Good day. Thank you for standing by. Welcome to the ACVA fourth quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Your question will be withdrawn. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tim Fox, Vice President of Investor Relations. Thank you, operator. Good afternoon, thank you for joining ACV's conference call to discuss our fourth quarter and full year 2022 financial results. With me on the call today are George Chamoun, Chief Executive Officer, and Bill Zerella, Chief Financial Officer. Before we get started, please note that today's comments include forward-looking statements, including statements regarding future financial guidance. These forward-looking statements are subject to risks and uncertainties and involve factors that could cause actual results to differ materially from those expressed or implied by such statements. A discussion of the risks and uncertainties related to our business can be found in our SEC filings and in today's press release, both of which can be found on our investor relations website. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's earnings materials, which can also be found on our investor relations website. With that, let me turn the call over to George. Thanks, Tim. Good afternoon, everyone, and thank you for joining us. We are pleased with our fourth quarter performance, which capped off a year that required strong execution from the ACV team during a challenging market environment. Execute we did. ACV delivered 18% revenue growth and gained share in a market that declined an estimated 20%. We expanded our marketplace, exiting the year with over 24,000 dealer partners. Our VCI team reached an exciting milestone, performing over 1 million inspections in 2022. Our technology team launched a broad range of new solutions to drive growth and scale across our operations. We achieved all this while expanding margins and exceeding our EBITDA guidance. As we turn to 2023, we are encouraged to see positive signs emerge in the automotive market, with industry headwinds beginning to moderate. Our focus this year remains consistent on growing market share, expanding our competitive moat with leading-edge technology, increasing margins, and driving scale to deliver on our EBITDA targets. With that, let's turn to a brief recap of fourth quarter and full year 2022 results on slide four. Fourth quarter revenue of $98 million was within our guidance range and, as expected, declined modestly year-over-year versus very strong results in Q4 2021. GMV of $1.8 billion declined year-over-year, primarily due to a 20% decrease in GMV per unit as wholesale prices declined from historical highs in Q4 2021. We sold 125,000 vehicles in our marketplace, which was in line with guidance and reflected the impact of a 1,000 basis point decrease in conversion rate versus Q4 2021. For the full year, revenue of $422 million increased 18% despite challenging market conditions in the second half of the year. GMV for the year increased to $9 billion due to a 20% increase in GMV per unit, while units declined modestly year-over-year, reflecting a 1,200 basis point decrease in conversion rate. On slide five, I will frame the rest of today's discussion around the three pillars of our strategy to drive long-term shareholder value: growth, innovation, and scale. I will begin with growth. On slide seven, we're again providing context for the dealer wholesale market in relation to the broader automotive retail market. First, to illustrate the supply side of our market, we have provided data on new light vehicle volumes. As you can see in the chart on the left, SAR increased sequentially in Q4, which is an encouraging sign that automotive production challenges are finally easing. As you can see in the chart on the right, volumes last year were down 8% year-over-year and 20% below pre-pandemic volumes. This decline in retail sales translated into fewer trades, which pressured wholesale auction listings during the year. Turning to slide eight, let's review trends for used vehicles. The retail used vehicle market was under pressure throughout 2022 as interest rate increased and retail prices remained elevated relative to historical levels. This resulted in used retail sales declining 11% year-over-year, which created additional headwinds on traded volumes and wholesale auction listings. On a more positive note, recent industry data has pointed to a solid start for the used retail market this year, with volumes up month-over-month and year-over-year in January. These recent trends for new and used retail sales are positive signs for the wholesale market. The macro factors impacting supply in the market may persist throughout 2023, and we have factored that into our guidance. Turning to slide nine. We're also seeing some encouraging inventory trends that typically benefit the wholesale market. The chart on the left shows that the used vehicle supply has reached levels not seen since the onset of the pandemic. Why is this important? Dealers are in the business of selling cars, not storing them. As used inventories build and vehicles start to age, dealers leverage wholesale channels to sell their aged inventory. Dealers also tend to become less price-sensitive as inventories reach elevated levels, which improves auction conversion rates. We have started to see these dynamics play out on our marketplace in early 2023, which is a positive leading indicator for the wholesale market. The chart on the right illustrates that the supply of new light vehicles is also recovering, albeit off historically low levels. This is important for two reasons. The first and most obvious reason is that dealers require an adequate supply of inventory to satisfy consumer demand. The second reason is that when dealer lots are replenished with new vehicles, there is added incentive to reduce aged used inventory, which in turn generates more volumes for wholesale channels. The takeaway here from a market perspective is that we appear to have turned the corner. As I mentioned earlier, the persistent headwind impacting wholesale volumes appear to be moderating. On slide 10. We're sharing additional insight into our business that reinforces our confidence in ACV's long-term growth opportunity. The chart on the left shows annual listings in our marketplace, which is a measure of dealer penetration and marketplace adoption. In 2022, we grew listings 20% year-over-year, despite a 10% decline in retail sales. Listings growth was driven primarily by franchise dealer penetration, which increased 600 basis points year-over-year to just over 40%. Bear in mind, we are still in the early days of engaging with the majority of our dealer partners. Increasing wallet share across our marketplace is a large opportunity and key objective for this year. The figure on the right is the annual variance in ACV's conversion rates. As we highlighted over recent quarters, pre-pandemic conversion rates on our marketplace were quite stable and predictable. As supply, demand, and wholesale prices were impacted by pandemic-related factors, conversion rates increased significantly. While this increase was a growth tailwind in 2021, conversion rates declined significantly in the back half of 2022 as price depreciation accelerated, resulting in cautious buying behavior. To put this into perspective, the 1,200 basis point year-over-year decline in conversion rate resulted in a 125,000 unit headwind in 2022. As I mentioned earlier, we are encouraged to see this trend start to reverse in early 2023, and we believe conversion rates will revert back to normalized levels throughout the year. Turning now to slide 11. We estimate that the U.S. dealer wholesale market continues to remain well below normalized volumes and contracted 20% year-over-year in 2022. Despite this market backdrop, we are executing on our key growth initiatives and gaining market share. Given an estimated market contraction of 20% and a 3% year-over-year unit decline, this implies that ACV grew market share by approximately 17% in 2022. Next, I would like to wrap up the growth section with highlights on our value-added services. On slide 12, you can see that ACV Transportation continues to deliver strong results and is scaling into a great business. Our strong carrier network and fast cycle times resulted in attach rates once again exceeding 50%. Our carrier partners achieved record cycle times during the quarter, benefiting both sellers and buyers in our marketplace and setting us further apart from the competition. Over 80% of our transports were automatically dispatched in Q4, an increase of 1,000 basis points from Q3. Our technology investments continue to drive both growth and operating efficiencies. These efficiencies resulted in another quarter with revenue margin in the low double digits, an increase from the mid-single digits in early 2022. As a reminder, our 2026 financial target assumes transport revenue margin of 15%, and our progress is clearly putting us on a path to achieve this target. Turning now to slide 13. ACV Capital continues to experience strong demand in the market. Capital attach rates grew over 90% year-over-year in Q4, resulting in over 70% loan volume growth and average loan values increasing approximately 20% year-over-year. We have continued to ramp our investments to drive dealer engagement and scale to ensure that ACV Capital is an important growth and profit driver going forward. Turning to the second element of our strategy to drive long-term shareholder value, innovation. On slide 15, I'll first recap some of the growth-oriented product innovations delivered in 2022. These innovations are focused on enhancing the dealer buying experience, increasing conversion rates, advancing our marketplace offerings, and expanding our TAM. Let me begin with the dealer buying experience. Marketplace 2.0 delivered a new UI with updated filtering, search, and notification features. Our advanced buyer solution, S.A.M., enhanced the buying experience through intelligent notification and auto-bidding capabilities. We leaned in with tech to increase conversion rates by launching new auction formats and enhanced pricing data, creating a broader range of merchandising options for our dealer partners. Our private marketplace solution experienced strong traction with some of the largest dealer groups in the country. This solution enables dealers to easily auction inventory within their network and leverage ACV's open marketplace for unsold units. In transport, we launched the Mobile Carrier App to provide carrier partners with digital tools to streamline their business. We developed targeted lane pricing to improve spreads and drive margin expansion. We launched the ACV Capital portal, equipping dealers with 24/ 7 self-service access to critical data and to drive further adoption of our capital offerings. We expanded our TAM with new solutions from our Drivably and Monk acquisitions, enabling dealers to transform their consumer sourcing experience with digital solutions powered by machine learning and data. These solutions also enable ACV, through our dealer partners, to engage upstream with the consumer prior to deploying our critical VCI resources. On slide 16 are examples of tech investments that extend into our operations, delivering customer success while reducing costs. Our next-gen collection device, APEX, delivers significantly higher transparency into vehicle operating conditions while also increasing the inspection productivity of our teammates. We launched new virtual lift capabilities that target specific pain points in the inspection process. These capabilities leverage AI technology, raising the bar on ACV's inspection transparency while reducing arbitration risk. To further advance our inspection capabilities, we introduced Copilot and ArbGuard. These technologies leverage machine learning, predictive analytics, and sensor data to inform our VCIs on vehicle-specific issues before conducting an inspection. Lastly, our technology investment and title processing is leveraging our in-house image recognition and data extraction, supporting title processing with higher efficiency and accuracy. Turning now to slide 17. We have an exciting roadmap of innovation to further expand our competitive mode. Our primary focus on innovation this year is to further enhance and leverage our vehicle intelligence platform, which is powered by AI and machine learning, in conjunction with our extensive and growing data repository. We'll continue to focus on increasing conversion rates by enhancing our programmatic capabilities and elevating the dealer experience with new self-service features. Our industry-leading inspection capabilities will raise the bar even higher with the full rollout of APEX, Copilot, ArbGuard, with Monk integration that result in improved condition reports and lower arbitration exposure. We'll continue to expand our transportation platform and implement a loan management system to enable off-network financing in ACV Capital. We'll launch this next generation of SaaS and data service offerings with a major upgrade of MAX Digital and deeper integrations of Drivably and Monk for consumer sourcing through our dealer partners. To wrap up on innovation, I think you'll agree that our team is delivering industry-leading technology to the market and into our own operations that expand our competitive moat and help drive profitable long-term growth. With that, let me hand it over to Bill to take you through our financial results and how we're driving growth at scale. Thanks, George, and thank you everyone for joining us today. We are pleased with our Q4 financial performance. We delivered revenue in line with our guidance, with upside to Adjusted EBITDA, despite the challenging macro factors George outlined earlier on the call. We also demonstrated the strength of our business model with revenue margin and Adjusted EBITDA margin expansion versus Q4 2021. Turning to slide 19, I'll begin with a review of our fourth quarter results. Revenue of $98 million was within our guidance range and declined modestly year-over-year versus strong results in Q4 2021. To add some context to our revenue performance, note that the Q4 2022 conversion rate declined 1,000 basis points versus Q4 2021, resulting in an approximate $18 million headway. Adjusted EBITDA loss of $13 million or 13% of revenue beat our guidance range, and EBITDA margin improved approximately 300 basis points versus Q4 2021. Turning to slide 20, I will cover some additional detail on revenue. Total revenue of $98 million represented a 35% CAGR since Q4 2020. Auction and assurance revenue, which was 56% of total revenue, declined 3% year-over-year versus strong results in Q4 2021. The revenue performance reflects a 10% year-over-year unit decline due to conversion rate compressions, partially offset by higher auction and assurance ARPU. Marketplace services revenue, which was 35% of total revenue, declined 3%. ACV Capital revenue more than doubled year-over-year. However, transport revenue, which is a much larger business today, was impacted by the declining units year-over-year. Our SaaS and data services products comprise 8% of total revenue and grew 5% year-over-year. We are making significant improvements to the MAX Digital platform, while also taking a more measured approach to customer acquisition to position ourselves for a re-acceleration of growth as we exit 2023. Turning now to slide 21, I will review costs in the quarter. Q4 cost of revenue as a percentage of revenue decreased approximately 400 basis points year-over-year. The improvement was driven primarily by our transport business, which again delivered a low double-digit revenue margin in the quarter. Operating costs, excluding cost of revenue, was effectively flat year-over-year in Q4. This reflects the significant investments we made in 2021 to support market expansion and technology initiatives and reflects our focus in 2022 on expense discipline as we optimized and scaled our business. Moving to slide 22, let me frame our investment strategy and path to profitability. Our focus on spending discipline and operating efficiency resulted in a material decrease in OpEx growth in 2022. In fact, our Adjusted EBITDA loss of $56 million was at the midpoint of our original 2022 guidance, despite $30 million less revenue than initially anticipated due to the challenging market conditions. We accomplished this while preserving our go-to-market and technology investments to ensure ACV is in a strong position as market conditions improve. Next, I will highlight our strong capital structure on slide 23. We ended Q4 with $497 million in cash equivalents and marketable securities and $76 million of long-term debt to finance our growing ACV Capital business. Note that our Q4 cash balance includes $145 million of float in our auction business. As we discussed previously, the amount of float on our balance sheet can fluctuate meaningfully based on business trends in the final two weeks of each quarter and has a corresponding impact on operating cash flow. In Q4, cash flow from operations was $1 million, with a sequential increase in float contributing $7 million in positive cash flow. Consistent with the outlook we provided last quarter, cash used in operations declined significantly from $73 million in the first half of 2022 to just $2 million in the second half of the year. Now I'll turn to guidance on slide 24. For the first quarter of 2023, we are expecting revenue in the range of $107 million-$110 million. Adjusted EBITDA is expected to be a loss in the range of $12 million-$14 million. For the full year, revenue is expected to be a range of $460 million-$470 million. This range represents growth of 9%-11% year-over-year. Adjusted EBITDA is expected to be a loss in the range of $30 million-$35 million and over a 40% improvement versus 2022. We remain committed to achieving Adjusted EBITDA breakeven exiting this year. As it relates to our guidance, we are assuming that new vehicle supply remains constrained in the near term, then improves as production and inventory continue to recover throughout the year. We are also assuming that conversion rates increase from the historically low levels in the back half of 2022 as wholesale price depreciation moderates. Finally, we expect non-GAAP operating expenses, excluding cost of revenue and depreciation and amortization, to grow at approximately half the rate of revenue growth. Let me wrap up on slide 25 by reviewing our 2026 financial targets. We are very pleased with our execution in a very challenging macro environment, and we remain confident in our ability to achieve $1.3 billion of revenue and $325 million of Adjusted EBITDA in 2026. Our confidence is reinforced by a number of factors, including strong dealer penetration and wallet share gains, resulting in sustained market share gains. Opportunities to expand our TAM into adjacent markets, including commercial wholesale. Our broad technology platform enabling durable long-term growth and operating efficiency. Consistent improvement in revenue margins. And a commitment to balancing growth and investment as our business scales. We look forward to providing you with details on our long-term targets at our upcoming Analyst Day on June 1st. With that, let me turn it back to George. Thanks, Bill. Before we take your questions, let me summarize. We are very pleased with our strong execution during challenging times in our industry, we are especially proud of our ACV team that has delivered these results. We continue to gain market share by attracting new dealers to our marketplace and by gaining wallet share, which positions ACV for attractive growth as market conditions improve. We are executing on our territory penetration plan and gaining traction with an expanding suite of offerings. We are delivering on an exciting product roadmap to further differentiate ACV and expand our addressable market. We are on track to achieve our near term Adjusted EBITDA target and over the medium term, generate over $1 billion in revenue with attractive margins that we believe will drive significant shareholder value. We are committed to achieving these results while building a world-class team to deliver on our goals. With that, I'll turn the call over to the operator to begin the Q&A. Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, you can press star one one as well and your question will be withdrawn. Please stand by while we compile our Q&A roster. Please give us one second as we are experiencing some technical difficulties. Just one second. Thank you for standing by. Thank you for being patient. Please allow us one second. Thank you for your patience. We will proceed with the question and answer portion. I will go ahead and reread those instructions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question comes from the line of Chris Pierce at Needham & Company. I just wanted to kind of take. Your line is now open. I'll start over. Sorry about that. For George, I just wanted to take your temperature and temperature of dealers kind of you speak with, given the better February wholesale data, specifically because, you know, retail did better in January because of lower prices. Just kind of talking to dealers, talking to investors, I'm just curious what you're thinking about the path of prices going forward at the retail level, given wholesale price strength, because that would kind of have an effect on, you know, retail used units. Just kind of curious how you're thinking about that and how dealers are thinking about it. Can you hear me okay? Just to make sure. I can hear you. Okay, great. We had a little phone issue there for a second. Just wanted to make sure. Did you hear any of what I said, just so I can ask it? Yes, I did. Yeah, we heard you. All good. Just figures. We had a phone issue, right while the question started. I would say, the year has started, to your point, January is generally favorable, I think, compared to how a lot of dealers were expecting with interest rates rising, a fear of consumer, the consumer pullback in the market. Both January and February, I would say, have been probably a little bit more positive than dealers were expecting. There's probably a few different theories on why. One theory of why the market has held together pretty well is it could be consumers are out, you know, knowing interest rates are only going to go up, so they're buying cars, you know, knowing that, you know, even though prices have remained elevated, interest rates may keep going up. That's what the market has signaled, right? Obviously a couple different reasons why that could be happening, but either way, you know, we're seeing so far, Chris, is that dealer sentiment right now is still strong. I think the market's hanging in there, even more than dealers were expecting. Okay. Just, you know, could you comment on just kind of what wholesale prices going up could mean for retail prices? I know the relationship tends to be, you know, certain in one direction. Just kind of we had kind of a funky end of last year where wholesale retail spreads really widened out. I'm just trying to get at if dealers think that higher wholesale prices will necessarily flow through to higher retail prices, or because of lower wholesale prices, we might not see that phenomenon which would help retail units and help auction conversion, et cetera. Yes. I think, Chris, if you see retail prices for used have hung in there pretty strong, thus far this quarter. I think a few different industry reports have reported. I think wholesale has been strong and retail has been strong. I think there's been, you know, a pretty consistent correlation there. Okay. All right. Thank you. Thanks, Chris. Thank you. Thank you, Chris. Give us one moment while we prepare the next question. Our next question is from Bob Labick at CJS Securities. Your line is now open. Hey, Bob. Good afternoon. Thanks for taking our questions. Hi. How are you guys? I wanted to start, you've touched on a couple of these points, maybe, you know, pin you down a little bit here in terms of where do you see kind of unit growth coming from? What buckets next year? Maybe you can rank them. I'm not asking for specific numbers of units, but is it, you know, same dealer growth, share of wallet? The biggest growth driver, is it new dealer sign-ups? Is it expanding TAM? Is it commercial? If you just, like, rank order the buckets of growth, where you see units coming from, please. Yeah, certainly, Bob. I think it's like a measured approach to our growth has been adding more rooftops, but definitely grabbing more wallet share from dealerships has been a larger focus. You've heard me really talk about that on the last few earning calls. We've. We still have a lot of room to grow within the rooftops we already that are working with ACV. We already have over a third of franchise dealers working with ACV. That supply alone, just from gaining additional wallet share, is a significant opportunity. There are other areas of growth, but if I had to just pick a few, I would say, adding more dealers and focusing on wallet share would be the most significant. Got it. Okay, great. Then, you've given the pipe supply environment and the, you know, just volatility and declining prices, et cetera. We've read there's been some kind of mix shift at auction, meaning maybe more $10,000 cars are trading or $10,000 below, but dealers are holding on to the, you know, $20,000-$25,000 cars because they can't get them anyway. Is that the case? What are you expecting, I guess, in terms of, you know, the mix at auction next year, you know, how might that impact the P&L? Yeah, Bob, we've seen our mix shift help from having sort of newer, more recent vehicles or vehicles that are aged, you know, three years and younger, is an example. The one cohort has actually grown pretty significantly from a% perspective. I know that probably seems strange as to why that would be. Dealers are starting to get, you know, new supplies starting to come back. Used, aged is still relatively low but starting to go back towards normal. When you look at all the factors, dealers holding on to the right cars, meaning the vehicles that matches their specific mix of inventory, sort of their sweet spot, that's really what dealers always did prior to COVID, prior before all these sort of industry challenges. Look at it as a return to normal. Yeah, we're definitely growing our share with the newer vehicles in the marketplace. Okay, that's great. Thank you so much. Certainly. Thanks, Bob. Thank you, Bob. Please give us a moment while we prepare the next question. The next question comes from Michael Graham of Canaccord. Your line is now open. Hey, thank you. It's great to see some of these trends turning around. I wanted to ask two questions. The first is just, you know, you mentioned share of wallet a couple of times as being an important factor this year. I just wonder if you could outline, you know, a couple of the key success factors in sort of growing your share of wallet in your existing rooftops. I just wanted to ask on the quarter, your GMV declined around 29%, but auction revenue was only down 3.5%. Just wondering if you could, you know, shed some light on what was going on underneath the hood there in Q4. Thanks. Yeah, certainly. I'll start there, Michael, and Bill can chime in on the, on the auction revenue side. We, you know, we're seeing, you know, strength in mix, as I mentioned before. That, that's actually helpful at in a moving forward basis relates to our ARPU. Bill, why don't you actually go first, and then I'll chime in. Yeah. Just so that- Hey Michael. You're right. Our GMV per unit did go down pretty substantially. But actually our ARPU increased 5%, for example, quarter-on-quarter. Most of that is essentially attributable to the price increase on buy fees that we passed through in October, if you remember. That more than offset any reduction in GMV per unit. Same dynamic would apply year-on-year as well. You know, we really been able to mitigate any decline in GMV as a result. In fact, for this year, we're expecting, you know, some modest, further modest declines in GMV per unit. Our ARPU, we expect to be flattish year-on-year if we think about, you know, what's baked into our guidance as well. As far as wallet share, the types of things we're doing to focus on growing wallet share, one is having our inspectors show up to our existing customers more often. That's a pretty simple tactic. Second, add more value. Some of our product offerings, for example, Drivably and, for a few of our customers, Monk, these are consumer acquisition tools. Part of our go-to-market for these consumer acquisition tools is asking the dealers for more share. Think about it as we offer more value, we're looking for more of your wholesale, and a few other things might help us drive both our relationship and an opportunity with our customers. Okay. Thanks a lot, guys. Certainly. Thank you. One moment while we prepare the next question. Our next question comes from John Colonnese from Jefferies. Your line is now open. Hey guys, this is Vincent Kardos on for John. Thanks for taking my question. How are you thinking strategically about competition heading into 2023 at a time when there's, you know, maybe just a little bit left of the pie to be shared by the various physical and digital auction providers due to depressed volumes in the industry? As a related follow-up, I'd be curious to hear your thoughts on kind of what you view as the most important areas for the business to improve in order to extend your early lead over some of the other digital players in the industry. Thanks. Yeah, certainly. When you think about competition, I think what you'll see is we've likely extended our lead in digital when you compare us to others in the industry. As we all know, the largest share is still on, in the physical auction. Moving more to digital is sort of a key part of our focus over the next, you know, few years. When you look at all the various capabilities we're bringing to the market, one of which is ACV Private Marketplaces, it helps large dealer groups trade vehicles within a group. That's an example of ACV adding more value. Those cars first trade before it goes out into an open marketplace. That's one example of a product offering that is outside of our open marketplace that's helping us gain share. Our newer product like Drivably and Monk and how we're gonna go to market later this year and early next year with MAX are all offerings that we are looking for market share from the wholesale side as well. We're bringing a broader approach and a broader partnership to our dealer partners that helps us differentiate from just a traditional auction company. Thanks, George. Certainly. Any other questions? All good on my end. Thanks. Certainly. Thank you. Operator, you can mute me. Our next question comes from Rajat Gupta of JP Morgan. Your line is now open. Hey, Rajat. Great. Thanks for taking the question. Just had a question on the OpEx guidance, you know. I think it implies 5% year-over-year, you know, excluding the cost of revenue. Curious, like what is it governed by? Because you haven't given us a breakup of the revenue target in terms of volume versus pricing. I was so curious, you know, what's driving that OpEx increase. Is it more a function of the volume or do you see like you have more cushion on investing because pricing is stronger? Just curious if you could elaborate on that. I have a follow-up. Thanks. Yeah. Hey Rajat, it's Bill. There are a few drivers to OpEx growth. You know, keep in mind that our OpEx, which includes marketplace operations, includes our inspectors. We are actually, we're starting this quarter growing our inspector footprint based on aligning that capacity with volume. That flows through OpEx on our P&L. As you know, that's an important driver to support our growth. That would be one area. The other area is, you know, some other investments that we're making on the go-to-market side in terms of kind of also supporting our growth in terms of sales folks, supporting major accounts, more kind of go-to-market investments at ACV Capital to support the growth there as well, even though that growth is gonna be a little more metered than it was last year. You know, in just in general, if you look at our overall growth that we've modeled for the business this year, we wanna make sure we have the resources baked into our financial model to support it. I think we've demonstrated so far in the past, especially last year and especially last quarter, that we've been pretty disciplined. You know, you wouldn't expect that we would be making any decisions in terms of OpEx unless there's a really strong basis in terms of supporting volume or return on investment. Hopefully that answers your question. Got it. That's, that's helpful. Any way to frame in terms of, you know, the inspector growth versus volume growth kind of equation? You know, any way to size that? Like what kind of volume growth requires what kind of in-inspector growth from the base you are at right now? Yeah. It's, it's kinda hard to give you a formula 'cause it's not necessarily that precise. In a lot of ways, we, what we have to do is basically build capacity in advance of expected volume, right? We can't just generate, you know, higher volumes in a territory and not have the capacity to support it. We basically, through our biz ops teams, basically look at projected volume across all of our territories across the country, and we'll make decisions as to where we selectively need to add capacity to make sure we can support that volume. I can't give you a formula that you can apply necessarily to the model per se. I wish I could give you more clarity than that, but that's actually how we make those decisions. Un-understood. Fair enough. maybe like as a follow-up, you know, you reiterated Are you officially reiterating the 2026 targets, or is that more of a placeholder from, you know, from the Analyst Day? I mean, you know, you're gonna do, like, $35 million EBITDA loss 2023 and that inflecting to $325 million in 3 years. I'm just curious, like, is that view pretty much still intact, or are we gonna get an update on that at some point this year? just so we could clarify that. thank you. Yeah. In our prepared remarks today, we're reiterating those targets. We haven't changed those targets. At our Analyst Day on June first, we'll be doing a deep dive in terms of the different parts of the model and how the model's evolved from our Analyst Day last year in terms of how we hit those targets. That'll be a very big part of our Analyst Day June first. Understood. Great. Thanks, thanks for taking the question. Okay. Thanks, Rajat. Thank you. One moment while we prepare our next question. Our next question comes from Nick Jones from JMP Securities. Your line is now open. Great. Thanks for taking the questions. two if I can sneak in here? I think, George, you mentioned there was about a third of franchise dealers on the platform. How do you think about any limiting factors or kind of sophistication levels required by like, to kinda double that number over time as you gain more share? Then, you know, when you go and try to build wallet share within dealers, kind of, you know, what's limiting their desire to kind of organically add more units or wholesale units to the platform? What's kind of stopping them from kind of organically doing that? Thanks. When I think about, you know, what's the limit? I mean, I don't, I don't really put a limit on how many dealers could be working with us. You know, you happen to, you know, think about a, you know, how could we, for example, double? At the end of the day, it's really about dealers feeling good about moving their wholesale operation online first and foremost. If it's gonna move online from a physical auction, then them feeling more comfortable that ACV is also, like, the winning choice there. You've seen so far, compared to our other digital competitors, we've been the preferred partner as relates to digital. I think it's just a matter of time. You know, really your second question is, I think, related in that we have significant wallet share on customers that we've been working with for three, four years. I mean, very significant wallet share on customers that aren't new to the platform, aren't new to digital. To us, it's really just a matter of time. You know, these other value-added services we're providing will also be helpful because what it does is you start to have a relationship with the dealer principals or the most senior level executives in the dealer group, not just the local decision maker for that specific rooftop. Think about this as a twofold way for us to increase wallet share. One, just the inertia of time of proving that digital and ACV are the right ways for you to dispose of your wholesale. Second, to be a broader partner for the dealership, which gives you an edge over the other competitors we have in the marketplace. Great. Thanks, George. Certainly. Thank you. Thank you. One moment while we bring the next question to stage. Our next question is from Daniel Imbro from Stephens. The line is now open. Yes. Hey, good afternoon. Good afternoon, guys. Thanks for taking our questions. Bill, I wanna start with more of a financial question. I guess, given the knowledge that inspector costs go into OpEx, just looking at the marketplace gross margin line, we saw some nice leverage in 4Q despite a year-over-year decline in volume. I guess, is it fair to assume this year we should get even further leverage as volume begins to pick back up and you lever some of those fixed costs, or what are the incremental investments that might be needed that could limit that leverage as volume improves? Yeah. Hey, Daniel. I mean, as you know, we don't guide to, you know, to cost of revenue slash, you know, revenue margins. We are assuming in our modeling that we do continue to improve our margin profile, and we're able to drive our cost of revenue, you know, down somewhat, as we kinda get back more into a growth mode here. I would say that, you know, we've already made a lot of the investments that are gonna drive that. We'll continue to make, you know, new investments that will help us, you know, maybe towards the latter part of this year going into next year as we think about hitting our target model, you know, which we'll talk about more on our Analyst Day in June. you know, for sure, we've kinda demonstrated a pretty significant improvement in our margin profile. you know, especially this quarter, if you think about, you know, year-on-year, we're up over 400 basis points in terms of cost of revenue being down, and we had a nice quarter-on-quarter improvement as well. I'm not sure I would assume that we're gonna be able to kinda maintain that kinda year-on-year improvement in 23, but certainly we're assuming that there is kind of a continued kind of, you know, movement upstream in terms of the margin profile as we get more and more efficient. Scale certainly helps. I think all the investments that we continue to make, you know, plus, you know, we demonstrate we have some pricing power as well. You know, that certainly is another factor in improving margins. We talked about transport extensively. Our Capital business will continue to grow, and that's a high margin business. It's all those factors combined. Got it. That's helpful. Then George, maybe one more on the strategic thing. Thinking about the innovation pillar of growth you talked about, last year, APEX helped gain some share. I think in the slide decks you called out Copilot and ArbGuard as new tools. Can you just provide more color? What do these tools add to your portfolio or offering that you don't have today? Then how does that compare when we think about the larger incumbent players, you know, the omni-channel players today, do they have similar tools? Are these truly incremental to the wholesale channel? And how do you think about that going forward as you do more innovation? Yeah. Hey, Daniel. You know, great questions. These are differentiated technologies, to put it in, like, simple terms, you're about to inspect a vehicle, and let's say that specific vehicle had, you know, transmission issues, you know, 20% of the time. Well, you know, instead of every one of our inspectors becoming an expert after, let's say, four years and doing, you know, thousands of inspections, every single inspector becomes an expert before they inspect that one given vehicle. If you look at last year alone, we inspected 1 million cars. The data moat that we're harnessing is really incredible. We don't really believe there's anyone in the world who is listening to as many vehicles, sensing vibration issues and other types of issues from this new technology we've just recently launched. The way we're harnessing our data and the way we're structuring our data allows us to first and foremost, moderate our arbitration costs over time. That would be the benefit we'll see in our financial statement over the next few years. Not all at once, but think about a little bit small benefits over time. Number two is buyers gain more confidence because they're having less arbitration issues, so that creates higher buyer satisfaction. Three is these technologies could be used outside of the auction marketplace. A matter of fact, that's probably the most frequently asked thing from dealers in this past NADA show, was dealers asking us to tweak our product roadmap this year because they want to use this technology outside of the auction, meaning when they're having the cars come into their own store, deciding whether they're retail or wholesale. Yeah, I think great questions. The more we invest in technology, the more differentiation, the more value we're providing to dealers across the market. If I could circle on a follow on, I guess, how is the hiring ability for inspectors today? I mean, technicians across auto are in very short supply. Is it more difficult to find people to do these inspectors? I think about Bill's answer earlier, needing more inspectors to fuel growth. Just trying to think about how available is that labor, and is that loosening up at all yet? I would say 80%, 90% of the country, our hiring has not changed at all. Our days to fill a role has been very strong. Now keeping in mind, we're not hiring as many inspectors per month as we were, you know, about a year ago. Our number of inspectors growth because we do have a nice size today of you know, over 800 inspectors, that's a nice size across the country. The simple answer would be we're not having a difficult time. We're not looking for as much of that mechanical background, as you mentioned, from a true mechanic. We can do a lot of training. To your first question about the validity of this investment making into tools, it helps take someone with a car background, but not a full mechanical background and turn him or her into a great inspector. Great. Thanks for all the color, best of luck, guys. Thank you, Daniel. Thank you. One moment while we bring our next question to stage. Our next question is Ron Josey from Citi. Your line is now open. Great. Thanks for taking the question. 2, please. I just wanted to follow up, maybe George and Bill, around the drivers for conversion rates improvements. Going forward for this year, I think I heard you say enhancing programmatic capabilities coming up this year. If you could just provide more details on what can drive conversion rates higher, that would be helpful. Then George, as a follow-up to your point just there on using the data outside of the marketplace, I mean, since really, getting to know you before IPO, it's all been all about the data and being able to leverage that. So how close are we to actually being able to do that given that dealers are asking for the product? Is this something that might be viable here in the next couple of years? Thank you, guys. Yeah, certainly, Ron. We're not assuming conversion rates, you know, you know, improve much more than they are today across the back half of this year. I just want to make sure we're. You know, conversion rates are out there pretty strong. If we don't need significant improvement in conversion rates this year. Maybe to answer your question more directly, it would be the why is last year. We saw this radical price depreciation, which really affected the marketplace for wholesale very significantly. We saw conversion rates go down below the sort of traditional levels. We think this year we're gonna see more stabilization, even with used car values this quarter, being relatively strong, let's say, towards the end of the year. We're expecting them to go down, I think we'll see this moderated depreciation in these cars. We're still not gonna see a ton of supply back all at once. Think about, the market is sort of, living with the current environment better. I'm trying to figure out a way to describe it, but we're really at this sorta stabilization point where dealers understand there will be, you know, values will go down. Conversion rates are strong. I would say, we're really in an effective market right now. Did you have another question? I'm trying to remember. That's super helpful. Yeah, I was just following up on your comment about using the data corpus that you have. Oh, right. Given the Okay. Yeah. Thank you. Yep. On the data side, you know, we're trying not to boast too much, but I think we're building one of the broadest AI capabilities there is in automotive at this time. It really ranges from imagery. Our, our Monk acquisition was a fantastic acquisition. We're, we're really still in the early days, so this isn't affecting our revenue or costs materially this year, but the technology is extraordinary. The AI coming from our R&D team on everything from, you know, looking at, you know, a windshield and whether or not, you know, glass has been, you know, is broken to, you know, scanning the undercarriage and seeing if a catalytic converter is missing or listening to an engine and being able to detect a high% of the time. Think like almost 90% of the time, we could detect an engine issue just by listening to the engine. All of that machine learning and AI is really creating an incredible moat for us. Yes, dealers are asking for these tools for their own use cases. We're just not ready at this moment. We've got some work to do to take those capabilities and turn them on to sort of like be their own SaaS services. We're brainstorming on how we would do that. I would say, you know, maybe we can get some of this to market by late this year, early next year. We're trying to obviously, you know, be careful about adding too many goals and objectives, focusing first and foremost on the marketplace objectives we've laid out for you all. We also don't wanna increase headcount significantly this year. As Bill mentioned, we're really moderating our headcount. We'll come, you know, we'll deliver some of these key objectives, I think late this year, early next year, I think that'll be fine. I don't think there's a need for us to move any faster. These are very sorta differentiated capabilities, not only on what they provide for the dealer, but the cost, 'cause these devices are very low cost for us. Yeah, we've got some great opportunities in the future to add even more, a broader relationship with these dealers. I would look towards sort of early next year, and we'll probably talk about more of this on our Investor Day and maybe be a little bit more specific than I'm being today. Great. Thank you, George. Certainly. Thank you. Thank you. One moment while I prepare the next question. Our next question comes from Gary Prestopino from Barrington Research. Your line is now open. Hey, good evening, everyone. Hey, George, it looks like according to the data that I have, that your dealer penetration somewhat accelerated in Q4. I think I had it at 33% in Q3 and up to 40 in Q4. What accounts to that? Do you have more feet on the street or, you know, just what would account for that acceleration? You know, Gary, I don't have a specific reason, beyond I would say at any 1 quarter, you do see us. If you look back in time, there's been quarters we've had a little higher or, you know, but I think pretty consistent. In fact, if we were to talk about ACV if you look at it across a year, we've really had this pretty consistent growth in both dealerships, consistent share of wallet share. I really can't point to 1 thing in Q4. It would have to be probably all these things coming together, this broad value-added services moat that we're building around what we're doing. I don't have anything on top of my head right now to point to 1 reason why we accelerated growth in Q4. Okay. Thank you. No, thank you, Gary. Well, listen. Are we done? Okay, sounds good. Is that your last question, Gary? Thank you. That is my last question. I would now like to turn it back to Tim Fox, Vice President of Investor Relations, for closing remarks. Great. Thanks, Gerald. I'd like to thank everybody for joining us today on the call. Note that we're gonna be participating in JMP's tech conference in San Francisco on March seventh. As Bill mentioned and George mentioned, we'll be hosting our 2023 Analyst Day on June 1st in New York. Registration details can be found in either the press release or on our IR website. We look forward to seeing you on the road, hopefully in the next few months. Thank you again for your interest in ACV, and have a great evening. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.