improvements to Reportable Segment Disclosures (ASU 2023-07)The guidance amends reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.December 31, 2024The Company is currently evaluating the impact of this guidance and expects the adoption to result in additional disclosures in the notes to our consolidated financial statements.
Income Taxes (ASU 2023-09)The guidance amends income tax disclosure requirements to provide information to better assess how an entity's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. It requires annual disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold.December 31, 2025The Company is currently evaluating the impact this guidance may have on the consolidated financial statements.
2.    Financial Instruments
The following is a summary of available-for-sale financial instruments, as of September 30, 2024 and December 31, 2023, respectively (in thousands):
September 30, 2024
Amortized CostUnrealized Gains
Unrealized Losses
Fair Value
Marketable securities:
Corporate securities (1)
$31,098 $36 $(89)$31,045 
U.S. treasury and agency securities4,177 6  4,183 
Total Marketable securities$35,275 $42 $(89)$35,228 
(1)Comprised primarily of corporate bonds
December 31, 2023
Amortized CostUnrealized Gain
Unrealized Losses
Fair Value
Cash equivalents:
Corporate securities (1)
$1,213 $ $(1)$1,212 
Total cash equivalents1,213  (1)1,212 
Marketable securities:
Corporate securities (1)
$199,084 $115 $(819)$198,380 
U.S. treasury and agency securities30,404 25 (48)30,381 
Total Marketable securities$229,488 $140 $(867)$228,761 
(1)Comprised primarily of corporate bonds and commercial paper
As of September 30, 2024, the fair values of available-for-sale financial instruments, by remaining contractual maturity, were as follows (in thousands):
Due within one year$28,491 
Due in one to five years6,737 
Total$35,228 
10

The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio.
The Company does not believe that any unrealized losses are attributable to credit-related factors based on its evaluation of available evidence. To determine whether a decline in value is related to credit loss, the Company evaluates, among other factors: the extent to which the fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency and any adverse conditions specifically related to an issuer of a security or its industry. Unrealized gain and losses on marketable securities are presented net of tax.
3.    Fair Value Measurement
Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis (at least annually). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation of these assets or liabilities are as follows:
Level 1: Observable inputs such as quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs other than the quoted prices in active markets that are observable either directly or indirectly.
Level 3: Unobservable inputs in which there is little or no market data which require the Company to develop its own assumptions.
The Company’s financial instruments that are not measured at fair value on a recurring basis include trade and finance accounts receivable and accounts payable whose carrying values approximate fair value due to the short-term nature of those instruments.
The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
 September 30, 2024
 Level 1Level 2Level 3Total
Cash equivalents:   
Money market funds$83,971 $ $ $83,971 
Marketable Securities:   
Corporate securities 31,045  31,045 
U.S. treasury and agency securities504 3,679  4,183 
Total financial assets$84,475 $34,724 $ $119,199 
11

 December 31, 2023
 Level 1Level 2Level 3Total
Cash equivalents:   
Money market funds$22,433 $ $ $22,433 
Corporate securities 1,212  1,212 
Marketable Securities:   
Corporate securities 198,380  198,380 
U.S. treasury and agency securities20,064 10,317  30,381 
Total financial assets$42,497 $209,909 $ $252,406 
The Company classifies its highly liquid money market funds and U.S treasury securities within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its corporate securities, and U.S. agency securities within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.
4.    Accounts Receivable & Allowance for Doubtful Receivables
The Company maintains an allowance for doubtful receivables that in management’s judgment reflects losses inherent in the portfolio. A provision for doubtful receivables is recorded to adjust the level of the allowance in accordance with GAAP.
Changes in the allowance for doubtful trade receivables for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):
Three months ended September 30,Nine months ended September 30,
2024202320242023
Beginning balance$5,507 $3,629 $2,868 $4,860 
Provision for bad debt2,271 2,046 5,048 5,325 
Net write-offs
Write-offs(1,082)(3,254)(2,197)(11,442)
Recoveries309 935 1,286 4,613 
Net (write-offs) recoveries(773)(2,319)(911)(6,829)
Ending balance$7,005 $3,356 $7,005 $3,356 
Changes in the allowance for doubtful finance receivables for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):
Three months ended September 30,Nine months ended September 30,
2024202320242023
Beginning balance$3,192 $3,048 $3,428 $2,275 
Provision for bad debt835 677 3,113 3,205 
Net write-offs
Write-offs(528)(1,148)(3,338)(3,300)
Recoveries58 96 354 493 
Net (write-offs) recoveries(470)(1,052)(2,984)(2,807)
Ending balance$3,557 $2,673 $3,557 $2,673 
5.    Guarantees, Commitments and Contingencies
The Company provides certain guarantees to Sellers in the Marketplace in the ordinary course of business, which are accounted for under ASC 460 as a general guarantee.
12

Vehicle Condition Guarantees – Sellers must attach a vehicle condition report in the Marketplace for every auction; this vehicle condition report is used by Buyers to inform bid decisions. The Company offers guarantees to Sellers in qualifying situations where the Company performed a vehicle inspection and prepared the vehicle condition report. Sellers must pay an additional fee in exchange for this guarantee. The guarantee provides Sellers protection from paying remedies to Buyers related to a Buyer’s claim that the vehicle condition report did not accurately portray the condition of the vehicle purchased on the Marketplace. The guarantee provides the Company with the right to retain proceeds from the subsequent liquidation of the vehicle covered under the guarantee. The guarantee is typically provided for 10 days after the successful sale of the vehicle on the Marketplace. The fair value of vehicle condition guarantees issued is estimated based on historical results and other qualitative factors. The vehicle condition guarantee revenue is recognized on the earlier of the guarantee expiration date or the guarantee settlement date. The maximum potential payment is the sale price of the vehicle. The total sale price of vehicles for which there was an outstanding guarantee was $213.8 million and $142.8 million at September 30, 2024 and December 31, 2023, respectively. The carrying amount of the liability presented in Accrued other liabilities was $1.6 million and $1.2 million at September 30, 2024 and December 31, 2023, respectively.
The recognized probable loss contingency, in excess of vehicle condition guarantees recognized, presented in Accrued other liabilities was $1.8 million at September 30, 2024 and December 31, 2023.
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 September 30, 2024 and December 31, 2023.
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 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 condensed 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.
6.    Borrowings
2021 Revolver
On August 24, 2021, ACV Auctions Inc. entered into a revolving credit facility (the “2021 Revolver”). The 2021 Revolver was established to provide general financing to the Company. The 2021 Revolver is secured by substantially all of the Company's assets except for ACV Capital receivables. The maximum borrowing principal amount of the 2021 Revolver is $160.0 million and includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time.
On June 1, 2023, the Company entered into Amendment No. 1 (the "First Amendment"), which modified the rate to which interest payments are indexed to the Secured Overnight Financing Rate, or SOFR. The interest rate applicable to the 2021 Revolver is, at our option, either (a) SOFR (or a replacement rate established in accordance with the terms of the credit agreement for the 2021 Revolver) (subject to a 0.00% SOFR floor), plus a margin of 2.75% per annum plus an additional credit spread adjustment of 0.11% for daily and one-month terms, 0.26% for three-month terms and 0.43% for six-month terms or (b) the Alternate Base Rate plus a margin of 1.75% per annum. The Alternate Base Rate is the highest of (a) the Wall Street Journal prime rate, (b) the NYFRB rate plus 0.5% and (c)(i) 1.00% plus (ii) the adjusted SOFR rate for a one-month interest period. The First Amendment maintains a maximum borrowing principal amount of $160.0 million.
On June 20, 2024, the Company entered into Amendment No. 2 (the "Second Amendment") to permit the Company, ACV Capital and ACV Capital Funding II LLC ("ACV Funding"), a wholly owned, bankruptcy-remote, special-purpose subsidiary of ACV Capital, to enter into the transactions contemplated by the Warehouse Facility.
On October 7, 2024, the Company entered into Amendment No. 3 on the 2021 Revolver which allows the Company to make investments and other acquisitions (i) if Total Liquidity (as defined therein) immediately prior to the consummation of such investment or acquisition and after giving pro forma effect to such investment or acquisition is equal to or greater than $200.0 million, in an unlimited amount or (ii) if Total Liquidity immediately prior to the
13

consummation of such investment or acquisition and after giving pro forma effect to such investment or acquisition is less than $200.0 million, in an amount not to exceed $25.0 million in the aggregate for any fiscal year of the Company.
Refer to Note 9 contained in our Annual Report on Form 10-K for the year ended December 31, 2023 for further details and key terms regarding the 2021 Revolver.
As of September 30, 2024 and December 31, 2023, outstanding borrowings under the 2021 Revolver were $48.5 million and $115.0 million, respectively, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.3 million and $2.1 million, respectively decreasing the availability under the 2021 Revolver by a corresponding amount. As of September 30, 2024, the interest rate on the outstanding borrowing was 9.75%.
Warehouse Facility
On June 20, 2024, ACV Funding entered into a revolving credit and security agreement, providing for a revolving warehouse facility (the "Warehouse Facility") with a maximum principal amount of $125.0 million. The Warehouse Facility was established to provide liquidity to fund new originations of auto floorplan loans by ACV Capital. The facility is secured by all assets of ACV Funding, including the auto floorplan loans owned by it. The revolving feature on the facility ends on June 20, 2026. The facility matures twelve months later, unless sooner terminated or extended in accordance with its terms.
Advances under the Warehouse Facility funded by asset-backed commercial paper conduit through the issuance of commercial paper notes will bear interest generally at a rate equivalent to the weighted average annual rate of all commercial paper notes issued by the commercial paper conduit to fund its advances, plus a margin of 3.00%. Advances funded by lenders that are not commercial paper conduits, or by commercial paper conduits funded through means other than the issuance of commercial paper notes, will bear interest generally at a rate equal to (i) Term SOFR for a period of one-month (subject to a 0.00% floor), plus 0.11448% or, in certain circumstances, the Alternate Base Rate, plus (ii) a margin of 3.00%. The Alternate Base Rate is the highest of (a) the prime rate quoted in the Wall Street Journal, (b) the NYFRB rate plus 0.50% and (c)(i) 1.00% plus (ii) the Term SOFR rate for a one-month interest period. The interest rate may be increased under certain circumstances, including upon the occurrence of an early amortization event or event of default under the warehouse documentation. ACV Funding must also pay upfront any unused fees in connection with the facility. As of September 30, 2024 borrowings under the Warehouse Facility were $66.5 million with an interest rate of 8.21%.
As of September 30, 2024, the Company was in compliance with all of its financial covenants and non-financial covenants.
7.    Leases
The Company leases office space under operating leases expiring at various dates through 2038. For the three and nine months ended September 30, 2024, the Company incurred operating lease costs of $1.9 million and $4.8 million, respectively. For the three and nine months ended September 30, 2023, the Company incurred operating lease costs of $1.0 million and $1.8 million, respectively. For operating leases, the weighted-average remaining term is 10.7 years and 7.3 years with a weighted-average discount rate of 10% and 5% for the periods ended September 30, 2024 and December 31, 2023, respectively.
Maturities of lease liabilities as of September 30, 2024 were as follows (in thousands):
2024 (remaining)$1,921 
20257,564 
20267,350 
20277,044 
20286,794 
Thereafter35,486 
Total lease payments66,159 
Less imputed interest(24,801)
Total$41,358 
14

The following amounts relate to operating leases that were recorded on the Company's Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023 (in thousands):
September 30,
2024
December 31,
2023
Operating lease right of use assets:
Other assets$41,594 $16,858 
Operating lease liabilities:
Accrued other liabilities3,627 1,647 
Other long-term liabilities37,731 15,034 
The Company recorded right of use assets in exchange for new lease liabilities of $10.9 million and $25.2 million during the three and nine months ended September 30, 2024, respectively. The Company recorded right of use assets in exchange for new lease liabilities of $9.6 million and $15.3 million during the three and nine months ended September 30, 2023, respectively.
8.    Revenue
The following table summarizes the primary components of revenue; this level of disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors (in thousands):
Three months ended September 30,Nine months ended September 30,
2024202320242023
Auction marketplace revenue$84,894 $51,390 $227,656 $159,911 
Other marketplace revenue62,748 45,012 177,671 134,251 
Data services revenue8,266 8,135 24,521 24,598 
Marketplace and service revenue$155,908 $104,537 $429,848 $318,760 
Contract liabilities represent consideration collected prior to satisfying performance obligations. The Company had $5.2 million and $4.2 million of contract liabilities included in Accrued other liabilities on the Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, respectively. Revenue recognized for the three months ended September 30, 2024 from amounts included in deferred revenue as of June 30, 2024 was $5.4 million. Revenue recognized for the nine months ended September 30, 2024 from amounts included in deferred revenue as of December 31, 2023 was $4.2 million. All the remaining performance obligations for contracts are expected to be recognized within one year.
9.    Stock-Based Compensation
Refer to Note 13 contained in our Annual Report on Form 10-K for the year ended December 31, 2023 for further details regarding our equity plans.
15

The following table summarizes the stock option activity for the nine months ended September 30, 2024 (in thousands, except for share and per share amounts):
Number of
Options
Weighted-
Average
Exercise
Price Per
Share
Intrinsic
Value
Weighted-
Average
Remaining
Contractual
Term (in years)
Outstanding, December 31, 20236,296,350$2.49 $79,728 4.83
Exercised(2,072,230)4.17 
Forfeited(4,032)5.60 
Expired(23,839)5.05 
Outstanding, September 30, 20244,196,249$1.64 $78,434 3.54
Exercisable, September 30, 20244,147,984$1.57 $77,796 3.51
The following table summarizes the restricted stock unit and performance share unit activity for the nine months ended September 30, 2024 (in thousands, except for share and per share amounts):
 
Number of RSUs
Weighted-
Average
Grant-Date
Fair Value
Outstanding, December 31, 20237,237,920$14.37 
Granted4,745,687$17.45 
Vested(2,707,252)$14.79 
Forfeited(406,205)$15.02 
Outstanding, September 30, 20248,870,150$15.84 
As of September 30, 2024, there was approximately $122.5 million of compensation expense related to the unvested portion of common stock options, restricted stock units, and performance share units that will be recorded as compensation expense over a weighted-average period of 2.5 years.
During the first quarter of 2024, the Company entered into two contingently returnable share agreements (the "2024 Agreements") for certain compensatory share-based service awards. The 2024 Agreements authorized 773,099 shares of common stock to be issued. Shares will be released and distributed to the employee award recipients with the final vesting date during the first quarter of 2028. At September 30, 2024, there was approximately $9.5 million of compensation expense related to the unvested portion of the contingently returnable shares that will be recorded over 3.33 years.
During the second quarter of 2024, the Company's Board of Directors approved long-term incentive awards to certain of the Company's executive officers which comprised performance share units (“PSUs”), which may only be settled in shares of the Company’s Class A Common Stock. The PSUs are subject to both service-based vesting conditions and a requirement that the average closing price of the Company’s Class A Common Stock, as measured over a period of 30 trading days commencing at the grant date and ending July 1, 2027, equal or exceed a designated level (the “Stock Price Condition”). The PSUs will vest in one-third installments on each of July 1, 2025, 2026 and 2027, provided that the Stock Price Condition has been satisfied prior to the relevant date. If the Stock Price Condition has not yet been satisfied prior to the relevant date, then the PSUs that otherwise would have vested on such date will remain unvested unless and until the Stock Price Condition has been satisfied. If the Stock Price Condition has not been satisfied by July 1, 2027, then the PSUs will be forfeited on that date. In each circumstance, vesting is subject to the executive’s continued service with the Company until the time of vesting.
10.    Income Taxes
The Company had an effective tax rate of approximately 1% and 0% for the three months ended September 30, 2024 and 2023, and (1)% and (1)% for the nine months ended September 30, 2024 and 2023, respectively. The principal differences between the federal statutory rate and the effective tax rate are related to state taxes, foreign taxes and credits, and the non-recognition of tax benefits for certain entities in a loss position for which a full valuation allowance has been recorded.
16

11.    Net Income (Loss) Per Share
The numerators and denominators of the basic and diluted net income (loss) per share computations for the Company's common stock are calculated as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands, except share data):
Three months ended September 30,Nine months ended September 30,
2024202320242023
Class A
Class B
Class A
Class B
Class A
Class B
Class A
Class B
Numerator:
Net loss attributable to common stockholders$(14,734)$(1,295)$(15,327)$(2,911)$(47,932)$(5,631)$(42,540)$(9,480)
Denominator:
Weighted-average number of shares of common stock - Basic and diluted152,333,76113,389,407134,822,34125,605,646147,060,84617,276,363130,464,80929,076,477
Net loss per share attributable to common stockholders:
Basic and diluted$(0.10)$(0.10)$(0.11)$(0.11)$(0.33)$(0.33)$(0.33)$(0.33)
The following table presents the total weighted-average number of potentially dilutive shares that were excluded from the computation of diluted net loss per share attributable to common shareholders because their effect would have been anti-dilutive for the period presented:
Three months ended September 30,Nine months ended September 30,
2024202320242023
Unvested RSUs and other awards3,348,3062,368,1863,234,6672,099,410
Stock options4,049,2965,428,4444,497,1915,477,646
12.    Acquisitions

The Company completed four business acquisitions during the nine months ended September 30, 2024 and two business acquisitions during the nine months ended September 30, 2023. These acquisitions were accounted for using the acquisition method and, accordingly, the results of the acquired businesses have been included in the Company's results of operations from the respective acquisition dates. Purchase price allocations related to these acquisitions are subject to adjustments as they are finalized over the 12-month measurement period from the respective acquisition date. Goodwill acquired in connection with these acquisitions represents expected synergies from the combined operations, is deductible for tax purposes in the United States, and is amortized on a straight-line basis over 15 years.

June 2024 Acquisition
On June 17, 2024, the Company completed its acquisition of all of the ownership interest of a business (the "June 2024 acquisition") for estimated cash consideration of $51.6 million, which included $5.0 million of acquired cash and $14.1 million of acquired real estate. The aggregate purchase price was preliminarily allocated to $11.4 million of goodwill, $18.7 million of intangibles, and $21.4 million of net tangible assets assumed. The Company completed a sale of the real estate to a third party on August 6, 2024. The business acquired in the June 2024 acquisition offers wholesale and commercial car auction and reconditioning services and enabled the Company to expand its range of offerings to dealers and commercial partners.

March 13, 2024 Acquisition

On March 13, 2024, the Company completed its acquisition of all of the ownership interests of a business (the "March 13, 2024 acquisition") for estimated cash consideration of $19.1 million. The aggregate purchase price was preliminarily allocated to $14.4 million of goodwill, $5.5 million of intangible assets, and $0.7 million of net tangible
17

liabilities assumed. The business acquired in the March 13, 2024 acquisition offers wholesale car auction services and enabled the Company to expand its range of offerings to dealers and commercial partners.
March 8, 2024 Acquisition
On March 8, 2024, the Company completed its acquisition of all of the ownership interests of a business (“the March 8, 2024 acquisition”) for estimated cash consideration of $27.4 million. The aggregate purchase price was preliminarily allocated to $7.4 million of goodwill, $16.3 million of intangible assets, and $3.6 million of net tangible assets assumed. The business acquired in the March 8, 2024 acquisition offers wholesale and commercial car auction and reconditioning services and enabled the Company to expand its range of offerings to dealers and commercial partners.
Alliance Auto Auctions
On January 30, 2024, the Company completed its acquisition of all of the ownership interests of Alliance Auto Auctions for estimated cash consideration of $66.9 million and 639,976 common shares of the Company's Class A common stock. The fair value of the consideration shares of $8.6 million was determined based upon the closing market price of the Company's Class A common shares on January 30, 2024.
The aggregate purchase price for the Alliance Auto Auctions acquisition was preliminarily allocated to the assets and liabilities assumed as follows (in thousands):
Assets Acquired
Cash and cash equivalents $2,467 
Trade receivables14,926 
Finance receivables 
Other current assets768 
Property & equipment892 
Goodwill 40,391 
Acquired intangible assets32,700 
Other assets8,305 
Total assets acquired$100,449 
Liabilities Assumed
Accounts payable$15,040 
Accrued payroll400 
Accrued other liabilities2,132 
Deferred revenue64 
Other long-term liabilities7,362 
Total liabilities assumed24,998 
Net assets acquired$75,451 

Alliance Auto Auctions offers wholesale car auction services and enabled the Company to expand its range of offerings to dealers and commercial partners.
April 2023 Acquisition
On April 24, 2023, the Company completed its acquisition of all of the ownership interests of a business (“the April 2023 acquisition”) for total cash consideration of $12.5 million. The aggregate purchase price was allocated to $5.3 million of goodwill, $6.0 million of intangible assets, and $1.2 million of net tangible assets assumed. The business acquired in the April 2023 acquisition offers wholesale and commercial car auction services and enabled the Company to expand its range of offerings to dealers and commercial partners.
August 2023 Acquisition
On August 22, 2023, the Company completed its acquisition of all of the ownership interests of a business ("the August 2023 acquisition") for total cash consideration of $16.9 million. The aggregate purchase price was allocated to
18

$6.2 million of goodwill, $14.2 million of intangible assets, and $3.6 million of net tangible liabilities assumed. The business acquired in the August 2023 acquisition offers wholesale commercial car auction services and enabled the Company to expand its range of offerings to dealers and commercial partners.
19

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" relating to our financial condition and results of operations for the year ended December 31, 2023 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on February 21, 2024, or the Annual Report. Some of the information contained in this discussion and analysis, including information with respect to our financial condition or results of operations, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Form 10-Q. You should review the “Risk Factors” section of our Annual Report for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Our mission is to build and enable the most trusted and efficient marketplace platform for buying and selling used vehicles with transparency and comprehensive data that was previously unimaginable.
We provide a highly efficient and vibrant marketplace platform ("marketplace platform" or "marketplace") for wholesale vehicle transactions and data services that offer transparent and accurate vehicle information to our customers. Our marketplace platform leverages data insights and technology to power our digital marketplace and data services, enabling our dealers and commercial partners to buy, sell, and value vehicles with confidence and efficiency. We strive to solve the challenges that the used automotive industry has faced for generations and provide powerful technology-enabled capabilities to our dealers and commercial partners who fulfill a critical role in the automotive ecosystem. We help dealers source and manage inventory and accurately price their vehicles as well as process payments, transfer titles, manage arbitrations, and finance and transport vehicles. Our marketplace platform encompasses:
Digital Marketplace. Connects buyers and sellers of wholesale vehicles in an intuitive and efficient manner. Our core digital marketplace offerings are auctions in varying formats, which facilitate real time transactions of wholesale vehicles, and are accessible across multiple platforms including mobile apps, desktop, and directly through API integration. We also offer transportation, financing and assurance services to facilitate the entire transaction journey.
Remarketing Centers. Provides an additional channel to provide dealers and commercial partners with auction services. At remarketing centers, vehicles may be auctioned onsite and/or launched into the digital marketplace. Additional services are offered at remarketing centers that are important to servicing commercial partners.
Data Services. Offers insights into the condition and value of used vehicles for transactions both on and off our marketplace and helps dealers, their end consumers, and commercial partners make more informed decisions and transact with confidence and efficiency. We enable dealers to manage their inventory and set pricing more effectively while turning vehicles faster and maximizing profit by leveraging predictive analytics informed by artificial intelligence, machine learning and market data.
Data and Technology. Underpins everything we do, and powers our vehicle inspections, comprehensive vehicle intelligence reports, digital marketplace, inventory management software, and operations automation.
We have historically generated the majority of our revenue from our digital marketplace where we earn auction and ancillary fees from both buyers and sellers in each case only upon a successful auction. Buyer auction fees are variable based on the price of the vehicle, while seller auction fees include a fixed auction fee and an optional fee for the elective condition report associated with the vehicle. We also earn ancillary fees through additional value-added services to buyers and sellers in connection with the auction.
20

Our customers include participants on our marketplace platform and purchasers of our data services. Certain dealers and commercial partners purchase data services in connection with vehicle assessments, software subscriptions, and transactions that do not occur on our marketplace. Our dealer customers include a majority of the top 100 used vehicle dealers in the United States.
Key Operating and Financial Metrics
We regularly monitor a number of operating and financial metrics in order to measure our current performance and estimate our future performance. Our business metrics may be calculated in a manner different than similar business metrics used by other companies.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Marketplace Units198,354150,057559,511454,768
Marketplace GMV$2.5 billion$2.1 billion$7.2 billion$7.0 billion
Adjusted EBITDA$11.2  million$(3.7) million$22.5  million$(12.8) million
Marketplace Units
Marketplace Units is a key indicator of our potential for growth in Marketplace GMV and revenue. It demonstrates the overall engagement of our customers and our market share of wholesale transactions in the United States. We define Marketplace Units as the number of vehicles transacted within the applicable period. Marketplace Units transacted includes any vehicle that successfully reaches sold status, even if the auction is subsequently unwound, meaning the buyer or seller does not complete the transaction. These instances were immaterial in the periods presented. Marketplace Units exclude vehicles that were inspected by ACV, but not sold. Marketplace Units have generally increased as we have expanded our territory coverage, added new Marketplace Buyers and Marketplace Sellers and increased our share of wholesale transactions from existing customers. Because we only earn auction and ancillary fees in the case of a successful auction, Marketplace Units will remain a critical driver of our revenue growth.
Marketplace GMV
Marketplace GMV is primarily driven by the volume and dollar value of Marketplace Unit transactions. We believe that Marketplace GMV acts as an indicator of our success, signaling satisfaction of dealers and buyers, and the health, scale, and growth of our business. We define Marketplace GMV as the total dollar value of vehicles transacted within the applicable period, excluding any auction and ancillary fees. Because our definition of Marketplace Units does not include vehicles inspected but not sold, and because the value of the vehicle sold is not recognized as revenue, GMV does not represent revenue earned by us. We expect that Marketplace GMV will continue to grow as Marketplace Units grow, though at a varying rate within a given applicable period, as Marketplace GMV is also impacted by the value of each vehicle transacted. In periods of declining used vehicle values, Marketplace GMV may decline even while Marketplace Units increase.
Marketplace Buyers
We define Marketplace Buyers as dealers or commercial partners with a unique customer ID that have transacted at least once in the last 12 months as a buyer on our marketplace platform. Marketplace Buyers include independent and franchise dealers buying on our marketplace.
Marketplace Sellers
We define Marketplace Sellers as dealers or commercial partners with a unique customer ID that have transacted at least once in the last 12 months as a seller on our marketplace platform. Marketplace Sellers include independent and franchise dealers selling on our marketplace, as well as commercial partners, consisting of commercial leasing companies, rental car companies, bank or other finance companies, who use our marketplace to sell their inventory.
We monitor the growth in both Marketplace Buyers and Marketplace Sellers as they each promote a more vibrant and healthy marketplace. We believe that our growth in Marketplace Sellers and Marketplace Buyers over time has been driven by the value proposition of our offerings, and our sales and marketing success, including our ability to attract new
21

dealers and commercial partners to our marketplace platform. Based on our current position in the market, we believe that we have significant opportunity to continue to increase the number of Marketplace Buyers and Marketplace Sellers.
Adjusted EBITDA
Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business. We define Adjusted EBITDA as net income (loss), adjusted to exclude: depreciation and amortization, stock-based compensation expense, interest (income) expense, provision for income taxes, and other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses. We monitor Adjusted EBITDA as a non-GAAP financial measure to supplement the financial information we present in accordance with generally accepted accounting principles, or GAAP, to provide investors with additional information regarding our financial results. For further explanation of the uses and limitations of this measure and a reconciliation of our Adjusted EBITDA to the most directly comparable GAAP measure, net income (loss), please see “—Non-GAAP Financial Measures.”
We expect Adjusted EBITDA to fluctuate in the near term as we continue to invest in our business and improve over the long term as we achieve greater scale in our business and efficiencies in our operating expenses.
Factors Affecting Our Performance
We believe that the growth and future success of our business depend on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth, improve our results of operations, and increase profitability.
Increasing Marketplace Units
Increasing Marketplace Units is a key driver of our revenue growth. The transparency, efficiency and vibrancy of our marketplace is critical to our ability to grow our share of wholesale transactions from existing customers and attract new buyers and sellers to our marketplace platform. Failure to increase the number of Marketplace Units would adversely affect our revenue growth, operating results, and the overall health of our marketplace.
Grow Our Share of Wholesale Transactions from Existing Customers
Our success depends in part on our ability to grow our share of wholesale transactions from existing customers, increasing their engagement and spend on our marketplace platform. We remain in the early stages of penetrating our Marketplace Buyers’ and Sellers’ total number of wholesale transactions. As we continue to invest in eliminating key risks of uncertainty related to the auction process through our trusted and efficient marketplace platform, we expect that we will capture an increasing share of transactions from our existing buyers and sellers. Our ability to increase share from existing customers will depend on a number of factors, including our customers’ satisfaction with our marketplace platform, competition, pricing and overall changes in our customers’ engagement levels.
Add New Marketplace Buyers and Marketplace Sellers
We believe we have a significant opportunity to add new marketplace participants. As we expand our presence within our existing territories, we are able to drive increased liquidity and greater vehicle selection, which in turn improves our ability to attract new Marketplace Buyers and Marketplace Sellers. Additionally, we intend to add more commercial consignors to our marketplace platform and capture a greater share of vehicles in the wholesale market that are sold to dealers by commercial consignors through auctions and private sales.
Our ability to attract new Marketplace Buyers and Marketplace Sellers will depend on a number of factors including: the ability of our sales team to onboard dealers and commercial consignors onto our marketplace platform and ensure their satisfaction, the ability of our territory managers to build awareness of our brand, the ability of our vehicle condition inspectors, or VCIs, to cultivate relationships with our customers in their respective territories, and the effectiveness of our marketing efforts.
22

Grow Awareness for Our Offerings and Brand
Wholesale vehicle online penetration is in the early stages, lagging the consumer automotive market, and we expect more dealers and commercial partners to source and manage their inventory online. As the digitization of the wholesale automotive market accelerates, we believe that our digital marketplace is well positioned to capture a disproportionate share of that growth. We use targeted sales and marketing efforts to educate potential Marketplace Buyers and Marketplace Sellers as to the benefits of our offerings and drive adoption of our marketplace platform. Our ability to grow awareness of our offerings and brand depend on a number of factors, including:
Secure Trusted Supply. The more trusted supply on our marketplace, the more buyers we can attract to our marketplace platform.
Deepen Relationships with Dealers and Commercial Partners. We have a team of VCIs who regularly interact with our customers, providing high-quality inspection services and developing strong customer relationships.
Drive Customer Loyalty. Our loyal customers and referrals serve as a highly effective customer acquisition tool, and help drive our growth in a given territory.
Grow Brand Awareness. We invest in promoting our brand via targeted marketing spend to increase customer awareness in the territories in which we operate.
Our future success is dependent on our ability to successfully grow our market presence and market and sell products to both new and existing customers.
Grow Value-Added and Data Services
We continue to drive customer adoption of our existing value-added and data services and introduce new and complementary products. Our ability to drive higher attachment rates of existing value-added services, such as ACV Transportation and ACV Capital, will help grow our revenue. In 2019 we launched our financing arm, ACV Capital. In 2021, we added ACV MAX (formerly doing business as MAX Digital) flagship inventory management system to our portfolio of data services offerings. We continue to drive customer adoption of our data services such as our True360 Reports that bring transparency and offer insights into the condition and value of used vehicles, as well as our inventory management system, which enables dealers to accurately price wholesale and retail inventory while maximizing profit by leveraging predictive analytics informed by artificial intelligence. These data services enable our customers to make more informed inventory management decisions both on and off our digital marketplace. In addition, we will continue to focus on developing new products and services that enhance our marketplace platform in areas including new data-powered products. Our ability to drive customer adoption of these products and services is dependent on the pricing of our products, the offerings of our competitors and the effectiveness of our marketing efforts.
Investment in Growth
We are actively investing in our business. In order to support our future growth and expanded product offerings, we expect this investment to continue. We anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts, expand our employee base and invest in our technology development. The investments we make in our marketplace platform are designed to grow our revenue opportunity and to improve our operating results in the long term, but these investments could also delay our ability to achieve sustained profitability or reduce our profitability in the near term. Our success is dependent on making value-generative investments that support our future growth.
Used Car Demand
Our success depends in part on sufficient demand for used vehicles. Our growth over the last several years has coincided with a rising consumer demand for used vehicles. Since early 2020 demand for cars has outpaced supply. During this period, we have seen new car supply have a significant impact on the supply of wholesale vehicles available within our marketplace. More recently, new vehicle supply has begun to increase, although still below 2019 levels. However, this increase in new vehicle supply has been coupled with an increase in interest rates which has made both new and used vehicles more expensive for retail consumers utilizing financing. Used car demand will be in part dependent on the economic health of the retail consumer and their ability to afford a vehicle purchase.
23

Used vehicle sales are also seasonal. Sales typically peak late in the first quarter and early in the second quarter, with the lowest relative level of industry vehicle sales occurring in the fourth quarter. Due to our growth since launch, our sales patterns to date have not been entirely reflective of the general seasonality of the used vehicle market, but we expect this to normalize as our business matures. Seasonality also impacts used vehicle pricing, with used vehicles depreciating at a faster rate in the last two quarters of each year and a slower rate in the first two quarters of each year. We may experience seasonal and other fluctuations in our quarterly results of operations, which may not fully reflect the underlying performance of our business. See the section titled “Seasonality” for additional information on the impacts of seasonality on our business.
Components of Results of Operations
Revenue
Marketplace and Service Revenue
We have historically generated the majority of our revenue from our digital marketplace where we earn auction and ancillary fees from both buyers and sellers, in each case only upon a successful auction. Our marketplace and service revenue consists principally of revenue earned from facilitating auctions and arranging for the transportation of vehicles purchased in such auctions.
We act as an agent when facilitating a vehicle auction through the marketplace. Auction and related fees charged to the buyer and seller are reported as revenue on a net basis, excluding the price of the auctioned vehicle in the transaction.
We act as a principal when arranging for the transportation of vehicles purchased on the marketplace and leverage our network of third-party transportation carriers to secure the arrangement. Transportation fees charged to the buyer are reported on a gross basis.
We also generate data services revenue through our True360 reports and ACV MAX inventory management software subscriptions and offer short-term inventory financing to eligible customers purchasing vehicles through the marketplace.
Customer Assurance Revenue
We also generate revenue by providing our Go Green assurance to sellers on the condition of certain vehicles sold on the marketplace, which is considered a guarantee under GAAP. This assurance option is only available for Go Green sellers on qualifying vehicles for which we have prepared the vehicle condition report. Customer assurance revenue also includes revenue from other price guarantee products offered to sellers. Customer assurance revenue is measured based upon the fair value of the guarantees that we provide. We expect the fair value per vehicle assured to decrease over time as we continue to improve the quality of our inspection product, which in turn reduces the costs of satisfying such assurance.
Operating Expenses
Marketplace and Service Cost of Revenue
Marketplace and service cost of revenue consists of third-party transportation carrier costs, titles shipping costs, customer support, website hosting costs, inspection costs related to data services and various other costs. These costs include salaries, benefits, bonuses and related stock-based compensation expenses, which we refer to as personnel expenses. We expect our marketplace and service cost of revenue to continue to increase in absolute dollars as we continue to scale our business and introduce new product and service offerings.
Customer Assurance Cost of Revenue
Customer assurance cost of revenue consists of the costs related to satisfying claims against the vehicle condition guarantees, and other price guarantees.
Operations and Technology
Operations and technology expense consists of costs for wholesale auction inspections, personnel costs related to payments and titles processing, transportation processing, product and engineering and other general operations and technology expenses. These costs include personnel-related expenses and other allocated facility and office costs. We expect that our operations and technology expense will increase in absolute dollars as our business grows, particularly as
24

we incur additional costs related to continued investments in our marketplace, transportation capabilities and other technologies.
Selling, General and Administrative
Selling, general and administrative expense consists of costs resulting from sales, accounting, finance, legal, marketing, human resources, executive, and other administrative activities. These costs include personnel-related expenses, legal and other professional services expenses and other allocated facility and office costs. Also included in selling, general and administrative expense is advertising and marketing costs to promote our services. We expect that our selling, general and administrative expense will increase in absolute dollars as our business grows. However, we expect that our selling, general and administrative expense will decrease as a percentage of our revenue as our revenue grows over the longer term.
Depreciation and Amortization
Depreciation and amortization expense consists of depreciation of fixed assets, and amortization of acquired intangible assets and internal-use software.
Other Income (Expense)
Other income (expense) consists primarily of interest income earned on our marketable securities and cash and cash equivalents. Other income (expense) also includes interest expense on our borrowings.
Provision for Income Taxes
Provision for income taxes consists of U.S. federal, state and foreign income taxes.
25

Results of Operations
The following table sets forth our Condensed Consolidated Statements of Operations data expressed as a percentage of total revenue for the periods presented:
Three months ended September 30,
20242023
Amount
% of
Revenue
Amount
% of
Revenue
(in thousands)
Revenue:
Marketplace and service revenue$155,908 91 %$104,537 88 %
Customer assurance revenue15,421 %14,477 12 %
Total revenue171,329 100 %119,014 100 %
Operating expenses:
Marketplace and service cost of revenue (excluding depreciation & amortization) (1)
67,064 39 %47,928 40 %
Customer assurance cost of revenue (excluding depreciation & amortization)14,176 %12,464 10 %
Operations and technology (1)
42,539 25 %35,132 30 %
Selling, general, and administrative (1) (3) (5) (6)
54,973 32 %40,797 34 %
Depreciation and amortization (2) (4)
9,716 %4,980 %
Total operating expenses188,468 141,301 
Income (loss) from operations(17,139)(22,287)
Other Income (expense):
Interest income2,050 4,489 
Interest expense(1,077)(439)
Total other income (expense)973 4,050 
Income (loss) before income taxes(16,166)(18,237)
Provision for income taxes(137)
Net loss$(16,029)$(18,238)
26

Nine months ended September 30,
20242023
Amount
% of
Revenue
Amount
% of
Revenue
(in thousands)
Revenue:
Marketplace and service revenue$429,848 90 %$318,760 88 %
Customer assurance revenue47,794 10 %44,097 12 %
Total revenue477,642 100 %362,857 100 %
Operating expenses:
Marketplace and service cost of revenue (excluding depreciation & amortization) (1)
187,010 39 %145,732 40 %
Customer assurance cost of revenue (excluding depreciation & amortization)
41,548 %38,081 10 %
Operations and technology (1) (6)
120,302 25 %106,180 29 %
Selling, general, and administrative (1) (3) (5) (6)
160,738 34 %123,689 34 %
Depreciation and amortization (2) (4)
26,351 %12,086 %
Total operating expenses535,949 425,768 
Income (loss) from operations(58,307)(62,911)
Other Income (expense):
Interest income7,410 12,505 
Interest expense(2,218)(1,205)
Total other income (expense)5,192 11,300 
Income (loss) before income taxes(53,115)(51,611)
Provision for income taxes448 409 
Net income (loss)$(53,563)$(52,020)
27


(1) Includes stock-based compensation expense as follows:Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)(in thousands)
Marketplace and service cost of revenue (excluding depreciation & amortization)$294 $282 $753 $684 
Operations and technology4,517 3,052 11,767 7,777 
Selling, general, and administrative13,449 9,521 35,535 27,801 
Stock-based compensation expense$18,260 $12,855 $48,055 $36,262 
(2) Includes acquired intangible asset amortization as follows:Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)(in thousands)
Depreciation and amortization$3,390 $1,301 $8,616 $3,742 
(3) Includes litigation-related costs as follows:Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)(in thousands)
Selling, general, and administrative$— $— $1,553 $— 
(4) Includes amortization of capitalized stock based compensation as follows:Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)(in thousands)
Depreciation and amortization$1,247 $509 $3,155 $1,034 
(5) Includes acquisition-related costs as follows:Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)(in thousands)
Selling, general, and administrative$214 $88 $3,520 $611 
(6) Includes other adjustments as follows:Three months ended September 30,Nine months ended September 30,
2024202320242023
(in thousands)(in thousands)
Operations and technology$46 $— $46 $(8)
Selling, general, and administrative501 378 737 385 
Other adjustments$547 $378 $783 $377 
Comparison of the three months ended September 30, 2024 and 2023</