ACV Auctions Reports Strong Q4 Earnings and Outlook

Acv Auctions, Inc. ((ACVA)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for ACV Auctions, Inc. showcased a positive sentiment with the company reporting robust performance in terms of revenue growth, adjusted EBITDA profitability, and market share expansion, all buoyed by AI-driven innovations. Though the company exhibited a strong financial outlook, it acknowledged ongoing challenges in the used-vehicle market, specifically flat wholesale volumes due to consumer affordability issues and inventory shortages.

Record Revenue Growth

ACV Auctions reported record revenue growth, with Q4 revenue reaching $160 million, surpassing their guidance. This achievement contributed to a full-year revenue growth of 32% for 2024, highlighting the company’s ability to outperform expectations and deliver strong financial results.

Adjusted EBITDA Profitability

The company celebrated its first full year of adjusted EBITDA profitability, marking a significant milestone with a 900 basis point year-over-year improvement. This indicates a stronger operational efficiency and a solid financial footing moving forward.

Market Share Gains

ACV Auctions continued to gain market share, with more than half of US dealers now transacting on ACV’s platform. This expansion underscores the company’s competitive edge and its growing influence in the digital marketplace.

Strong Performance in ACV Transport

ACV Transport delivered impressive results, achieving over 30% revenue growth with 410,000 deliveries in 2024. The revenue margin also expanded by 300 basis points, reflecting the segment’s operational success and contribution to the overall revenue growth.

AI-Driven Innovations

The release of new AI-powered features that predict vehicle prices with accuracy has enhanced ACV’s pricing intelligence and marketplace conversion. These innovations are expected to further strengthen the company’s competitive advantage and operational efficiency.

Strong Financial Outlook

Looking ahead, ACV Auctions has set a positive financial outlook for 2025, with anticipated revenue growth of 20% to 23% and adjusted EBITDA growth of approximately 150% year-over-year. These projections reflect the company’s confidence in maintaining strong top-line growth and continued EBITDA expansion.

Flat Dealer Wholesale Volumes

The company faced flat dealer wholesale volumes in 2024, attributed to consumer affordability issues and a 25% deficit in used-vehicle inventory. This challenge highlights the ongoing pressures within the used-vehicle market.

Market Uncertainties

ACV Auctions recognized the persistent challenges in the used-vehicle market, with no sustained improvement in the trade to wholesale mix, indicating an uncertain environment that could impact future growth.

Mixed Automotive Market Conditions

Despite a 2% increase in new vehicle sales, the used-vehicle market experienced modest declines. This mixed market condition has led to uncertainties regarding the recovery of retail sales, which ACV continues to monitor closely.

Forward-Looking Guidance

ACV Auctions projects a flat trend in dealer wholesale volumes for 2025. Despite this, the company expects revenue growth to range between 20% and 23%, targeting $765 million to $785 million, and aims for adjusted EBITDA of $65 million to $75 million, reflecting a substantial year-over-year growth. ACV plans to leverage AI for pricing intelligence and introduce new value-added services while maintaining its focus on long-term growth objectives.

In conclusion, the ACV Auctions earnings call highlighted a strong financial performance with substantial revenue growth and increased market share, supported by AI-driven innovations. While the company faces challenges in the used-vehicle market, its forward-looking guidance suggests a confident outlook for 2025, with expectations of continued growth and profitability.