All right, I think we're going to get started with our next session. It's my pleasure to have the team from ACV Auctions here. George Chamoun, CEO, Tim Fox, VP, Investor Relations. Guys, thanks for being part of the conference again this year. Thanks for having us. Yes, excited to be here. Okay, good to see you both. For those who don't know the story as well, George, maybe you can take us a step back and just sort of introduce the concept of what you're trying to build, how it's evolved. You've been on quite a journey over the last couple of years. Yeah, it's really been an exceptional ride. So in 2016, I joined as CEO, and prior, was an angel investor, and we really were taking on this fascinating dealer wholesale category, dealer-to-dealer wholesale category. And just to take a step back on what this TAM is, there was about 20 million cars a year sold pre-COVID. Dealer-to-dealer being one segment of wholesale and about 8 million commercial cars. A category that most investors hadn't really looked at because the largest companies, like Cox Automotive, were private. There was a one-company car in the category. Most investors hadn't really looked at it. So we brought in this digital-first opportunity. The digital-first opportunity meant cars didn't need to be shipped. We brought this unique inspection minded, with the best inspection report. We're opening up the opportunity to bring demand, regional, national demand to any given car. Started in the Northeast, going after this very large market share. Just in, you know, it's been seven-ish years. We're already a little north of 8% market share of dealer wholesale across the country, so really tremendous job of taking share. And when you look at that regionally, we've had incredible share on the East Coast, where we've been there a number of years, and out West, we've got a lower percentage, but we're still new, and we're young, and we're growing. And so, a digital-first model, disrupting primarily a legacy model, that we've been growing both pre-COVID and post-COVID pretty consistently. So it's always interesting to me. We've not been—you know—seeing each other a number of investor days and things over the years, the legacy component of what you're going after to disrupt. Talk a little bit about that addressable market. Like, you talk about 8% penetration today, but talk about what the broader market landscape is, what you see as the realm of competition, and how you're building towards disruption over the medium to long term. Sure. I'll, I'll talk about the dealer wholesale business first before I get to commercial, because on commercial, we're still relatively young- Yeah ... and just standing that up. On the dealer side- Yeah Each and every market across the country had a market leader that was traditionally a physical auction. Yeah. In some cases, it was a mom-and-pop independent auction. In some cases, it might have been owned by Cox or owned by Carr or somebody else. In any one location, there was a different market leader. So a simple way to look at it is if you look at the country as 150+ territories, like we do, there could have been, in any one of them, 200 different auctions that could have been the leader in that market. Very fragmented. Another way to look at it is the largest player in the space, Cox Automotive, had two of about 11-13 million dealer wholesale cars. So even the largest player in the category had less than 20% share of dealer wholesale. Very fragmented. Yeah. Cars were shipped to an auction by the seller. Buyers would show up, and the average distance between buyer and seller was probably a few hundred miles at best. I'm being kind. Okay? Move to our world. Car gets inspected. Yeah. You no longer need to know who the seller is. You know, Bob Ford, locally, or Mary GMC, whoever that local dealer is, it doesn't matter. In the traditional world, we wanted to know who the seller was. The seller's credibility was whether or not you're going to buy that car. With the ACV inspection, I don't need to know who the seller is. Right. The average distance on our platform is over 350 miles. Average. That's not how far they're going, average. So you're getting true reach. A car is ending up where it needs to, wherever it should be. And, and that's been the, I would say, the primary way we've disrupted has been about each and every car goes through our inspection, and because of that, a buyer is more confident buying it, and we're, and, and, and it ends up being in the right hands. Now, from then to now, we began it to say earlier, we've added additional value-added components- Yeah -beyond that primary driver, but that's what's really driven the physical to digital change has been trust with the ACV inspection. That trust is what's converting folks to our world. Got it. So maybe to skip from that macro view and the big picture down to something a little more micro, it feels like through most of the last couple of years, we've had an ongoing conversation about where supply and demand sit in the marketplace. I've joked with you that, yeah, I think if we ever find balance between supply and demand, I don't even know what I'll do with myself, covering the stock. But just talk us through the journey you've been on post-COVID and elements of the supply-demand dynamics in the broader automotive landscape and how that's impacted your business. Yeah, I'll start at a high level. Maybe, Tim, you could any data you wanna provide. But the main thing that happened to us shortly after COVID was, as supply of new cars was basically shut down- Yes. Our dealers had less cars to sell, therefore less trades. And also, at the same time, they were holding on to more cars. So selling less, getting less trades a month from consumers, and also holding on to more because they... You know, you're gonna want to hold onto a car with 100,000 miles on it as a franchise dealer. Why? Not because you really wanna sell that car, because you don't have a choice. You're not gonna have your lot be empty. So it was, for some marketplace businesses you all cover, COVID was a good thing. For us, we were growing just fine pre-COVID. So COVID, I would say, has been, with us, was really more of a nuisance than anything else. It was more disruption. It was more disruption- Yeah ... and more challenging because it really disrupted our supply. Yes, it helped for demand for a period of time, and it helped a little bit on ARPU, but we're really a volume-driven business, and so there was more challenges. So we really had to grow the number of rooftops, which we've done. Yep. We had to, you know, get to our goals, which we've generally done a good job hitting our numbers, even with that disruption. But in our category, COVID brought some significant challenges. The great news is it's starting to go back to normal. Yeah. We really articulated we thought this year would be the trough, and next year, between now and 2026, we'll see a build back to normal. So I think the I'm happy to share that we're starting to see dealers start to take more trades, and also, within some of our data products, we see how many of them they keep versus retail. Yep. And then we're starting to see a willingness to wholesale starting to go up each and every month. Interesting. Okay. You talked a little bit about growing rooftops, given the environment that presented itself. Talk a little bit about your go-to-market strategy, your land and expand strategy, and what your learnings have been, and how people should think about that strategy continuing to evolve in the years ahead. Yeah, our core, our core land-and-expand strategy was to first establish over 150 territories, and what that meant was primarily hiring a territory manager and that territory manager hiring Vehicle Condition Inspectors. That was establishing at least a presence. Presence, meaning we might only get the one or two dealers in that one given market, but let's start our journey. Then we start to hire additional inspectors in that market to sort of, as we start to grow, grow our relationships in any given area. Yeah. That's been our primary growth up until recently. In addition to us hiring territory managers and hiring inspectors, taking more and more share, we've started to introduce additional value-added services. For example, ACV Private Marketplace, where large dealer groups are trading within their group. That's a new way for us to grow beyond just growing store by store. Other value-added products, like this new one, Clear Car, which is helping dealers buy cars from consumers. So look at it as been our primary growth, which has been hiring our inspectors, getting them out in the field, and then these new value-added services. Got it. Sticking with those new value-added services for a minute, talk a little bit about how you approach building technology innovation and additional value-added services into the platform. I don't know if it's best to go sort of innovation by innovation or product by product, but how should investors think about what those types of product innovations do to elements of retention, higher unit economics, you know, revenue growth? How to think about some of the outputs of some of those innovations? Sure. So first is, dealers voice their needs. Yeah. This is not a shy industry. I've been in a few other verticals where you're, you were trying to invent something before it was before the market maybe even needed the product or service. This is very straightforward. You get in front of your dealer partners, they tell you: "Hey, this is my need. Can you do it or not?" And it's been a very challenging category for dealers. So there's not a lot of great tech companies in the automotive tech world. It's not like other verticals you all look at. So if a dealer told us, "Hey, inventory is important. I need to be able to keep more cars. I need to make sure I retail the right cars and wholesale the right cars," they don't come out and say, "I need a private marketplace." They tell you, "I have these certain needs. Sure. And my own stores don't even trust each other. How do you help me?" So they expressed their need, and we came out with a fantastic product offering. And how that expresses back to our unit economics, we say, "Hey, we'll basically give you this product," charge them a little bit for it, "as long as we get first shot at your wholesale. Yeah. The Clear Car one was the cars I buy from consumers are the cars I have the highest margin. They're the... I win new customers with—I need to get more consumers walking in the door. I can't have CarMax or Carvana eating my lunch. I need help. That's the way a dealer tells us. Yeah. They wouldn't say, "I want an AI-driven pricing engine." They're not gonna say that. They're not gonna say, like, you know, they're gonna say, "I, I, I need to win against CarMax. I need to win against Carvana. Help me." So a couple of years ago, we started our path, and we, we're just launching this product now, and it's been years in the making, where we were listening to what dealers need, and then how does it go back to our economics and say, "Okay, you can, you know, for feature A, it's $400 a month, for feature B, it's another $400, so let's call it $800 a month. But if you give me 10 cars a month, wholesale, which is about half your wallet share, I'll give it to you for free. So either pay me $4,800 a month, or I'll just give it to you for free. Whatever you want, Mrs. Dealer or Mr. Dealer, we'll whatever works for you." So dealers express their needs. We've done a fantastic job of bringing true data-oriented products. You know, a lot of investors are hearing AI everywhere you turn right now, but in our sector, what we're doing, from pricing to condition and other factors, we are truly disrupting a category. And in business model, we're being fair to the dealer. How would you like to pay us? Do you want to pay us a few hundred a month in subscription, or you want to give us your cars? Yeah. We're happy either way. Understood. You know, you've had two investor days over the last sort of year and a half. At both of them, you've given a lot of great data about what's defined winning and gaining market share in certain pockets of where you operate. Talk a little bit about what defines outsized market share success for you in certain markets, and how to think about reducing friction longer term to get even more market share where maybe you're under-penetrated today. Why don't you take the first half of that? So you can... Because you're up here with me, and then I'll answer the second half. Sure. So you know, when we look at the algorithm really for market share, it's a combination of penetration- Yeah. So primarily franchise penetration. Franchise dealers generate about 80% of our, of our units that come in from the supply side. So penetrating rooftops and then getting wallet share, right? Getting a higher percentage of the amount of wholesale that they're transacting every month and quarter. If you look across the country, what we shared at the analyst day is that we're about 30% penetrated across all franchise dealers across the U.S. However, we're only about 30% of the wallet share. Yeah. So multiply those two together, that gives you a sense of what our market share is in franchise. But if you look in the Northeast, even parts of the Southeast and Texas, even emerging parts of California, we have areas where we have 50%, 60%, 70% rooftop penetration, combined with 60%, 70%, in some cases, even higher wallet share. Yeah. Right. When you get to that tipping point, which we start to see territory by territory, market by market, and then region, that's where you really start to get the unit economics in the model. Yeah. Right? Because volume drives it. We have a highly high level of fixed cost. Yeah. Right? And so as you start to drive that, you know, consistent growth, more rooftops, more wallet share, that really drives the unit economics over time. So the majority of what Tim described, we've done with our core product, our ACV Auctions digital marketplace. Just rinse, repeat, introducing the product to a market and getting share. It's only recently, last couple of years, where these other value-added services are at, are offering even more value. So I would look at, you know, the numbers Tim represented, where, you know, we've taken in some markets, 30% total market share. We've done that primarily with just the core product. Yeah. But you never stop. To answer your second part of your question, you never stop investing in the future. Yeah. Right? It's all part of the formula. We are building things that are helping the dealer make better choices, helping the dealer compete, helping them, you know, that are ways that a local physical auction just doesn't do. Right. So we're just going to keep winning share the way we've been doing it historically, but also adding this additional value so that in a way it just further differentiates us from the decision-making of why use, you know, marketplace X versus marketplace Y. Got it. So bring it back to what you talked about before, which is building value add or ancillary services on top of the platform. Which ones are you most excited about that can unlock elements of either volume slash market share, defined either by rooftop or volume of cars, that you think are the biggest unlocks for the growth in the business in a more stable supply-demand environment, looking out over the next couple of years? Maybe I'll ask that as the first one. So, asking, like, which feature is like your favorite, is almost like asking about your favorite child. So I'll answer it this way. If you looked at whether we're talking about Clear Car, which is a way to buy cars from consumers, or, ACV Capital, which is a funding mechanism for buyers, or ACV Transport or MAX Digital, which is an inventory manager. If you say, okay, what's the commonality of our data model that can help dealers make better decisions? So it's answering a different question you're asking. Yeah. The commonality is the condition of the vehicle, and understanding the condition unlocks better decision making- Yeah ... in every single part of automotive. So if you ask me what's the most important part of our product tech investment thesis, is whether the dealer in the future uses our inspection people, meaning our Vehicle Condition Inspectors, or doing a self-inspection, or the consumer self-inspects. Our data model will help dealers make the best decisions. So if I had to pick a favorite, it would be the underlying data structure that is literally fueling all these vertical features and products we're all talking about, is a condition-adjusted, you know, engine that helps you decide what to do. Keep the car, retail the car, wholesale the car, transfer the car, don't transfer the car. Yell at your carrier because it's not in the condition it came. Like, capital, how much to spend on the car? All of that. Dealers will go from gut and, you know, and just, you know, professionals who have to look and smell a car to understand what to do with it, to do they go through one of ACV's models, and they will lend through one of our inspection models. It helps you make the right decision. Talk about that a little bit, because that's what struck me when I take a step back and look at the business, at some of these investor days you put together, which is how much friction there still is in the offline process, right? Even just inspecting a car or deciding about price. Can you just talk about what that - how much friction you're reducing or quantify some way the differential between the offline world and the online world, and how it feeds back into competitive differential? So if any of you have been inspectors, we had highly trained professionals who you need to look at a vehicle, who they know everything. They know a Nissan Sentra really sounds this way or doesn't, or a Subaru has this issue or that issue. You know, it's a category. Automotive has been this category where 16,500 franchise dealers and over 30,000 independent dealers had an expert, and that expert might have been great in these cars, maybe good in these cars. However good that expert is, or they have a bunch of experts inside that dealership, they're making decisions on buying a car, retailing a car, reconditioning a car, but it wasn't structured. There wasn't a way to say, Subarus are supposed to sound this way. There wasn't a way to say, Nissan Altimas fall apart, you know, 35% of the time when they're this mileage, and here's... It wasn't structured. It, it was professionals who each and every part journey. So I would say dealers have done an incredible job making money. And you, you know, for those of you that cover retail, you'll see a bunch of dealers have made lots of money doing what I'm talking about through professionals. All we're really doing is taking what the best can do, and we're enabling it for everyone. And, and, and we're doing that in a, in a structured way by, you know, we, we've now gotten to the point before you even inspect the car, before you even look at it, we can tell you, here's all the things you need to know about that given vehicle. Then after you inspect it, here are the things you should now be careful about. And so that just didn't really exist in this category. So, what that can do to their overall economics, dealers can decide. They can decide maybe to invest differently in personnel. They can decide to invest more in acquisition of consumers. They can, they could decide how to, you know, how to take their overall business plan and allocate it differently by having, you know, more of a technology-enabled decision-making methodology versus these experts who are really the ones who are making all the decisions. Got it. One of the questions we get a fair bit from investors is just the competitive landscape. I think people understand a marketplace disrupting the offline traditional ways of doing things, but many times I'll run into investors who think we haven't thought enough about what might be around the corner or how the competitive landscape might change. What do you try to protect against from a competitive standpoint of how the industry dynamic might change around some of the disruption you're trying to accomplish? If I had to pick far enough out, I would say this industry, like all, will be, you know, AI will transform everything. Got it. It's just a matter of time. So I would say she or he who has the most structured data and can unlock it in the most seamless way will have advantages long term. I don't think this will be an industry that will change rapidly in, like, the next three years. I think it'll take many more, but I think this industry, like most, will see massive disruption in the long run. Decision-making will get easier and easier, and it'll... You know, which dealer should buy a car, which dealer should sell a car, and how you make your —it will all change. Yep. I'm just trying to invest. I'm trying to pace our investment. I think we're investing more than anyone else in the world in these categories, to make sure as we move towards the systems just making decisions versus people, that we're in the best position. That's probably a global statement, not just a national statement, right? Because as you move to technology helping you make decisions versus just people, it changes everything. Got it. Maybe last one on just ancillary services. You know, always interesting from the outside looking in. You talked about it a little bit before, but elements of driving more volume because of these ancillary services are more unit economics. How should we think about some of the businesses like capital and transport and things like that, that could move the needle either from a volume standpoint or a unit economic standpoint? Tim, why don't you start out with some of the things we've said publicly, and then I'll chime in with- Sure. So, transport has been really the most successful of the ancillary services, so we got into this past quarter about almost 55% of our units use ACV Transport. It's a business that's a marketplace within a marketplace. We don't own any of the assets. It's obviously a very asset-light business. What's really important about transport is that not only does it help fuel the volume and the growth and regionalization of our different territories, but that team has done an amazing job leveraging some of these ML and AI technologies to build better pricing algorithms, to actually build much more localized pricing, to the point where we're running now in the mid-teens from, like, a revenue margin perspective. It was losing money a year ago, right? Our long-term goal in 2026 or medium-term targets is to get that into the high teens. We're very close to achieving that already. That's a big driver of volume, and growing our regionalization, and also a key contributor to our margin improvement over the next three years. ACV Capital is a newer business with significantly higher revenue margins in that business. It's a great business. We're metering the growth there just because of the environment we're in right now. But even last quarter, revenue growth was over 100%, on about, call it, 10% attach rates to the number of units that we're selling. The goal for 2026 is to get that to about 25% attach rate. We'd probably be close to that today if we really wanted to be a little less risk-averse. But we're, you know, just trying to meter that as we, you know, gain incremental share and scale in those businesses. So when you think about the second half of your question is, how is technology not only helping us today achieve these objectives, but what, what is... where, where does this thing go? We definitely beat the, you know, our EBITDA targets for transport this past quarter. And I really, by the way, was not holding anything back from you all. Like, our advancements of our AI pricing engine within transport, I was just not expecting it to work that fast. You build this stuff, you don't... You build technology, and you kinda pace yourself. In your mind, you go, "Hey, this will help us for the next two years." But sometimes it helps you a little faster. So now, in the world of transport, how do you look at it as almost like a thousand different virtual lanes? This car is going from Buffalo to Miami, you know, in the wintertime. This one's going from New Jersey to over here to Philly. Like, it's like so many lanes. So how do you, how do you price this? Well, we built an AI pricing engine that's, that's now allowing us to make these decisions. Yeah. The first quarter of launching this, was like, "Whoa! We got a lot more low-hanging fruit than we thought. Yeah. And so it doesn't stop. It doesn't stop. Like, each and every product, you know, why- You know, the biggest, the biggest ask I get on Capital, ACV Capital, from dealers is, "I want to buy cars outside of ACV. I'll go with you, but give me money outside." And right now, we say, "No. Right. The next yes will be, if you're buying cars from consumers, and if you're using ClearCar, then I'll say yes. We might have a dozen or so in trial right now that we're not telling everybody about just yet. Like, yeah, of course, I'm trying that before I say it's launch. But why would I feel comfortable funding a dealer to buy cars from consumers? Because they're using our pricing engine to buy the cars from consumers, so I know that there's about $600-$800 of wholesale profit or $1,500-$2,000 in retail margin if they use our pricing engine. So I feel comfortable funding that dealer, I think, better than anyone else in the world at funding that dealer to buy cars. No bank could do that. Right. So it's you just keep investing with the thesis. That's why, you know, underlying this whole thing is really you keep investing of more and more structured data to help make better decisions. And with that, the businesses will continue to evolve till we hit those 2026 objectives. Understood. Well, sticking with those longer-term objectives, I think the other big investment debate we always have with folks is just elements of bridge building towards the long-term revenue targets, the long-term margin targets. Just, I know they're out there in the public domain, but just help people understand some of the variables that you view as key to executing against those long-term objectives to build to the revenue base and the margin profile that you want to achieve with the company longer term. Tim, why don't you go first now? So the fundamental building blocks of that, those 2026 targets, starting with revenue and revenue growth, first of all, is that we share that we expect to achieve about 1.5 million units. About 10% of that comes from these emerging categories of consumer to dealer and commercial. So the rest, you know, a little over 1.3 million would be dealer wholesale. That would imply at the time that we'd need about 12% share of a healthy dealer wholesale market. So that's the first assumption you have to believe, that the market gets back from, call it, 8 million today, closer to 11 million over the next 3 years, and we would need about 12% share. The second element of that is that we would continue to drive incremental pricing increases. We've laid out that about a $500 auction and assurance ARPU would be the element of the other, the model in 2026. Q1, Q2, we're $450-ish this year, so we're closing in on that target. We feel very comfortable about that. And about... So if we put it in terms of percentages, about 50% of the growth needs to come from market share, a consistent amount of market share, call it mid-teens market share growth. We've been delivering that now for two years. About 20% from pricing, about 10% from these new adjacent categories, and then 20% from market recovery. Right? So 80% of it is, are things that are really within our control, and that's, so that's the top line. EBITDA targets come almost primarily from volume growth. We laid out there that at about a $25 million run rate in a region, you get to break even from an adjusted EBITDA perspective. When you reach $50 million, you're talking mid-teens EBITDA margins, and then only another $15 million of revenue to $65 million, do you get to 25% EBITDA margin. There's that much incremental leverage in the, in the model. Today, we have, probably five or six territories that are already 25% or more, adjusted EBITDA. We expect by the end of this year to have 10 regions running in the mid, mid-teens from an Adjusted EBITDA perspective. So, it really is kind of a volume recovery story to, to achieve those targets. We laid out how much of our business is fixed, our cost basis. It's a pretty, pretty high percentage. Certainly, when you look at R&D, G&A, very, very high fixed cost. So there's a lot of leverage. Understood. So maybe just to summarize that, we've already hit a similar unit economics and EBITDA profile, you know, in a handful of markets. Yes. So we're not talking about something we haven't already seen. That's, and we're doing that today with the amount of retail and wholesale in current market conditions. We're, we've laid out this path that says we just have to keep growing the way we've been growing. We're not really expecting an accelerated growth, even though I've said to you all these new things we're doing. The plan just says, just consistent growth, and then we've given this 20% out of our control of the market recovery. So you can really see, here's the, here's the 80 versus 20, and it allows investors to really have their own opinion. One, you know, I believe we should be growing the same, if not more, than we're growing today. I think the market will recover by 2026, but if any one investor, you know, wanted to go in there and have your own assumptions, we try to do our best to transparently show the plan. But we can taste this. This is not something like in other industries, you're waiting for something to happen, right? Some massive event. This is a business model that's proven. We've our overall economic profile in our mature areas is already doing what we need it to do. Understood. So bring us home in the last minute, George. You know, if we sit here and have this conversation a year from now, top priorities for allocating capital, building product, executing, what's top of mind for you over the next 12 months? Yeah. Not to sound like a broken record, but much of our product technology investment is around how does condition affect price and value across, whether it be auctions or any one of these other features. So we're gonna keep investing in that category. If you ask me that a year from now, I think I'll be saying that. If you ask me that five years from now, I think we're gonna be saying that. I think we're onto something that's, you know, i t would be like in the - I was talking to one of the investors earlier about what's going on with AI, and, you know, he or she was investing in the right chips five or 10 years ago, was in the right place at the right time. I think condition-adjusted decision-making is that for this category. I think we're onto the right thing. I think we're doing a great job of focusing on dealer-to-dealer with the majority of our resources, and then, and at the same time, we've got an investment in unlocking commercial and unlocking consumer-to-dealer, which is still B2B from our perspective, just one more element of it. So I think we're doing a great job of what's the core, and then how do we then take this investment out to use expanding our TAM? So I feel really good about our plan. Okay. Please join me in thanking ACV Auctions- Thanks, everyone. -for being part of the conference this year.