Great! So we'll get started here. Welcome, everybody. I'm Ron Josey. I lead coverage of the internet sector here at Citi, and we were gonna have Vikas with us here today. Unfortunately, he had a family emergency arise, so I'm psyched to have with us Tim Fox. And so- Tough shoes to fill, but I'll do my best. Great. Well, do your best, for sure. So Tim's the Vice President of Strategic Finance and IR. We'll get into that in a second. Which means responsibilities for financial planning, ops, M&A, you name it. I think most people are familiar with ACV Auctions. Just, you know, in a nutshell, it's a digital marketplace to wholesale vehicles. There's a lot going on at ACV. It's not just wholesale, it's many different forms of wholesale, I can, I guess. So with that, Tim, welcome to our tech conference. I know you've been busy all day with one-on-ones. Last presentation of the day, so we get a good crowd. Mm, mm, mm. Get your questions ready. All right, so- Standing room only. New role here, right? Strategic finance- Yeah ... M&A, planning, ops. Tell us a little bit about your purview at ACV, just to level set? Sure, so obviously, I joined to stand up an IR function from scratch. Joined a month after the IPO. Had a few weeks to build out a complete IR function prior to reporting our first quarter as a public company, but it's been a blast. Since then, basically been given a little bit more purview into annual planning, midterm targets that you're familiar with, and then really starting to insert myself more into many of the sort of growth-y investments, whether that's organic, whether that's partnerships, whether it's M&A, to really have a seat at the table to drve that. It's been fun to start to expand into other areas and frankly be able to help the team understand, really from an investor perspective, what are they looking for from our financial model, right? Yeah. It's largely what we went public with, but with the one caveat being our move into the commercial space has created a little bit of a distortion on OpEx, but all within the guise of growing, you know, adjacency within wholesale. So yeah, really excited to be expanding my purview. Yeah. No, it's gonna help us too, frankly. Exactly. That's great. Congrats on- Thank you ... on all of that. That's very great. That's very cool. So let's see, I want-- we'll dig down to everything ACV, but I want to understand a little bit more about macro. Mm-hmm. A lot of moving parts here as we try to better understand what's happening within the auto sector, so I believe the team called out new vehicle inventories were normalizing. Yes. OEMs are increasing incentives. Maybe we'll see more of that going forward. At the same time, used supply is still below pre-COVID levels. Right ... I think, wholesale depreciation is persisting or, you know, doing its thing. So, walk us through sort of like macro- Sure ... help sort of patch it together, and we'll go from there. Probably best to start with what drives the focus on the dealer wholesale piece. Yeah. What drives that business ultimately? And if you think about, this is a, a dealer-to-dealer marketplace, right? So the traditional market is fundamentally physical auctions. For those of you not familiar, thirty, forty, fifty years, most dealers, when they get a trade, they don't want to necessarily keep it, doesn't fit their brand, they will flip that into the, the dealer wholesale market. And even today, 85% of these trades that get disposed into the wholesale go to one of 280 or so physical auctions across the country. Manheim being the largest, they have about 70 auctions. ADESA, which was acquired by Carvana, has probably another 30-ish or so. And then there's hundreds of these other smaller, independent auctions that run once a week. It's, you know, it's pretty classic. You know, you think of sort of a cattle auction. They literally run these cars down what they call lanes, and buyers hover around, and you know, there's an auctioneer, and you get a few minutes to sort of watch these vehicles go by, but it's fairly light on data, and you're really trying to use your gut when you're looking at these vehicles to bid on them and ultimately buy up inventory. So if you start with the high level, retail sales is really the first sort of leading indicator, right? So a retail sale of either a new or used vehicle. With those, if you've sold vehicles before, during a trade, half the time when you buy a new or used car, about half the time there's a trade associated. And then at that point, the dealer has a decision to make. If you're bringing a F-150 to a Ford store, and it only has 40,000 miles on it, in pretty good shape, you're liable to keep that, right? You'll put a little bit of reconditioning into it, keep it, and sell it on your lot. If, however, you're bringing an F-150 to a Mercedes dealership, your, you know, wife finally convinced you to get rid of your truck and upgrade, that Mercedes dealer- That happened to you. Yeah, exactly. Unfortunately, miss my truck. Yeah, that Mercedes dealer is going to flip it into the wholesale market. Okay. So first and foremost, everything is really driven off new and used retail sales. Clearly, with all the global supply chain challenges that we all faced and saw, during the past three years, new vehicle sales went from seventeen and a half, eighteen million units to twelve at the bottom, right? So stepping back, about six million fewer new cars were sold over the past three years, which has created, obviously, a dearth of used vehicles, especially late model. So you had new vehicle sales dropping like a rock, inventories dropping like a rock, and so what happened was, not only did you have fewer trades to go into the wholesale market. Dealers were forced to keep a higher percentage of these trades for their own retail purposes, right? So if they've got no inventory really, or very little inventory on their lot, they were keeping cars that had eighty, ninety thousand miles, that in the past they just would have passed on. Really, what we look at is this ratio of trade-to-wholesale mix. Pre-COVID, your average franchise dealer would typically wholesale six out of every 10 cars, that, that they take in as a trade. That got as low as four. Hmm. Right? So a pretty significant headwind, frankly, to wholesale supply. We think this year, depending on where the rest of the year shapes up, we'll probably end this year somewhere around seven, eight, 7.9, maybe eight million units of dealer wholesale. That's down from 11 million pre-COVID. So we're still in a market that this year will still be about 25% below normal times. Now, it's just interesting, since 2020, the market's gone down, call it 25%. Our revenue has tripled. Hmm. Right, and that's because we've been taking share. It's a digital transformation. We're offering a completely different value proposition to both buyers and sellers on our marketplace that's effectively replacing this, you know, physical auction experience. Now, the good news is, you know, starting last year, you started to see the new vehicle market recover. I think this year, most of the analysts are expecting 15.8, maybe 16 million- Sure ... of new vehicle sales. So still below pre-COVID levels, but certainly better than twelve. As you mentioned, OEMs are leaning into incentives. Pre-COVID, the average incentive for a new car was somewhere in the $4,000 range per vehicle. That got to as low as, like, $500, right? Just because they needed- they didn't need to do incent to sell new cars. You'll start to see, as you watch NFL football this weekend, you'll start to see, ads for 1.9% financing, $3,500 cash back. You're starting to see more and more of that proliferate across, different brands. That's great news. So new car inventory is good. Toyota's probably the only OEM that's still a little bit below normal, but all the other brands are pretty much back to normal. New vehicle sales are picking up. The only sort of retail headwind that we're seeing that we do think will start to unlock probably next year is on used cars. If you think about what consumers are facing right now, when the new car inventory picture sort of exploded, demand for used car went up significantly, so prices went up. So we're down 20% from the peak for a used car average retail, but we're still probably 25%-30% above pre-COVID levels, and obviously interest rates have spiked. Yeah. Right? So your average, moderate sort of, consumer from a credit perspective could face 10%-12% interest rate on a used vehicle. That's gonna start to obviously go the right direction here as the Fed starts cutting. So you get a combination of prices coming down on used cars, interest rates normalizing. We think that there could be a pretty interesting unlock, for used car demand. One other interesting data point on that front, the average age of a used vehicle in the U.S. right now is 13 years. That's the oldest it's ever been- Yeah ... by far. So you've got a lot of aged vehicles, which are costing a lot more to fix. So we think that as soon as we start to see prices and interest rates sort of collide, you could see used car demand start to really pick up. What that's gonna really translate to, more broadly, is a normalization of this trade to wholesale mix, right? Dealers are gonna start to give us more listings. When our condition inspectors show up to inspect five cars, hopefully there's seven, maybe eight for them, 'cause the dealers are like: "Look, my lot's pretty full, this doesn't fit my profile," and start pushing more and more into the wholesale channel. So according to AuctionNet, which is a third-party provider of data, the market contracted 5% in Q1, dealer wholesale. It was down 3% in Q2, so it improved a little bit. And literally, the day after we reported our Q2 results, they came out with their July report and said that July was up 7% year over year, the first positive quarter in three years. Positive month, excuse me. So part of that might have been this CDK outage that some of you might be familiar with, that caused massive disruption in the automotive space for the last part of June, but outside of that, we did see June-July results were quite solid throughout the whole month, and we reported in early August that we'd seen that momentum continue into early August. Black Book, which is another third-party data provider, came out today showing that wholesale prices are stabilizing. Conversion rates, so the number of listings that convert into an auction sale, are quite strong, so these are all just positive green shoots, and I was promised this, this was a large, stable market when I was hired, and it's been three years, I've been patiently waiting for that to come to fruition, so hopefully, we're looking at perhaps an inflection point in our overall backdrop. In the meantime, you know, we've been taking, consistently taking share. Obviously, when you triple your revenue in a declining market, the bogey that we've put out there is to gain about mid-teens market share each year, if that was pretty consistent in Q2. You know, we had 22% unit growth, call it 5% or 6% of that acquired, and the market was down 3%. So if you just do the simple math, our market share gains were probably 16, 17, 18% year over year. So that's our, you know, our main driver of incremental growth is continuing to just take share. As I mentioned, 85% of the volume today still goes through these physical auctions, so there's a lot of white space out there for us to go after. The 15% that don't go through auctions go through ACV? And OPENLANE digital platforms. And Manheim's done a little bit of digital- Digital, yeah ... sort of off-prem work as well. So yeah, it's, it's mainly those three players. Got it. Let's talk a little bit more just on the macro front. You said conversion rates improved, I think, in July. I think we heard about that as well from an ACV perspective. Historically mid-50s- Yeah ... if I'm not mistaken. What is there anything to point to that's driving that conversion rates? Is it faster auctions, more supply, more dealers on the network? So a lot in there, but- For us personally, you're talking not necessarily the market. So there's a number of- Yes, great ... interesting things that drive conversion rates. So, if you step back and look at, we have basically about 150 territories across the country, some of which we've been in for seven years, some of which we've been in for one year or two years. Markets like in Boston South, which I point to all the time, is where I've lived for 25 years. Our conversion rates there are consistently in the mid-70s, right? And when you unpack that, what you see is you have a very dynamic sort of marketplace. You've got a very strong supply base, very strong buyer base. Dealers have become accustomed to using the ACV estimate, right, which is our AI-driven pricing engine. Very sophisticated. It not only takes in real-time pricing data from the hundreds of thousands of transactions, but we also build into it a condition adjustment to it. We've done three million or so inspections, so we know when we're doing an inspection of this vehicle, we know what the condition of this vehicle is. There are There are 250 data points, exterior, interior, engine, undercarriage, structural. And so what we're giving the seller is, we're giving them a price for this vehicle that's not only based on what the market's looking for, but also what the condition of that vehicle is. Yeah. Every vehicle is different, right? The same make, model, mileage is going to have some differences of value. So dealers that have been with us for a period of time start to trust that pricing model. When they use it, they have very high conversion. On top of that, we've also made some changes to the format of our auctions. It used to be all basically 20-minute auctions, just kind of bang, bang, bang- Yeah ... running all day. What we found was that for more expensive vehicles, say $50,000-$75,000 or above, dealers were actually looking for a little bit more time, right? So we've added a two-hour format. That's helped also drive conversion rates. So I'd say it's been a lot of it driven by our own tech, our own data, and then just sort of the natural evolution of territories. As those regional sales get larger, you get more of this network effect. By default, your conversion rates increase. Right. Over time, you know, we've built. We didn't build in anywhere close to 70% into those midterm targets, but we did have an expectation that conversion rates would tick up each year and, you know, increase into those midterm targets. Are we at that historical level, around 50% or so, or mid-50%? We're in the mid-50s, yeah. We are, okay. We were a little bit above that in Q2. There's a seasonal dynamic to this. Q1 is usually the strongest quarter, you get tax returns and so on. Q2 tends to step down a hair, which it did sequentially. It was still up year over year, which was good. Right now, frankly, the Black Book data is suggesting that Q3 could actually be at or above Q2, which would be unlikely. Yeah ... or at least- Or not normal. ... yeah, not normal, and would be, frankly, you know, a nice upside to our results. That's great. Well, I hope, I hope that's the case. As do I. Let's, um- Yeah ... let's stick with the core of what ACV does on dealer penetration- Sure ... VCI efficiency, so vehicle condition inspector efficiencies. Tell us about dealer penetration. Where are we with that on, call it, all the rooftops, but then also the franchise rooftops? Sure. Yeah. About 80% of the supply of listings on our marketplace come from franchise dealers. These are dealers that are selling, obviously, brand-name OEMs, new cars and used cars, but basically, these are the Fords and the GMs and the Mercedes. The reason why we focus on franchise dealers is they generate the most volume, right? And we send a person, a vehicle condition inspector, to these dealerships to actually do the inspections, and they, they launch them right from their own dealership. So you've got 17,000 or so- Yeah ...franchise rooftops. Some are owned by the big public franchise names we're all familiar with, and the Sonic of the world, and so on. But there's hundreds and hundreds of small dealer groups across the country. So that's 80% of our supply. From a buyer perspective, about 80% of our buying are done by independent car dealers. These are used car-only dealers. There's 35,000 independent dealers of various sizes, from as big as Carvana, CarMax, to, you know, a local used car dealer that you might see in your town that has 20 cars sitting out in the front lot. We don't concentrate on all of those indies- Yep. from a supply perspective. Again, it's just an efficiency play for us on our VCIs. We do certify certain larger indies, so about 20% of our supply come from very large independent dealers. But stepping back and looking at the sort of 80/20 Pareto rule, from a franchise perspective, we're doing business with about a third of all franchise dealers. That means we're doing at least one vehicle, right, with them a month. Okay. So that's sort of the penetration measure. In some of our more mature territories, we have 60%, 70%, 80% penetration, right? The other part of the calculus is wallet share. So how much of their wholesale business are we capturing. And how much are they still using a second partner, often a physical auction? In that wallet share, we measure right down to the rooftop. You know, we have, again, long-term relationships where we have 60%, 70%, 80% of their wallet share. They'll always keep a second partner there to keep them honest. Sure. In some cases, they'll divide their inventory up. They'll put the sort of clean stuff that's more expensive through ACV because of our condition report, where they'll send their, call it, junk cars, $5,000, $6,000 cars, they'll just shoot them off to the auction, right? So we have the combination of penetration and wallet share, the calculation there is that's effectively market share. So making good progress. You know, we have a lot of new territories, a lot of regions where we're still, you know, 10%, 12%, 15% penetrated, so still early days. It's a you know, it's a classic sort of direct sales model on the sell side, on the supply side. We have territory managers that are assigned basically to about 100 franchise rooftops. It's how we divide the country up. And their job is to go out there and pitch the business. We'll convince them to give us three or four cars, say, "Hey, give us a shot." The VCIs are going out there, doing their stuff. We show them that we're getting them more money, right? The average distance that a buyer travels to a physical auction, it's like 100 miles. Okay. Right? Our average transaction, because we have a transport service that, it's a separate marketplace that, dealers can use, our average transport is almost 500 miles. Hmm. So what that tells you is that your average dealer is effectively getting five times as many buyers. Right. Five times as many eyeballs, however you want to calculate it. That means more bids. That means more bids mean a higher price. Combined with our vehicle condition report, which gives the full 250 data points, we can demonstrate to the sellers, "You're going to get better margins. You're going to get a better return. You don't have to pay to ship the vehicle to an auction. You don't have to wait a week or two or three weeks for it to sell. We'll post it, list it. Two to 20 minutes or two hours later, you-" If they use ACV Transport, it'll be picked up within 24-48 hours, and you get paid. Tim, during this time of uncertainty within the autos market, where supply came down, new used supply came down, talk about, were dealers more open arms to ACV, or was it, "I've been using my lane at the Baltimore Manheim for 50 years- Yeah. It just works? There was, you know, there was a very short period of time when the- I see ... physical auctions were actually shut down at the beginning of COVID. Sure. But they were put into the category of, you know, whatever the businesses were- Required, yeah. So they opened up pretty quickly. Yeah. But at least that short time and even after they were open, people were nervous sort of being out and about. I do think that there certainly was, you know, a kind of a secular- Mm-hmm -shift, where people got a taste of using the all-digital model. So I certainly think it was a little bit of a catalyst for adoption. But it's still, you know, it still really is a battle. Yeah. We're out there, you know, you've got a very large, strong competitor in Manheim that leverages. They've got a fairly broad suite of software that they offer these dealers, so they'll sweeten the pot. They'll give them a discount on their DMS system to, you know, for promise of getting their wholesale business. So, you know, these are things that we have to sell through, we've been selling through for a long time. But the adoption continues, you know, and we're just a very patient, you know, go-to-market model. One thing that's been really interesting is that, you know, you mentioned earlier that we're doing more than just this dealer wholesale. That was sort of ACV 1.0. Yeah. You know, we've expanded into other software categories. We're offering dealers a much more holistic set of solutions, becoming more strategic. We've been able to grow our share of the large dealer groups. So these are the Penskes of the world, the Lithias, Group 1s. They're obviously huge, and most of them tend to make decisions around wholesale and so on in a centralized fashion. So, being able to walk in there with a broader story than just, "We'll be your wholesale partner," ClearCar. So- Private marketplaces, right? Yeah. There's a bunch of different value-added services that have opened the door. And, you know, if you ask our CEO, George, the kind of meetings he's taking in 2024 compared to 2016 or 2017, it's a completely different ballgame. So one of the things that we think is interesting at ACV is, during the uncertainty of new car, you invested a lot in product. Oh, by the way, I forgot. So, VCI inspector units per day? Mm-hmm. I just want to get this out of the way. That's gotten to what? Yeah, good, good question. Yeah, so our vehicle condition inspectors in Long Island- Mm-hmm territory can do 12 or more inspections per day. Okay. Right? They're straight out. On average, across the country, it's only at six, right? So two takeaways there. One, there's a lot of excess capacity, which is great, right? So we don't need to add a lot more incremental investment there. Second thing is, it has grown. Last quarter, it was actually the highest level efficiency that we've seen. Company-wide? Company-wide. Really? Okay. Ticked up to a level that we hadn't seen before. That's really fundamentally driven by getting more listings per lister, but also the technology that we invested in, to your point. Not only have we invested in new customer-facing solutions, like private marketplaces and really the upgrade of ACV MAX and ClearCar, but we've also invested heavily in our own technology that our vehicle condition inspectors leverage, right? So they have apps today where they walk up to the vehicle, they scan the VIN, they don't need to type it in, and it will tell them before they even start the inspection, "Watch out," right? "This make, model, mileage is going to likely have issues with the engine knock or transmission issues." So we're pre-informing our VCIs. Yeah ... to watch out for certain things before going into the process. This is just a continual improvement as time goes on. Right ... given the data corpus. Exactly. I don't want to lead the witness here, but- Yeah ... this is all newer things in 2024, or? ArbGuard and Copilot were two new- Yeah ... apps that are basically internally used for the most part today, that improve efficiency and frankly, accuracy. Mm-hmm. Right? What's unique about our business model, unlike the typical physical auction model, is that we offer a guarantee, an insurance product that the sellers buy- Right ... call it $75, that guarantees the condition of the vehicle for the buyer. That's a very different value proposition. When you're a typical franchise dealer selling through an auction, you're actually on the hook- Yeah ... if that buyer finds out something wrong after they bring it back to their shop. In our case, for a relatively small amount of money, we're guaranteeing the condition of the vehicle, so therefore, we're actually on the hook if we miss something, which we do. Very small percentage of the time, but it's still one of our largest expenses, which is why we invest so much in this technology. We've got patented technology that developed APEX, which is an IoT-enabled device, wireless. You put it on the engine block, fire up the car, run it through different revs. It records the engine sound. Mm-hmm. While the VCI is finishing the rest of the inspection, it's running that against three million other engine recordings. Right ... and will be able to tell within 85%-90% accuracy if there's something wrong with that engine. Phenomenal. Yeah. Right? Just phenomenal. Which is big. You know, transmission and engine are the two biggest issues for arbitration costs. But yeah, it's really, it's really neat stuff. Now, the other thing that we're doing, which we started talking about last quarter, we're starting to take some of this tech and put it in the hands of our dealers. Really right now, we're piloting this for them to do their own inspections, right? 'Cause they said, "As much as we love you guys, we have to wait for the VCI to come around once or twice a week. Mm. Be nice if we could actually do our own inspection for certain use cases." So we've started to pilot that right now. Getting some very nice feedback. Arbitration rates have been pretty low. That could be a game changer. You need some third-party independence, though, and so- So- … Go Green is still, you're still- We're still gonna do a Go Green if the car is clean. Mm-hmm. There's another new thing that we actually just rolled out, which is a. Think of it as a. They call it Red Light template. So there's- Okay ... in the Green Light car means it's clean, and it's backed by the seller, or in our case, backed by ACV. Red Light vehicles, which is a decent part of the market, go to auction, at the buyer's risk. So the buyer knows they're buying a $5,000 car, got 80,000, 100,000 miles on it. It's likely to have some issues. They buy it as is, right? And so, we've been told by some of our dealers that, "Look, for our kind of junkier stuff, we actually don't want your vehicle condition inspectors poking around. You're gonna expose something that is going to hurt the price. We're just gonna send it to an auction- Mm-hmm ... and hope somebody doesn't discover this issue." So in effect, we were ceding some of that market to physical auctions or backlot cars. So we rolled out what we call this Red Light template. It went out nationally a couple of months ago. Getting some really interesting feedback. Dealers, we're starting to pitch them and say, "Look, we still want your $30,000 cars and $50,000 above, but we'll use our Red Light template on this $6,000 car. And what we'll do is we'll expose a condition report that's still way better than a physical auction experience, but doesn't show all 50 OBD2 codes. It doesn't do the whole sort of shooting match." It's a perfectly good report for a $5,000 car. And we're starting to see some really interesting shifts, and some pretty nice take rates with that. That's- ... with that Red Light thing, so- That piloted, allowing the dealers to do this on their own, piloted in 2Q? Yeah, so we started rolling out, yeah, so for, kind of it's been running for two quarters now. Okay. Really interesting. You know, it's still early days, but that could potentially open a decent supply of the market, as I mentioned earlier, for independents, we don't really engage with small or medium-sized indies. It just doesn't- Sure ... Make a lot of sense to send the VCIs there. Think of this model. Sure. We go to them and say, "Here's some tech," right? "For free. We'll even give you a discount on the sell fee, but you do the inspection, Red Light, you know, as is, and let them list. Sure. Right? 'Cause they're buying from us. They love the marketplace, and they say: "Why can't we sell with you?" It's like, well, we just can't afford to send our folks out there and do five or six vehicles. But if you want to do the inspection yourself- Right ... go nuts. Now, we have a lot to do to get there. Got to make sure that the arbitration rates don't kick up, 'cause we'll still have to be in the middle there. But nonetheless, it's a really interesting kind of adjacency that we can move into over time. So, so this helps bring more independents on, potentially, and eliminate or reduce friction to getting more dealers to sign up. Let's talk about... We've got about eight minutes left. Definitely want to open it up for questions if there are some. ClearCar. Yes. ClearCar is a great. It came out last year, it was talked about, we're at 900-1,000 dealers. Mm-hmm ... you tell me. And it basically is getting, you know, helping dealers improve their inventory. Sure. So tell me more about this. Still in beta as well. On the consumer side, 10 million units of used cars are sold peer-to-peer each year through Facebook Marketplace, different types of marketplaces, Craigslist, and so on. It's a big market. It's effectively almost the same size as the dealer wholesale market. Companies like Carvana and CarMax have kind of mastered the consumer sourcing play. Yeah. Right. And you see them advertise: "We'll buy your car. We'll buy your car." CarGurus is doing that a little bit with CarOffer. CarMax, interestingly enough, they buy pretty much every car that comes through, if the consumer agrees to the price. They end up wholesaling about 40% of those vehicles, and they make a very nice profit. Obviously, they keep the rest for their own retail purposes. What we've been trying to advocate to our franchise dealers is, "Look, you need to be aggressively going after the consumer market. That 50%. That, yeah. Or- Right, yeah. Get out there and use some of your precious advertising dollars, they're huge advertisers, as you know, and basically say: "We'll buy your car," right? So we've given them ClearCar, which is a, you know, a website tool that the consumer will interface with. But on top of that, really the guts and the meat of it is this pricing engine that is, as I mentioned before, based on the condition of the vehicle. The consumer will walk around with a guided tour of their vehicle, snap 15 pictures. They'll punch in whether there's aftermarket parts, kind of the standard questions. They get a very attractive offer, and those dealers get them in, they do a kind of a confirmatory inspection, and then, boom, they make the transaction. The deal is: we'll give you ClearCar if you give us 10 more vehicles a month, right? So this is a play, effectively a freemium play, to just get more and more of their wholesale. It's one of the fastest growing software products, we believe, in automotive. In 10 months, we've basically shared that we were at 900. I would be shocked if we're not at 1,000 by the end of Q3. We've got dealers doing some really creative stuff with it. We've got this video on our website. I'd recommend checking it out. It's a dealer group out of Houston called Classic Elite, and they're effectively using ClearCar in their service drive. Just kind of like, intuitively, like, why would you be heckling people about their cars when they're getting them serviced? But what they're doing is they're presenting the consumer with an estimate for the repair, and at the same time, they're giving them an offer on their car. Say: "Look, no pressure, I'm your service advisor, but this is a new thing we're doing. If you have any desire to sell your car, this is what we'll give you, guaranteed." And they went from doing, like, 10 or 15 vehicles sourced from their service bay, and then the very next month, using ClearCar, did 65. Oof! You know, why is that a big deal? Well, first of all, a lot of that inventory is very clean, it's very attractive, but even if it's not, they can flip it on to the ACV wholesale market and make a really nice profit. So that's a great new solution. It's, again, thinking in terms of moving up the stack from a strategic perspective. We're engaging at the C-suite level. We're able to pitch a very different story than just pure wholesale. Like, we're helping them get more inventory. As I mentioned, used car inventory is still 20% below normal, right? Off lease is dried up, right? Because the lease market was dead basically three years ago, so lease returns are down. So they're desperately looking for clean, you know, lightly used vehicles, and this should- When do you think lease returns improve? So l- We have three- I'm not an expert on this. Four minutes, so. Yeah, so from what I've read, it'll bottom in the back half of this year. So the sort of worst of the lease originations were in the back half of 2021. Probably takes three years to fully normalize. The off-lease market, from a wholesale perspective, when healthy, is about four million units. It's a big market. So in any event, yeah, really happy with the uptake on ClearCar. You know, we've got the... I keep telling the team, "We've got the land-... piece done. Right. Now let's bang the expand, right? Yeah. Let's just keep going and getting more wallet share. 'Cause effectively, it's not cannibalizing the traditional dealer wholesale market. If you think about it, it's actually going in and capturing what is typically peer-to-peer transactions, pulling that into the dealer network, and then effectively growing our wholesale TAM. Let's, in the three minutes, do we have any questions in the audience? Nope. You mentioned earlier that, you know, setting guidance was, or at least opining on guidance, was one of your responsibilities. So if SAAR, you know, largely out of your control, and interest rates, you know, largely out of your control, how do you think about setting guidance? Great question. So I was on the sell side, covering software, then worked for 10 years at a software company that transitioned to SaaS. It was a lot easier to set guidance with the SaaS model. You know, our team is remarkable in the analytics that they use. It's a complex marketplace, right? I mean, you're talking thousands and thousands of dealers that are transacting every day. So you know what? We basically take a look at the trends we're seeing from a listings perspective, listings per lister, GMV per unit, which helps inform our ARPU, and really just doing our normal thing, which is building some cushion in and go from there. I think, you know, our goal is always to set something that's reasonably I don't like to use the word conservative, but cautious in a sense, especially during what we've seen over the past couple of years. What we've also shared is that, you know, we've got a midterm target model that's out there, and we've been very explicit. We laid out in June of 2023 exactly what's assumed in there from a unit perspective, ARPU perspective, attach rates for transport and capital, what we expect for what we call revenue margin, which is effectively our gross margin, going from 50% to 60%. Showing the OpEx leverage in the model, we shared data on our territories. Our midterm target is 25% EBITDA margin. We'll be at 4% this year, so pretty big delta. But we've also shared that we have territories today that are running our gross margin this year is probably 52-53%, that are already at 25, 28, 30% EBITDA margin, right? So we know it's a proven model. Really, the question is: how quickly can we get the kind of volumes to lever across that business? So that's sort of a midterm guidance with very explicit underpinnings there. We'll see what the rest of this year shapes up like for next year. One of the simple algos, as I mentioned earlier, is that we think organically that we should be able to grow units. If the market's flat, we should be able to grow 15%, right? So that implies 15% market share. If the market's, you know, up 3%, theoretically, we should be growing a little bit faster than that 15%. But that's sort of how we base our unit guidance on there. ARPU is effectively just trying to look at wholesale depreciation, looking at GMV per unit. Again, the team's quite strong on that front. And then the rest of the model is, for the most part, discretionary. You're talking R&D, G&A, sales, and marketing. Most of those costs are, well, they're certainly well understood, and frankly, at this point, pretty much baked into what we need to drive to that midterm model, outside of kind of regular inflation. So it's, yeah, it's a pretty complicated business, but at the end of the day, it's a relatively simple model. So we're in overtime here. Ah. I've got to get you to a train. That's right. Uh, however- Yeah ... so we didn't get to half my questions, which is exciting, so we can continue another time. I'll be back, right? But as we wrap up here, I'd be remiss not to ask about, as we wrap up, literally, what should we be most excited for or look forward to in the back half of this year and the next year? And I can seed the questions, but I'd love your thought. Yeah, I think- In two- Yeah ... 10 seconds or less. Frankly, just getting a little bit of help from the underlying market would. Mm-hmm ... would make me extremely happy, right? Okay. I mean, it's been a headwind ever since we went public, and so just seeing new car sales continue to go up, OEM incentives continue to go up, you know, used car sales start to improve, it's been pretty tepid, but interest rates coming down, those are just going to be fundamental drivers for the dealer wholesale business. Right ... to start to show some positive momentum. Great. I thought you were going to say something about commercial. Commercial? Something to look out for. Something to look out for. Yeah. Early days, 5% of our business this year. That's a really exciting medium to long-term play, but maybe for another time. Yeah. Great. Tim, thank you very much. My pleasure. Appreciate your time. Thank you. We've got to get you on a train.