LIQUIDITY SERVICES INC
For the period ended Dec 31, 2024. Filed Feb 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Feb 6, 2025
LQDT$43.64-2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-093555
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-06.
0000950170-25-015164
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 142 previous paragraphs and 123 current paragraphs.
69 unchanged; 46 reworded; 8 added; 19 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Supply chain challenges and consumer sentiment. The supply of used vehicles available for sale on our marketplaces may be impacted by proposed tariffs in the U.S., as well as the slowing adoption of electric vehicles as a replacement to internal combustion vehicle fleets. Further, used car market price indices continue to experience heightened volatility. In addition, general consumer behavior can be turbulent, and changes in consumer sentiment can cause fluctuation in the mix, volumes, and demand for the products we receive. Change in these conditions or other challenges that may emerge in other key asset categories can impact our financial performance.
Current report
General and administrative expenses. General and administrative expenses increased $0.7 million, or 9.0%, primarily due to a $0.6 million increase in stock compensation primarily from variable stock awards tied to financial performance targets.
Current report
Depreciation and amortization. Depreciation and amortization expense decreased $0.4 million, or 13.4%, due to historically acquired intangible assets reaching the end of their useful lives.
Current report
Other operating expenses, net. Other operating expenses, net decreased $0.3 million, as the three months ended December 31, 2023, included legal, accounting and other professional fees incurred in connection with the acquisition of Sierra; see Note 3 -Sierra Acquisition for further information
Current report
The Company accepts multiple forms of payment including payment cards, bank transfers, and other merchant account providers. Generally, we require receipt of payment prior to shipment or buyer-arranged pick-up at the point of sale, which minimizes our collection risk on those transactions. However, for a limited number of financially qualified buyers, we may from time-to-time extend credit for certain large purchases with negotiated payment periods. Credit terms commonly require payment to be made within 30 days, but where commercial terms or market conditions warrant these payment terms may be extended for up to six months. As a result, our consolidated accounts receivable balances are typically a small component of our overall financial position but may, at times, be concentrated among a small number of such buyers. These buyers are not considered to be "major customers" of Liquidity Services which would otherwise be subject to additional disclosure requirements. Collection risk from and credit exposure to these financially qualified buyers is regularly reviewed by management and adjusted as needed.
Current report
Marketplace and Support System Innovations. We regularly invest in new solutions and enhancements to our marketplace platforms, including capabilities and tools for product recommendations, behavioral marketing, analytics, payment optimization, and leveraging advanced digital capabilities such as artificial intelligence (AI) and machine learning.
Current report
As of September 30, 2024, the Company had $7.6 million of remaining authorization to repurchase shares through December 31, 2025. On December 9, 2024, the Company's Board of Directors authorized the repurchase of up to an additional $10.0 million of the Company's outstanding shares of common stock through December 31, 2026.
Current report
Net cash used in operating activitieswas $12.1 million and $8.9 million for the three months ended December 31, 2024 and 2023, respectively. The $3.2 million increase in cash used in operating activities between periods was primarily attributable to an $11.8 million decrease in cash inflows associated with Accounts receivable primarily due to qualified buyers with credit terms transacting in our expanded purchase program volumes in our RSCG segment. This was partially offset by a $5.6 million increase in our Net income as adjusted for non-cash items, and a $2.2 million decrease in cash outflows associated with Prepaid expenses from the return of a commercial contract deposit.
Removed paragraphs (19)
Previous report
Supply chain challenges and consumer sentiment. Constraints in the production of new vehicles and heavy equipment, particularly as it relates to new fleet sales, are continuing to impact the supply of used vehicles available for sale on our marketplaces, while used car market price indices are simultaneously experiencing heightened volatility. In addition, general consumer behavior appears turbulent, with a greater focus on essential goods yet recent rise in sentiment. These conditions are impacting our financial performance and may continue to do so while these conditions persist, or if similar challenges emerge in other key asset categories.
Previous report
General and administrative expenses. General and administrative expenses increased $1.1 million, or 15.4%, due to a $0.4 million increase in stock compensation, and $0.5 million in litigation settlement expense incurred during the three months ended June 30, 2024; see Note 13 -Legal Proceedings and Other Contingencies for further information.
Previous report
Depreciation and amortization. Depreciation and amortization expense increased $0.3 million, or 11.6%, in connection with our acquisition of Sierra; see Note 3 -Sierra Acquisition.
Previous report
Other operating expenses (income), net. Other operating expenses (income), net increased $0.6 million, relating to legal, accounting and other professional fees incurred in connection with potential strategic acquisitions.
Previous report
Nine Months Ended June 30, 2024, Compared to the Nine Months Ended June 30, 2023
Previous report
Segment Results
Previous report
RSCG. Revenue from our RSCG reportable segment increased by $8.6 million, or 5.7%, due to a $14.2 million, or 6.7%, increase in GMV due to increased volumes in our purchase programs and sell-in place consignment solutions, partially offset by a lower value product mix in selected programs. Segment direct profit decreased by $2.1 million, or 4.1%, and segment direct profit as a percentage of total revenue decreased from 33.6% to 30.4%, due to an increase in the mix of purchase transactions and a lower blended take-rate on our consignment sales from growth in our sell-in-place consignment solutions and the lower value product mix in selected programs. The increased volumes in our purchase programs were associated with lower-touch product flows and did not have a material impact on RSCG's operating expenses.
Previous report
Consolidated Results
Previous report
Sales and marketing expenses. Sales and marketing expenses increased $5.2 million, or 14.6%, due to our market share expansion and client diversification efforts. The nine months ended June 30, 2023 included a $0.9 million non-recurring benefit from a concluded client program.
Previous report
General and administrative expenses. General and administrative expenses increased $2.6 million, or 12.3%, due to a $0.7 million increase in stock compensation, $0.5 million in litigation settlement expense incurred during the three months ended June 30, 2024 (see Note 13 -Legal Proceedings and Other Contingencies for further information), increases in variable compensation, and other costs in support of our growth.
Previous report
Depreciation and amortization. Depreciation and amortization expense increased $0.9 million, or 10.2%, in connection with our acquisition of Sierra; see Note 3 -Sierra Acquisition.
Previous report
Other operating expenses (income), net. Other operating expenses (income), net increased $1.0 million, relating to legal, accounting and other professional fees incurred in connection with Sierra and other potential strategic acquisitions.
Previous report
Interest and other income, net. Interest and other income, net increased $0.8 million, due to the effect of rising interest rates on our cash equivalent and short-term investment holdings.
Previous report
Working Capital Management
Previous report
Most of our sales are recorded subsequent to receipt of payment authorization, utilizing credit cards, wire transfers, and PayPal, an Internet-based payment system, as methods of payments. As a result, we are not subject to significant collection risk, as goods are generally not shipped before payment is received.
Previous report
We expect to continue to invest in enhancements to our e-commerce technology platform, marketplace capabilities, and tools for data-driven product recommendations, omni-channel behavioral marketing, expanded analytics, and buyer/seller payment optimization.
Previous report
Sierra Acquisition. On January 1, 2024, the Company acquired all the issued and outstanding equity securities associated with Sierra Auction Management, Inc. (Sierra), a full-service auction company specializing in the sale of vehicles, equipment and surplus assets for government agencies, commercial businesses, and charities in the southwestern U.S. See Note 3 -Sierra Acquisitionfor more information regarding this transaction.
Previous report
As of September 30, 2023, the Company had $17.0 million of remaining share repurchase authorization through December 31, 2025.
Previous report
Net cash provided by operating activitieswas $48.2 million and $32.4 million for the nine months ended June 30, 2024 and 2023, respectively. The $15.8 million increase in cash provided by operating activities between periods was primarily attributable to a $18.9 million increase in cash inflows associated with our Payables to sellers due to the receipt of buyer payments for certain, larger consignment asset sales near the end of the quarter. The settlements to the sellers for these sales will occur in the fiscal fourth quarter. As described in Note 13 -Legal Proceedings and Other Contingencies for further information, our Accrued expenses and other liabilities increased $3.5 million due to settlement agreement related to a former employee matter, and our Prepaid expenses and other current assets increased $3.0 million due to the expected recovery from our insurance carrier. These amounts are expected to be paid and received, respectively, in the fourth fiscal quarter of 2024.
Reworded paragraphs (46)
Previous wording
The Company has four reportable segments under which we conduct business: GovDeals, Retail Supply Chain Group (RSCG), Capital Assets Group (CAG), and Machinio. Further information and operating results of our reportable segments can be found in Note 14 -Segment Information.
Current wording
The Company has four operating and reportable segments under which we conduct business: GovDeals, Retail Supply Chain Group (RSCG), Capital Assets Group (CAG), and Machinio. Further information and operating results of our reportable segments can be found in Note 14 -Segment Information.
Previous wording
GovDeals. The GovDeals reportable segment provides solutions that enable government entities including city, county, state and federal agencies located in the United States and Canada and related commercial businesses to sell surplus property and real estate assets through our GovDeals, Bid4Assets and Sierra marketplaces; see Note 3 -Sierra Acquisition.
Current wording
GovDeals. The GovDeals reportable segment provides solutions that enable government entities including city, county, state and federal agencies located in the United States and Canada and related commercial businesses to sell surplus property and real estate assets through its GovDeals, Bid4Assets and Sierra marketplaces; see Note 3 -Sierra Acquisition.
Previous wording
RSCG. The RSCG reportable segment consists of marketplaces that enable corporations located in the United States and Canada to sell excess, returned, and overstocked consumer goods. RSCG also offers a suite of services that includes returns management, asset recovery, and e-commerce solutions. This segment uses multiple selling channels across our network of marketplaces and others to optimize the best combination of velocity, volume, and value. This segment conducts its business-to-business sales on its Liquidation.com marketplace, and direct-to-consumer sales on its AllSurplus Deals and Secondipity marketplaces.
Current wording
RSCG. The RSCG reportable segment consists of marketplaces that enable corporations located in the United States and Canada to sell excess, returned, and overstocked consumer goods. RSCG also offers a suite of services that includes returns management, asset recovery, and e-commerce solutions. This segment uses multiple selling channels across its network of marketplaces and others to optimize the best combination of velocity, volume, and value. This segment primarily conducts its business-to-business sales on its Liquidation.com marketplace and through Direct Sales, and direct-to-consumer sales on its AllSurplus Deals and Secondipity marketplaces and other third-party sales channels.
Previous wording
CAG. The CAG reportable segment provides solutions to sellers and consists of marketplaces that enable commercial businesses to sell surplus assets. The core verticals in which CAG operates include industrial manufacturing, oil and gas, heavy equipment, biopharma, and electronics. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing. CAG benefits from a global base of buyers and sellers enabling the sale and redeployment of assets wherever they’re most likely to generate the best value and highest use across the world. This segment primarily uses the AllSurplus and GovDeals marketplaces.
Current wording
CAG. The CAG reportable segment enables commercial businesses to sell surplus assets on our AllSurplus marketplace. The core verticals in which CAG operates include industrial manufacturing, oil and gas, heavy equipment, biopharma, and electronics. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing. CAG benefits from a global base of buyers and sellers enabling the sale and redeployment of assets wherever they’re most likely to generate the best value and highest use across the world. This segment primarily uses the AllSurplus and GovDeals marketplaces.
Previous wording
Machinio. The Machinio reportable segment operates a global search engine platform for listing used equipment for sale in the construction, machine tool, transportation, printing, and agriculture sectors. Machinio also offers the Machinio System service that provides equipment sellers with a suite of online marketing tools that includes website hosting, email marketing, and inventory management, to support and enable equipment sellers’ online business.
Current wording
Machinio. The Machinio reportable segment operates a global search engine platform for listing equipment for sale in the construction, machine tool, processing, transportation, printing, agriculture, and laboratory/medical sectors. Machinio also offers the Machinio System service that provides equipment sellers with a suite of software tools that includes website hosting, email marketing, and inventory management, to support and enable equipment sellers’ online business.
Previous wording
Effects of inflation and heightened interest rates. Sustained inflation in both the U.S. and internationally has weighed on the global economy, increasing prices for energy, shipping, and labor, among other areas of the macroeconomic environment. These events have caused a rise in borrowing costs as well, partly driven by actions taken by central banks to curb rising inflation, which has impacted buyer qualification and transaction timelines.
Current wording
Effects of inflation and heightened interest rates. Inflation in both the U.S. and internationally has weighed on the global economy, increasing prices for energy, shipping, and labor, among other areas of the macroeconomic environment. These events have caused a rise in borrowing costs as well, partly driven by actions taken by central banks to curb rising inflation, which has impacted buyer qualification and transaction timelines.
Previous wording
International armed and geopolitical conflicts. The global financial markets have experienced volatility subsequent to the invasion of Ukraine by Russia in February 2022, a conflict which remains ongoing, as well as the recent conflict in and adjacent to Israel. The Russia-Ukraine conflict specifically resulted in numerous countries, including the United States, imposing significant new sanctions and export controls against Russia, Russian banks, and certain Russian individuals. These sanctions and export controls and international responses to the ongoing conflict in and adjacent to Israel, have further heightened global supply chain disruptions and impacted the international trade markets. For the three and nine months ended June 30, 2024 and 2023, the Company's total revenues directly associated with Russia, Ukraine, and Israel were not material to our consolidated financial results. We will continue monitoring these armed and geopolitical conflicts around the world and any potential future impacts on our business.
Current wording
International armed and geopolitical conflicts. The global financial markets have experienced volatility subsequent to the invasion of Ukraine by Russia in February 2022, a conflict which remains ongoing, as well as the ongoing conflict in and adjacent to Israel. The Russia-Ukraine conflict specifically resulted in numerous countries, including the United States, imposing significant new sanctions and export controls against Russia, Russian banks, and certain Russian individuals. These sanctions and export controls and international responses to the ongoing conflict in and adjacent to Israel, have further heightened global supply chain disruptions and impacted the international trade markets. For the three months ended December 31, 2024 and 2023, the Company's total revenues directly associated with Russia, Ukraine, and Israel were not material to our condensed consolidated financial results. We will continue monitoring these armed and geopolitical conflicts around the world and any potential future impacts on our business.
Previous wording
an increase in buyer demand for surplus merchandise as consumers trade down by purchasing less expensive goods and seek greater value from their purchases, which could impact our long-term growth;
Current wording
an increase in buyer demand for surplus merchandise as consumers aspire to make more environmentally conscious decisions, while also seeking greater value through purchasing less expensive goods, both of which could impact our long-term growth;
Previous wording
the increase in demand from sellers and buyers to transact in a low touch, online solution as compared to live, in-person auctions or public sale events; and
Current wording
the increase in demand from sellers and buyers to transact in an online solution ensuring assets are sold for fair market value; and
Previous wording
We believe our marketplaces benefit over time from greater scale and adoption by our users creating a continuous flow of goods benefiting our buyers and sellers. As of June 30, 2024, we had 5.4 million registered buyers in our marketplaces. We had access to millions of additional end-users through a range of external consumer marketplaces. Aggregating this level of buyer demand and market data enables us to generate a continuous flow of goods from corporate and government sellers, which in turn attracts more buyers. During the twelve months ended June 30, 2024, the approximate number of registered buyers increased from 5.1 million to 5.4 million, or approximately 7%. As buyers continue to discover and use our e-commerce marketplaces as an effective method to source assets, we believe our solutions become a more attractive sales channel for corporate and government agency sellers. We believe this self-reinforcing cycle results in greater transaction volume and enhances the value of our marketplaces.
Current wording
We believe our marketplaces benefit over time from greater scale and adoption by our users creating a continuous flow of goods benefiting our buyers and sellers. As of December 31, 2024, we had 5.7 million registered buyers in our marketplaces. We had access to millions of additional end-users through a range of external consumer marketplaces. Aggregating this level of buyer demand and market data enables us to generate a continuous flow of goods from corporate and government sellers, which in turn attracts more buyers. During the twelve months ended December 31, 2024, the approximate number of registered buyers increased from 5.2 million to 5.7 million, or approximately 9%. As buyers continue to discover and use our e-commerce marketplaces as an effective method to source assets, we believe our solutions become a more attractive sales channel for corporate and government agency sellers. We believe this self-reinforcing cycle results in greater transaction volume and enhances the value of our marketplaces.
Previous wording
Other — fee revenue. We also earn non-consignment fee revenue from Machinio's subscription services, as well as other services including asset valuation, product handling, and storage fees. Non-consignment fee revenue is recorded within the Consignment and other fee revenues line-item on the Consolidated Statements of Operations.
Current wording
Other — fee revenue. We also earn non-consignment fee revenue from Machinio's subscription services, as well as other services including asset valuation, product handling, and storage fees. Non-consignment fee revenue is recorded within the Consignment and other fee revenues line-item on the Condensed Consolidated Statements of Operations.
Previous wording
Transaction Model Mix. Most of our transactions are conducted under the consignment model, which represented 86.5% and 86.0% of our consolidated GMV for the three and nine months ended June 30, 2024, respectively, and 87.5% and 85.5% of our consolidated GMV for the three and nine months ended June 30, 2023, respectively. However, only the consignment fee, representing a small portion of the consignment GMV, is recognized as revenue, causing consignment revenues to account for 35.9% and 36.5% of our total revenues for the three and nine months ended June 30, 2024, respectively, and 39.1% and 37.6% of our total revenues for the three and nine months ended June 30, 2023, respectively.
Current wording
Transaction Model Mix. Most of our transactions are conducted under the consignment model, which represented 79.8% and 88.7% of our consolidated GMV for the three months ended December 31, 2024 and 2023, respectively. However, only the consignment fee, representing a small portion of the consignment GMV, is recognized as revenue, causing consignment revenues to account for 27.0% and 39.6% of our total revenues for the three months ended December 31, 2024 and 2023, respectively.
Previous wording
Purchase model transactions are a smaller proportion of our consolidated GMV, representing 13.5% and 14.0% of our consolidated GMV for the three and nine months ended June 30, 2024, respectively, and 12.5% and 14.5% of our consolidated GMV for the three and nine months ended June 30, 2023, respectively. However, all of the GMV associated with the purchase model transaction is generally able to be recognized as revenue, causing purchase revenues to account for 57.0% and 55.7% of our total revenues for the three and nine months ended June 30, 2024, respectively, and 53.0% and 54.9% of our total revenues for the three and nine months ended June 30, 2023, respectively.
Current wording
Purchase model transactions are a smaller proportion of our consolidated GMV, representing 20.2% and 11.3% of our consolidated GMV for the three months ended December 31, 2024 and 2023, respectively. However, all of the GMV associated with the purchase model transaction is generally able to be recognized as revenue, causing purchase revenues to account for 67.7% and 50.8% of our total revenues for the three months ended December 31, 2024 and 2023, respectively.
Previous wording
We have multiple vendor contracts with Amazon.com, Inc. under which we acquire and sell commercial merchandise. While purchase model transactions account for less than 20% of our total GMV, the cost of inventory for purchase model transactions is the most significant component of our consolidated Costs of goods sold. $8.6 million and $5.8 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Condensed Consolidated Inventory balances as of June 30, 2024, and September 30, 2023, respectively. Our vendor contracts with respect to sourcing or consigning merchandise for our RSCG segment generally reflect the concentration dynamics inherent to the retail industry.
Current wording
We have multiple vendor contracts with Amazon.com, Inc. under which we acquire and sell commercial merchandise. While purchase model transactions account for less than 25% of our total GMV, the cost of inventory for purchase model transactions is the most significant component of our consolidated Costs of goods sold. $8.4 million and $12.2 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Condensed Consolidated Inventory balances as of December 31, 2024 and September 30, 2024, respectively. Our vendor contracts with respect to sourcing or consigning merchandise for our RSCG segment generally reflect the concentration dynamics inherent to the retail industry.
Previous wording
Other fee revenues accounted for 7.1% and 7.8% of our total revenues for three and nine months ended June 30, 2024, respectively, and 7.9% and 7.5% of our total revenues for the three and nine months ended June 30, 2023, respectively.
Current wording
Other fee revenues accounted for 5.4% and 9.6% of our total revenues for three months ended December 31, 2024 and 2023, respectively.
Previous wording
Gross merchandise volume (GMV). GMV is the total sales value of all merchandise sold by us or our sellers through our marketplaces or by us through other channels during a given period of time. We review GMV because it provides a measure of the volume of goods being sold in our marketplaces and thus the activity of those marketplaces. GMV also provides a means to evaluate the effectiveness of investments that we have made and continue to make, including in the areas of buyer and seller support, value-added services, product development, sales and marketing, and operations. Our GMV for the three and nine months ended June 30, 2024, was $380.4 million and $1.01 billion, respectively.
Current wording
Gross merchandise volume (GMV). GMV is the total sales value of all merchandise sold by us or our sellers through our marketplaces or by us through other channels during a given period of time. We review GMV because it provides a measure of the volume of goods being sold in our marketplaces and thus the activity of those marketplaces. GMV also provides a means to evaluate the effectiveness of investments that we have made and continue to make, including in the areas of buyer and seller support, value-added services, product development, sales and marketing, and operations. Our GMV for the three months ended December 31, 2024 and 2023 was $386.1 million and $305.9 million, respectively.
Previous wording
Total registered buyers, as of a given date, represent the aggregate number of persons or entities who have registered on one of our marketplaces. We use this metric to evaluate how well our marketing and promotional efforts are performing. Total registered buyers exclude duplicate registrations, buyers who are suspended from utilizing our marketplaces and buyers who have voluntarily removed themselves from our registration database. In addition, if we become aware of registered buyers that are no longer in business, we remove them from our database. As of June 30, 2024, and 2023, we had 5.4 million and 5.1 million registered buyers, respectively. None of our buyers represented more than 10% of our revenue during the three months ended June 30, 2024.
Current wording
Total registered buyers, as of a given date, represent the aggregate number of persons or entities who have registered on one of our marketplaces. We use this metric to evaluate how well our marketing and promotional efforts are performing. Total registered buyers exclude duplicate registrations, buyers who are suspended from utilizing our marketplaces and buyers who have voluntarily removed themselves from our registration database. In addition, if we become aware of registered buyers that are no longer in business, we remove them from our database. As of December 31, 2024 and 2023, we had 5.7 million and 5.2 million registered buyers, respectively.
Previous wording
Total auction participants. For each auction we manage, the number of auction participants represents the total number of registered buyers who have bid one or more times in that auction. As a result, a registered buyer who bids, or participates, in more than one auction is counted as an auction participant in each auction in which he or she participates. Thus, total auction participants for a given period is the sum of the auction participants in each auction conducted during that period. We use this metric to allow us to compare our online auction marketplaces to our competitors, including other online auction sites and traditional on-site auctioneers. In addition, we measure total auction participants on a periodic basis to evaluate the activity level of our base of registered buyers and to measure the performance of our marketing and promotional efforts. During the three months ended June 30, 2024 and 2023, 1,016,000 and 924,000 participants participated in auctions on our marketplaces, respectively. During the nine months ended June 30, 2024 and 2023, approximately 3,003,000 and 2,465,000 participants participated in auctions on our marketplaces, respectively.
Current wording
Total auction participants. For each auction we manage, the number of auction participants represents the total number of registered buyers who have bid one or more times in that auction. As a result, a registered buyer who bids, or participates, in more than one auction is counted as an auction participant in each auction in which he or she participates. Thus, total auction participants for a given period is the sum of the auction participants in each auction conducted during that period. We use this metric to allow us to compare our online auction marketplaces to our competitors, including other online auction sites and traditional on-site auctioneers. In addition, we measure total auction participants on a periodic basis to evaluate the activity level of our base of registered buyers and to measure the performance of our marketing and promotional efforts. During the three months ended December 31, 2024 and 2023, 960,000 and 848,000 participants participated in auctions on our marketplaces, respectively.
Previous wording
Completed transactions. Completed transactions represents the number of auctions in a given period from which we have recorded revenue. Similar to GMV, we believe that completed transactions is a key business metric because it provides an additional measurement of the volume of activity flowing through our marketplaces. During the three months ended June 30, 2024 and 2023, we completed 263,000 and 252,000 transactions, respectively. During the nine months ended June 30, 2024 and 2023, we completed 802,000 and 675,000 transactions, respectively.
Current wording
Completed transactions. Completed transactions represents the number of auctions in a given period from which we have recorded revenue. Similar to GMV, we believe that completed transactions is a key business metric because it provides an additional measurement of the volume of activity flowing through our marketplaces. During the three months ended December 31, 2024 and 2023, we completed 253,000 and 239,000 transactions, respectively.
Previous wording
Other operating expenses (income), net. Other operating expenses (income), net includes acquisition-related costs, impairment of long-lived and other assets, impacts of lease terminations, as well as business realignment expenses, including those associated with restructuring initiatives and the exit of certain business operations.
Current wording
Other operating expenses, net. Other operating expenses, net includes acquisition-related costs, impairment of long-lived and other assets, impacts of lease terminations, as well as business realignment expenses, including those associated with restructuring initiatives and the exit of certain business operations.
Previous wording
Income taxes. Income taxes include current and deferred income tax expense for the U.S. federal, state, and foreign jurisdictions. For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income. Our effective income tax rate after discrete items was 27.1% for the nine months ended June 30, 2024. The effective tax rate differed from the statutory federal rate of 21% primarily as a result of the impact of foreign, state, and local income taxes and permanent tax adjustments.
Current wording
Income taxes. Income taxes include current and deferred income tax expense for the U.S. federal, state, and foreign jurisdictions. For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income.
Previous wording
The following table sets forth, for the periods indicated, our operating results:
Current wording
The following table sets forth, for the periods indicated, our consolidated operating results:
Previous wording
GovDeals. Total revenues from our GovDeals reportable segment increased 28.0%, or $4.8 million, due to a $36.6 million, or 17.2%, increase in GMV driven by increased personal property sales, particularly in the vehicle and heavy equipment categories, and continued growth in our seller base. Revenue grew at a higher rate than GMV due to the expansion of service offerings to new, higher-volume sellers, including through the acquisition of Sierra. Segment direct profit increased by $4.3 million, or 26.4%, consistent with the increase in revenues. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods.
Current wording
GovDeals. Total revenues from our GovDeals reportable segment increased 29.1%, or $4.6 million, due to a $21.7 million, or 11.4%, increase in GMV driven by increased personal property sales, particularly in vehicles despite some softening in market prices, and continued growth in our seller base. Revenue grew at a higher rate than GMV due to the expansion of service offerings to new, higher-volume sellers, including through the acquisition of Sierra. Segment direct profit increased by $3.8 million, or 25.0%, consistent with the increase in revenues. Segment direct profit as a percentage of total revenue decreased from 94.7% to 91.7% due to transportation costs associated with Sierra and other expanded service locations.
Previous wording
RSCG. Revenue from our RSCG reportable segment increased by $7.8 million, or 15.3%, due to a $6.3 million, or 8.6%, increase in GMV due to increased volumes in our purchase programs, partially offset by a lower value product mix in selected programs. Segment direct profit decreased by $0.5 million, or 2.9%, and segment direct profit as a percentage of total revenue decreased from 35.1% to 29.5%, due to an increase in the mix of purchase transactions and a lower blended take-rate on our consignment sales. The increased volumes in our purchase programs were associated with lower-touch product flows and did not have a material impact on RSCG's operating expenses.
Current wording
RSCG. Revenue from our RSCG reportable segment increased by $44.0 million, or 100.5%, due to a $43.2 million, or 64.9%, increase in GMV due to expansion in our purchase programs. Segment direct profit increased by $4.4 million, or 31.1%, and Segment direct profit as a percentage of total revenue decreased from 32.3% to 21.1%, due to increased volumes from expanded purchase programs, driven by general merchandise categories that are lower-touch and do not generally have a significant impact on RSCG's operating expenses, and a lower blended take-rate on our consignment sales. These increased purchase volumes and their effect of lowering Segment direct profit as a percentage of total revenue are expected to continue.
Previous wording
CAG. Revenue from our CAG reportable segment decreased by $0.3 million, or 3.7%, while GMV increased by $3.6 million, or 7.5%, driven by consignment sales in our industrial and heavy equipment category, partially offset by project delays in our energy category. Revenue decreased despite the increase in GMV due to an increase in sales conducted with partners. There are inherent variations in the mix of assets sourced and sold by the CAG segment in any given period, which drove a decrease of 2.4% in Segment direct profit as a percentage of total revenue. As a result of the decreases in revenues, Segment direct profit decreased by $0.5 million, or 6.4%. Global supply chains may experience heightened disruptions due to international tensions and other factors, which could limit the volume of assets made available for sale in any period.
Current wording
CAG. Revenue from our CAG reportable segment increased by $2.0 million, or 25.7%, due to a $15.3 million, or 31.2%, increase in GMV driven by consignment sales in our heavy equipment and energy categories, while prior year results were impacted by project delays in certain international sales events. While there are inherent variations in the mix of assets sourced and sold by the CAG segment in any given period, Segment direct profit as a percentage of total revenue remained relatively consistent between the periods. As a result of the increase in revenues, Segment direct profit increased by $1.9 million, or 26.7%. Global supply chains may experience heightened disruptions due to international tensions and other factors, which could limit the volume of assets made available for sale in any period.
Previous wording
Machinio. Revenue from our Machinio reportable segment increased 15.4%, or $0.5 million, due to price increases and continued growth in subscribers. As a result of the increase in revenues, segment direct profit increased 15.5%, or $0.5 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods.
Current wording
Machinio. Revenue from our Machinio reportable segment increased 10.5%, or $0.4 million, due to price increases and continued growth in subscribers. As a result of the increase in revenues, segment direct profit increased 10.1%, or $0.4 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods.
Previous wording
Total revenues -Total consolidated revenue increased $12.8 million, or 15.9%. Refer to the discussion of Segment Results above for discussion of the increase in revenue.
Current wording
Total revenues. Total consolidated revenue increased $51.0 million, or 71.5%. Refer to the discussion of Segment Results above for discussion of the increase in revenue.
Previous wording
Cost of goods sold (excludes depreciation and amortization). Cost of goods sold increased $9.0 million, or 25.6%, due to increased purchase transaction volumes at our RSCG reportable segment during the three months ended June 30, 2024.
Current wording
Cost of goods sold (excludes depreciation and amortization). Cost of goods sold increased $40.6 million, due to increased purchase transaction volumes at our RSCG reportable segment during the three months ended December 31, 2024.
Previous wording
Technology and operations expenses. Technology and operations expenses increased $1.4 million, or 10.4%, primarily in support of the increased transactions volumes across our reportable segments, including operating costs associated with expanded full-service consignment solutions in our GovDeals segment through our acquisition of Sierra.
Current wording
Technology and operations expenses. Technology and operations expenses increased $3.2 million, or 22.3%, primarily in support of the increased transactions volumes across our segments, including operating costs associated with expanded full-service consignment solutions in our GovDeals segment through our acquisition of Sierra, temporary storage costs in our RSCG segment from the initial stages of its purchase programs expansion that are expected to normalize during the three months ended March 31, 2025, and a $0.2 million increase in stock compensation expense.
Previous wording
Sales and marketing expenses. Sales and marketing expenses increased $0.7 million, or 5.3%, due to our market share expansion and client diversification efforts.
Current wording
Sales and marketing expenses. Sales and marketing expenses increased $1.8 million, or 13.8%, primarily due to our market share expansion and client diversification efforts, and a $0.4 million increase in stock compensation expense.
Previous wording
Provision for income taxes. Provision for income taxes increased $0.2 million due to the impact of foreign, state, and local taxes and permanent tax adjustments.
Current wording
Provision for income taxes. Provision for income taxes increased $1.5 million due to the higher pre-tax income and the impact of foreign, state, and local taxes and permanent tax adjustments.
Previous wording
Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA. Non-GAAP EBITDA is a supplemental non-GAAP financial measure and is equal to Net income (loss) plus Interest and other (income) expense, net excluding the non-service components of net periodic pension cost (benefit); Provision (benefit) for income taxes; and Depreciation and amortization. Interest and other (income) expense, net, can include non-operating gains and losses, such as from foreign currency fluctuations. Our definition of Non-GAAP Adjusted EBITDA differs from Non-GAAP EBITDA because we further adjust Non-GAAP EBITDA for stock-based compensation expense, acquisition costs such as transaction expenses and changes in earn out estimates, business realignment expense, deferred revenue purchase accounting adjustments, and goodwill and long-lived asset impairment.
Current wording
Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA. Non-GAAP EBITDA is a supplemental non-GAAP financial measure and is equal to Net income plus Interest and other income, net excluding the non-service components of net periodic pension cost (benefit); Provision for income taxes; and Depreciation and amortization. Interest and other income, net, can include non-operating gains and losses, such as from foreign currency fluctuations. Our definition of Non-GAAP Adjusted EBITDA differs from Non-GAAP EBITDA because we further adjust Non-GAAP EBITDA for stock-based compensation expense, acquisition costs such as transaction expenses and changes in earn out estimates, business realignment expense, deferred revenue purchase accounting adjustments, and goodwill and long-lived asset impairment.
Previous wording
The authoritative guidance related to business combinations requires the initial recognition of contingent consideration at fair value based upon information known or knowable as of the acquisition date, with subsequent changes in fair value recorded through the Consolidated Statements of Operations and disallows the capitalization of transaction costs. We believe adjusting for these acquisition related expenses is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year.
Current wording
The authoritative guidance related to business combinations requires the initial recognition of contingent consideration at fair value based upon information known or knowable as of the acquisition date, with subsequent changes in fair value recorded through the Condensed Consolidated Statements of Operations and disallows the capitalization of transaction costs. We believe adjusting for these acquisition related expenses is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year.
Previous wording
Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA as calculated by us are not necessarily comparable to similarly titled measures used by other companies. In addition, Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA: (a) do not represent net income (loss) or cash flows from operating activities as defined by GAAP; (b) are not necessarily indicative of cash available to fund our cash flow needs; and (c) should not be considered as alternatives to net income (loss), income (loss) from operations, cash provided by (used in) operating activities or our other financial information as determined under GAAP.
Current wording
Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA as calculated by us are not necessarily comparable to similarly titled measures used by other companies. In addition, Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA: (a) do not represent net income or cash flows from operating activities as defined by GAAP; (b) are not necessarily indicative of cash available to fund our cash flow needs; and (c) should not be considered as alternatives to net income, income from operations, cash provided by (used in) operating activities, or our other financial information as determined under GAAP.
Previous wording
2 Acquisition-related costs are included in Other operating expenses (income), net on the Condensed Consolidated Statement of Operations. Litigation settlement expense reflects significant legal settlements not expected to reoccur and are included in General and administrative expenses on the Condensed Consolidated Statement of Operations. For further information see Note 13 - Legal Proceedings and Other Contingencies, for details about the litigation settlement that occurred during the three months ended June 30, 2024.
Current wording
2 Acquisition-related costs are included in Other operating expenses, net on the Condensed Consolidated Statement of Operations.
Previous wording
Our operational cash needs primarily relate to working capital, including staffing costs, technology expenses, leases of real estate, and equipment used in our operations, and capital used for inventory purchases, which we have funded through existing cash balances and cash generated from operations. The Company has not paid a dividend historically, nor do we have any intention to do so in the foreseeable future. From time to time, we may use our capital resources for other activities, such as contract start-up costs, joint ventures, share repurchases and acquisitions. As of June 30, 2024, we had $130.3 million in Cash and cash equivalents and $6.5 million in Short-term investments, which we believe is sufficient to meet the Company’s anticipated cash needs for at least one year from the date of these financial statements.
Current wording
Our operational cash needs primarily relate to working capital, including staffing costs, technology expenses, leases of real estate, and equipment used in our operations, and capital used for inventory purchases, which we have funded through existing cash balances and cash generated from operations. The Company has not paid a dividend historically, nor do we have any intention to do so in the foreseeable future. From time to time, we may use our capital resources for other activities, such as contract start-up costs, joint ventures, share repurchases and acquisitions. As of December 31, 2024, we had $128.7 million in Cash and cash equivalents and $10.4 million in Short-term investments, which we believe is sufficient to meet the Company’s anticipated cash needs for at least one year from the date of these financial statements.
Previous wording
We intend to indefinitely reinvest the earnings of our foreign subsidiaries outside the United States. As a result, we did not record a provision for deferred U.S. tax expense on the $10.9 million of undistributed foreign earnings as of June 30, 2024. As of June 30, 2024, and September 30, 2023, $25.6 million and $19.1 million, respectively, of cash and cash equivalents was held outside of the U.S.
Current wording
We intend to indefinitely reinvest the earnings of our foreign subsidiaries outside the United States. As a result, we did not record a provision for deferred U.S. tax expense on the $9.8 million of undistributed foreign earnings as of December 31, 2024. A total of $24.4 million of cash and cash equivalents and short-term investments was held out of the U.S. as of December 31, 2024. These amounts are not currently considered in our evaluation of near-term liquidity needs in the U.S. due to the potential for adverse tax consequences upon repatriation.
Previous wording
Our capital expenditures consist primarily of capitalized software, warehouse equipment, computers and purchased software, office equipment, furniture and fixtures, and leasehold improvements. The timing and volume of such capital expenditures in the future will be affected by the addition of new sellers or buyers or expansion of existing seller or buyer relationships. We intend to fund those expenditures primarily from our existing cash balances and operating cash flows. Our capital expenditures for the nine months ended June 30, 2024 and 2023, were $6.1 million and $3.9 million, respectively. This increase was primarily driven by enhancements to our platforms and marketplaces. As of June 30, 2024, we had no significant outstanding commitments for capital expenditures.
Current wording
Our capital expenditures consist primarily of capitalized software, warehouse equipment, computers and purchased software, office equipment, furniture and fixtures, and leasehold improvements. The timing and volume of such capital expenditures in the future will be affected by the addition of new sellers or buyers or expansion of existing seller or buyer relationships. We intend to fund those expenditures primarily from our existing cash balances and operating cash flows. Our capital expenditures for the three months ended December 31, 2024 and 2023, were $1.8 million and $1.7 million, respectively. This increase was primarily driven by enhancements to our platforms and marketplaces. As of December 31, 2024, we had no significant outstanding commitments for capital expenditures.
Previous wording
Our future capital requirements will depend on many factors including our rate of revenue growth, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the development and deployment of new marketplaces, the introduction of new value-added services and the costs to expand our network of warehouses including our new lease for warehouse space in Brownsburg, IN which commenced during the nine months ended June 30, 2024. We may seek to enter agreements with respect to potential investments in, or acquisitions of, complementary businesses, products or technologies, which could also require us to seek additional equity or debt financing. The sale of additional equity securities or convertible debt securities would result in additional dilution to our stockholders. Additional debt would result in increased interest expense and could result in covenants that would restrict our operations. There is no assurance that such financing, if required, will be available in amounts or on terms acceptable to us, if at all.
Current wording
Our future capital requirements will depend on many factors including our rate of revenue growth, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the development and deployment of new marketplaces, the introduction of new value-added services and the costs to expand our network of warehouses. We may seek to enter agreements with respect to potential investments in, or acquisitions of, complementary businesses, products or technologies, which could also require us to seek additional equity or debt financing. The sale of additional equity securities or convertible debt securities would result in additional dilution to our stockholders. Additional debt would result in increased interest expense and could result in covenants that would restrict our operations. There is no assurance that such financing, if required, will be available in amounts or on terms acceptable to us, if at all.
Previous wording
During the six months ended March 31, 2024, the Credit Agreement was amended to extend the maturity date by 12 months to March 31, 2026 (the Second Amendment). No other changes, including with respect to the borrowing terms or capacities, were made to the Credit Agreement as a result of the First Amendment or the Second Amendment.
Current wording
The Company maintains a $25.0 million Credit Agreement with Wells Fargo Bank, National Associated (the Credit Agreement). During the year ended September 30, 2023, the Credit Agreement was amended to extend the maturity date by 12 months to March 31, 2025 (the First Amendment). During the six months ended March 31, 2024, the Credit Agreement was amended to extend the maturity date by an additional 12 months to March 31, 2026 (the Second Amendment). No other changes, including regarding the borrowing terms or capacities, were made to the Credit Agreement as a result of the First Amendment or the Second Amendment.
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Previous report — wording carried elsewhere
GovDeals. Total revenues from our GovDeals reportable segment increased 22.7%, or $10.4 million, due to a $84.3 million, or 15.6%, increase in GMV driven by increased personal property sales, particularly in the vehicle and heavy equipment categories, and continued growth in our seller base. Revenue grew at a higher rate than GMV due to the expansion of service offerings to new, higher-volume sellers, including through the acquisition of Sierra. Segment direct profit increased by $9.4 million, or 21.6%, consistent with the increase in revenues. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods.
Previous report — wording carried elsewhere
CAG. Revenue from our CAG reportable segment increased by $1.0 million, or 3.5%, due to a $19.7 million, or 14.7%, increase in GMV driven by consignment sales in our industrial, energy, and heavy equipment categories. Revenue did not increase at the same rate as GMV due to increases in transactions conducted with partners and in the mix of transactions conducted under the consignment model. As a result of the increase in revenues, Segment direct profit increased by $0.1 million, or 0.6%. Segment direct profit as a percentage of total revenue decreased 2.3%, which may fluctuate due to inherent variations in the mix of assets sourced and sold by the CAG segment in any given period. Global supply chains may experience heightened disruptions due to international tensions and other factors, which could limit the volume of assets made available for sale in any period.
Previous report — wording carried elsewhere
Machinio. Revenue from our Machinio reportable segment increased 18.2%, or $1.9 million, due to price increases and continued growth in subscribers. As a result of the increase in revenues, segment direct profit increased 18.7%, or $1.8 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods.
Previous report — wording carried elsewhere
Total revenues -Total consolidated revenue increased $21.9 million, or 9.3%. Refer to the discussion of Segment Results above for discussion of the increase in revenue.
Previous report — wording carried elsewhere
Cost of goods sold (excludes depreciation and amortization). Cost of goods sold increased $12.6 million, or 11.8%, due to increased purchase transaction volumes at our RSCG reportable segment.
Previous report — wording carried elsewhere
Technology and operations expenses. Technology and operations expenses increased $1.7 million, or 3.9%, primarily in support of the increased transactions volumes across our reportable segments, including operating costs associated with expanded full-service consignment solutions in our GovDeals segment through our acquisition of Sierra.
Previous report — wording carried elsewhere
Provision for income taxes. Provision for income taxes decreased $0.2 million due to the impact of foreign, state, and local taxes and permanent tax adjustments.
Previous report — wording carried elsewhere
The Company maintains a $25.0 million Credit Agreement with Wells Fargo Bank, National Associated (the Credit Agreement). During the year ended September 30, 2023, the Credit Agreement was amended to extend the maturity date by 12 months to March 31, 2025 (the First Amendment).