ACV Auctions’ third quarter results were met with a sharp negative market reaction, reflecting investor discomfort with both the company’s profitability and the quality of its guidance. Management cited challenging conditions in the dealer wholesale market and elevated vehicle price depreciation as major operational headwinds. CEO George Chamoun noted, "Our performance was driven by solid execution in our dealer wholesale business as we continue to gain market share," but also acknowledged that difficult macro factors pressured conversion rates and margins. Leadership struck a cautious tone, emphasizing the need to adapt to evolving dealer behavior and tighter industry dynamics.
Is now the time to buy ACVA? Find out in our full research report (it’s free for active Edge members).
ACV Auctions (ACVA) Q3 CY2025 Highlights:
- Revenue: $199.6 million vs analyst estimates of $200 million (16.5% year-on-year growth, in line)
- Adjusted EPS: $0.07 vs analyst estimates of $0.06 (in line)
- Adjusted EBITDA: $18.65 million vs analyst estimates of $18.81 million (9.3% margin, 0.8% miss)
- Revenue Guidance for Q4 CY2025 is $182 million at the midpoint, below analyst estimates of $191.5 million
- EBITDA guidance for the full year is $57 million at the midpoint, below analyst estimates of $68.45 million
- Operating Margin: -11.9%, down from -10% in the same quarter last year
- Marketplace Units: 218,065, up 19,711 year on year
- Market Capitalization: $945.2 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From ACV Auctions’s Q3 Earnings Call
- Christopher Pierce (Needham & Company) asked if the dealer wholesale market has structurally changed and whether dealers will continue to retain trade-ins at higher rates. CEO George Chamoun replied that it is “way too early” to call it a permanent shift, pointing to macro factors like off-lease supply and interest rates as key variables.
- Rajat Gupta (J.P. Morgan) sought details on auction ARPU moderation and regional pricing actions. CEO Chamoun confirmed targeted pricing campaigns in new markets and expressed confidence that ARPU would recover in the coming quarter, though aggressive tactics may persist where needed.
- Bob Labick (CJS Securities) questioned the long-term trend of dealers retaining higher-value vehicles and its impact on ARPU. Chamoun advised analysts to assume stable ARPU in the near term, given the uncertainty, but anticipated increases if market dynamics normalize over several years.
- Andrew Boone (Citizens) inquired about ACV Capital’s path to normalized lending and cohort trends. CFO Zerella described new internal controls and risk reviews, while Chamoun highlighted continued strong attach rates and confidence in midterm growth targets.
- Naved Khan (B. Riley Securities) asked about pricing competition and the ramp of commercial volume via AutoIMS. Chamoun observed that industry players are both raising and discounting fees, with ACV’s commercial segment expected to contribute meaningfully in future years rather than next year.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will monitor (1) the pace of adoption and commercial impact of AI-powered products like Project Viper and Virtual Lift 2.0, (2) the stabilization of arbitration and loan loss costs, particularly within ACV Capital, and (3) progress expanding regional market share, especially in emerging geographies. The ramp-up of commercial remarketing centers and execution on field engagement strategies will be additional signs of operational momentum.
ACV Auctions currently trades at $5.61, down from $8.14 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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