LIQUIDITY SERVICES INC
For the period ended Mar 31, 2026. Filed May 7, 2026.
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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.
Mar 31, 2026 · Filed May 7, 2026
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 2025-12-31; filed 2026-02-05.
0001193125-26-038892
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001193125-26-211031
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 132 previous paragraphs and 145 current paragraphs.
95 unchanged; 30 reworded; 18 added; 6 removed; 1 previous and 2 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 (18)
Current report
GovDeals. Total revenues from our GovDeals reportable segment increased 10.7%, or $2.1 million, due to a $10.4 million, or 5.1%, increase in GMV, driven by continued new seller acquisition and service expansion, partially offset by lower real estate transaction activity and disruptions from significant winter weather events. Revenue grew at a higher rate than GMV due to the expansion of service offerings to higher-volume sellers and a lower transaction mix of real estate. Segment direct profit increased by $2.2 million, or 12.2%, and Segment direct profit as a percentage of total revenue increased from 92.1% to 93.4%, due to lower transaction processing fees.
Current report
RSCG. Revenue from our RSCG reportable segment increased by $0.5 million, or 0.6%, reflecting a relatively stable level of purchase revenues, and a $10.2 million, or 9.9%, increase in GMV primarily driven by consignment transactions in our lower-touch dropship and direct-to-consumer channels. Segment direct profit increased by $4.8 million, or 28.9%, and Segment direct profit as a percentage of total revenue increased from 20.0% to 25.7%, driven by robust buyer demand for purchase transactions of sortable goods, strong multi-channel consignment buyer participation, and lower transaction processing fees.
Current report
Technology and operations expenses. Technology and operations expenses increased $1.4 million, or 8.5% ($1.1 million, or 7.2%, after the effect of a $0.3 million increase in stock compensation primarily from variable stock awards tied to financial performance targets), driven by continued investment in our proprietary marketplace platform technology and the acquisition of Auction Software (see Note 3 -Acquisitions), partially offset by the streamlining of operational costs including warehouse consolidation efforts in our RSCG reportable segment.
Current report
Sales and marketing expenses. Sales and marketing expenses increased $2.3 million, or 16.7% ($1.7 million, or 13.3%, after the effect of a $0.6 million increase in stock compensation primarily from variable stock awards tied to financial performance targets), driven by continued market share expansion and multi-channel buyer participation initiatives.
Current report
General and administrative expenses. General and administrative expenses increased $2.0 million, or 27.6% ($1.0 million, or 17.6%, after the effect of a $1.0 million increase in stock compensation primarily from variable stock awards tied to financial performance targets), predominantly due to the timing and mix of compensation and benefit-related costs, which can vary from period to period and resulted in a higher-than-typical fluctuation during the three months ended March 31, 2026.
Current report
Other operating expenses, net. Other operating expenses, net decreased $0.2 million due to acquisition-related costs incurred during the three months ended March 31, 2025, in connection with the Auction Software acquisition; see Note 3 -Acquisitions.
Current report
Six Months Ended March 31, 2026, Compared to the Six Months Ended March 31, 2025
Current report
Segment Results
Current report
RSCG. Revenue from our RSCG reportable segment decreased by $5.2 million, or 3.0%, as a result of lower purchase transaction volumes. Despite the decrease in revenues, GMV increased by $13.9 million, or 6.6%, driven by consignment transactions in our lower-touch dropship and direct-to-consumer channels. Segment direct profit increased by $7.8 million, or 22.1%, and Segment direct profit as a percentage of total revenue increased from 20.6% to 25.9%, driven by robust buyer demand for purchase transactions of sortable goods, strong multi-channel consignment buyer participation, and lower transaction processing fees.
Current report
CAG. Revenue from our CAG reportable segment increased by $2.8 million, or 14.5%, despite a decrease in GMV of $4.7 million, or 3.7%, primarily driven by increased heavy equipment consignment transaction activity and greater international spot purchase transaction events during the six months ended March 31, 2026, partially offset by a decline in energy consignment transaction activity. Revenue grew despite the decline in GMV due to greater International spot purchase transactions and higher take-rates, primarily in our industrial and energy categories. Segment direct profit increased by $1.6 million, or 9.1%, as a result of the greater international spot purchase transaction events, and continued strength in consignment sales within our heavy equipment category. Segment direct profit as a percentage of total revenue decreased from 89.7% during the six months ended March 31, 2025, to 85.5% during the six months ended March 31, 2026, due to greater international spot purchase transaction events during the six months ended March 31, 2026. As a reminder, there are 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.
Current report
Machinio & Software Solutions. Revenue in our Machinio & Software Solutions businesses increased 19.1%, or $1.7 million, due to price increases, expansion of our Machinio System offering to marine dealers, and the acquisition of Auction Software; see Note 3 -Acquisitions. As a result of these increase in revenues, segment direct profit increased 16.3%, or $1.4 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods.
Current report
Consolidated Results
Current report
Cost of goods sold (excludes depreciation and amortization). Cost of goods sold decreased $12.1 million, primarily due to improved margins from robust buyer demand optimized through our multi-channel approach in our RSCG reportable segment, as well as lower transaction processing fees, during the six months ended March 31, 2026.
Current report
Technology and operations expenses. Technology and operations expenses increased $2.3 million, or 6.8%, ($1.7 million, or 5.0%, after the effect of a $0.6 million increase in stock compensation primarily from variable stock awards tied to financial performance targets), driven by continued investment in our proprietary marketplace platform technology and the acquisition of Auction Software (see Note 3 -Acquisitions), partially offset by a streamlining of operational costs including warehouse consolidation efforts in our RSCG reportable segment.
Current report
General and administrative expenses. General and administrative expenses increased $3.5 million, or 22.5%, ($1.1 million, or 8.6%, after the effect of a $2.4 million increase in stock compensation primarily from variable stock awards tied to financial performance targets), primarily due to the timing and mix of compensation and benefit-related costs, which can vary from period to period and resulted in a higher-than-typical fluctuation during the three months ended March 31, 2026.
Current report
Other operating expenses, net. Other operating expenses, net decreased $0.3 million, as the six months ended March 31, 2025, included greater transactions costs associated with the acquisition of Auction Software; see Note 3 -Acquisition.
Current report
Provision for income taxes. Provision for income taxes increased $3.1 million due to the higher pre-tax income, a decrease in tax benefits from stock compensation and other nondeductible expenses.
Current report
Net cash provided by operating activitieswas $29.0 million and $9.5 million for the six months ended March 31, 2026 and 2025, respectively. The $19.5 million increase in cash provided by operating activities between periods was primarily attributable to a $13.4 million increase in cash inflows associated with our Payables to Sellers due to higher buyer collection activity at the end of the current period in our GovDeals segment as there is inherent variability in the timing of payments processed across periods, as well as a $7.2 million increase in cash inflows associated with Accounts receivable driven by a reduction of RSCG purchase transactions conducted with buyer credit terms in the current year.
Removed paragraphs (6)
Previous report
RSCG. Revenue from our RSCG reportable segment decreased by $5.7 million, or 6.5%, primarily due to a mild reduction in inventory purchases during the three months ended December 31, 2025, partially offset by continued growth in key consignment programs. Despite the decrease in Revenue, GMV increased by $3.7 million, or 3.4%, as consignment transaction value growth was larger than the decline in purchase transaction value. Segment direct profit increased by $3.0 million, or 16.0%, and Segment direct profit as a percentage of total revenue increased from 21.1% to 26.2%, due to strong multi-channel buyer participation and lower transaction processing fees.
Previous report
Technology and operations expenses. Technology and operations expenses increased $0.9 million, or 5.1%, primarily in support of the increased transactions volumes across our segments, a $0.4 million increase in stock compensation expense, and the acquisition of Auction Software; see Note 3 -Acquisitions.
Previous report
General and administrative expenses. General and administrative expenses increased $1.5 million, or 18.1%, primarily due to a $1.5 million increase in stock compensation primarily from variable stock awards tied to financial performance targets.
Previous report
On May 7, 2025, the Company entered into a Third Amendment to the Credit Agreement (the Third Amendment) that extended the maturity date of the Credit Agreement to March 31, 2027, increased the maximum aggregate borrowing amount from $25.0 million to $35.0 million, and increased the sublimit for standby letters of credit from $10.0 million to $35.0 million.
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 - Acquisitions for more information regarding this transaction.
Previous report
Net cash used in operating activitieswas $0.6 million and $12.1 million for the three months ended December 31, 2025 and 2024, respectively. The $11.6 million increase in cash used in operating activities between periods was primarily attributable to an $11.6 million decrease in cash outflows associated with Accounts receivable as multi-channel buyer participation initiatives have reduced the proportion of transactions being conducted under credit terms in our RSCG segment.
Reworded paragraphs (30)
Previous wording
This document contains forward-looking statements. These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include but are not limited to the factors set forth in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, and subsequent filings with the Securities and Exchange Commission (SEC). You can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continues” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements.
Current wording
This document contains forward-looking statements. These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include but are not limited to the factors set forth in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, and Part II Item 1A of this Quarterly Report on Form 10-Q, and subsequent filings with the Securities and Exchange Commission (SEC). You can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continues” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements.
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 ongoing conflict in and adjacent to Israel, and instability in Venezuela. 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, 2025 and 2024, the Company's total revenues directly associated with Russia, Ukraine, Israel, and Venezuela 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 and Iran, and instability in Venezuela. Escalating tensions involving Iran have also contributed to volatility in global energy markets, including increases in oil prices, which in turn have placed upward pressure on transportation, logistics, and other operating costs and contributed to broader inflationary effects. Additionally, the Russia-Ukraine conflict 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 and Iran, have further heightened global supply chain disruptions, increased energy and commodity price volatility, and impacted the international trade and financial markets. For the three months ended March 31, 2026 and 2025, the Company's total revenues directly associated with Russia, Ukraine, Israel, Iran, and Venezuela were not material to our consolidated financial results individually nor collectively. We will continue monitoring these armed and geopolitical conflicts around the world and any potential future impacts on our business.
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 December 31, 2025, we had 6.2 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, 2025, the approximate number of registered buyers increased from 5.7 million to 6.2 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.
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 March 31, 2026, we had 6.3 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 March 31, 2026, the approximate number of registered buyers increased from 5.8 million to 6.3 million, or approximately 8%. 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
Transaction Model Mix. Most of our transactions are conducted under the consignment model, which represented 81.0% and 79.8% of our consolidated GMV for the three months ended December 31, 2025 and 2024, respectively. However, only the consignment fee, representing a small portion of the consignment GMV, is recognized as revenue, causing consignment revenues to account for 29.6% and 27.0% of our total revenues for the three months ended December 31, 2025 and 2024, respectively.
Current wording
Transaction Model Mix. Most of our transactions are conducted under the consignment model, which represented 80.9% and 80.9% of our consolidated GMV for the three and six months ended March 31, 2026, respectively, and 80.1% and 79.9% of our consolidated GMV for the three and six months ended March 31, 2025, respectively. However, only the consignment fee, representing a small portion of the consignment GMV, is recognized as revenue, causing consignment revenues to account for 29.3% and 29.4% of our total revenues for the three and six months ended March 31, 2026, respectively, and 27.3% and 27.1% of our total revenues for the three and six months ended March 31, 2025, respectively.
Previous wording
Purchase model transactions are a smaller proportion of our consolidated GMV, representing 19.0% and 20.2% of our consolidated GMV for the three months ended December 31, 2025 and 2024, 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 63.8% and 67.7% of our total revenues for the three months ended December 31, 2025 and 2024, respectively.
Current wording
Purchase model transactions are a smaller proportion of our consolidated GMV, representing 19.1% and 19.1% of our consolidated GMV for the three and six months ended March 31, 2026, respectively, and 19.9% and 20.1% of our consolidated GMV for the three and six months ended March 31, 2025, 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 64.5% and 64.1% of our total revenues for the three and six months ended March 31, 2026, respectively, and 66.9% and 67.3% of our total revenues for the three and six months ended March 31, 2025, respectively.
Previous wording
In assessing buyer concentration risk, we consider a number of quantitative factors, which can include the buyer's proportionate share of our consolidated GMV, revenues and direct profit, including any impacts based upon the transaction model mix they purchase. We also consider qualitative factors, such as the level of differentiation in the products sold and whether there are alterative buyers accessible in the market, among other relevant factors. For the three months ended December 31, 2025 and 2024, we were not dependent on any single buyer in a manner material to our business.
Current wording
In assessing buyer concentration risk, we consider a number of quantitative factors, which can include the buyer's proportionate share of our consolidated GMV, revenues and direct profit, including any impacts based upon the transaction model mix they purchase. We also consider qualitative factors, such as the level of differentiation in the products sold and whether there are alterative buyers accessible in the market, among other relevant factors. For the three and six months ended March 31, 2026 and 2025, we were not dependent on any single buyer in a manner material to our business.
Previous wording
The Company has multiple vendor contracts with Amazon.com, Inc. under which it acquires 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. $10.6 million and $10.1 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Inventory balances on our Condensed Consolidated Balance Sheets as of December 31, 2025 and September 30, 2025, respectively. The Company's 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
The Company has multiple vendor contracts with Amazon.com, Inc. under which it acquires and sells 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. $15.9 million and $10.1 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Inventory balances on our Condensed Consolidated Balance Sheets as of March 31, 2026 and September 30, 2025, respectively. The Company's 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 6.5% and 5.4% of our total revenues for three months ended December 31, 2025 and 2024, respectively.
Current wording
Other fee revenues accounted for 6.3% and 6.4% of our total revenues for three and six months ended March 31, 2026, respectively, and 5.8% and 5.6% of our total revenues for the three and six months ended March 31, 2025, respectively.
Previous wording
Gross merchandise volume (GMV). GMV is the total sales value of all transactions for which we earned compensation upon their completion through our marketplaces or 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, 2025, was $398.0 million, increasing from the three months ended December 31, 2024 by $11.9 million, or 3.1%.
Current wording
Gross merchandise volume (GMV). GMV is the total sales value of all transactions for which we earned compensation upon their completion through our marketplaces or 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 six months ended March 31, 2026, was $389.9 million and $787.8 million, respectively, increasing from the three and six months ended March 31, 2025 by $22.5 million, or 6.1%, and $34.4 million, or 4.6%, 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 December 31, 2025 and 2024, we had 6.2 million and 5.7 million registered buyers, respectively.
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 March 31, 2026 and 2025, we had 6.3 million and 5.8 million registered buyers, respectively.
Previous wording
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, 2025 and 2024, 983,000 and 960,000 participants participated in auctions on our marketplaces, respectively.
Current wording
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 March 31, 2026 and 2025, 985,000 and 982,000 participants participated in auctions on our marketplaces, respectively. During the six months ended March 31, 2026 and 2025, 1,968,000 and 1,942,000 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 December 31, 2025 and 2024, we completed 264,000 and 253,000 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 March 31, 2026 and 2025, we completed 280,000 and 258,000 transactions, respectively. During the six months ended March 31, 2026 and 2025, we completed 544,000 and 511,000 transactions, respectively.
Previous wording
CAG. Revenue from our CAG reportable segment increased by $1.6 million, or 16.6%, due to increased industrial spot purchase and heavy equipment consignment transaction activity, partially offset by the prior year period including larger, lower-take rate project work in our energy category. Despite this increase in Revenue, GMV decreased by $6.6 million, or 10.3%, primarily driven by the prior period including larger, lower-take rate project work in our energy category. 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 $0.6 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 $1.2 million, or 12.3%, due to a $1.9 million, or 3.2%, increase in GMV driven by increased heavy equipment and energy consignment transaction activity, partially offset by a decrease in industrial consignment transaction activity. Revenue grew at a higher rate than GMV due to higher take-rates, primarily in our industrial and energy categories. 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 $1.0 million, or 11.6%. 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 & Software Solutions. Revenue from our Machinio & Software Solutions reportable segment increased 27.5%, or $1.2 million, due to price increases and continued growth in subscribers and the acquisition of Auction Software; see Note 3 -Acquisitions. As a result of the increase in revenues, segment direct profit increased 23.1%, or $0.9 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods.
Current wording
Machinio & Software Solutions. Revenue from our Machinio & Software Solutions reportable segment increased 11.7%, or $0.6 million, due to price increases, expansion of our Machinio System offering to marine dealers, and the acquisition of Auction Software; see Note 3 -Acquisitions. As a result of the increase in revenues, segment direct profit increased 10.1%, or $0.5 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods.
Previous wording
Total revenues. Total consolidated revenue decreased $1.1 million, or 0.9%. Refer to the discussion of Segment Results above for discussion of the increase in revenue.
Current wording
Total revenues. Total consolidated revenue increased $4.4 million, or 3.7%. 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 decreased $8.0 million, due to lower purchase transaction volumes at our RSCG reportable segment, and lower transaction processing fees, during the three months ended December 31, 2025.
Current wording
Cost of goods sold (excludes depreciation and amortization). Cost of goods sold decreased $4.1 million, primarily due to improved margins from robust buyer demand optimized through our multi-channel approach in our RSCG reportable segment, as well as lower transaction processing fees, during the three months ended March 31, 2026.
Previous wording
Provision for income taxes. Provision for income taxes increased $0.6 million due to the higher pre-tax income and the impact of foreign, state, and local taxes and nondeductible tax adjustments.
Current wording
Provision for income taxes. Provision for income taxes increased $2.5 million due to the higher pre-tax income, a decrease in tax benefits from stock compensation and other nondeductible expenses.
Previous wording
GovDeals. Total revenues from our GovDeals reportable segment increased 8.5%, or $1.7 million, due to a $14.8 million, or 7.0%, increase in GMV driven by continued new seller acquisition and service expansion. Revenue grew at a higher rate than GMV due to the expansion of service offerings to higher-volume sellers. Segment direct profit increased by $2.4 million, or 12.5%, and Segment direct profit as a percentage of total revenue increased from 91.7% to 95.1%, due to lower transaction processing fees.
Current wording
GovDeals. Total revenues from our GovDeals reportable segment increased 9.6%, or $3.8 million, due to a $25.1 million, or 6.0%, increase in GMV driven by continued new seller acquisition and service expansion, partially offset by disruptions from significant winter weather events during the three months ended March 31, 2026. Revenue grew at a higher rate than GMV due to the expansion of service offerings to higher-volume sellers. Segment direct profit increased by $4.5 million, or 12.4%, and Segment direct profit as a percentage of total revenue increased from 91.9% to 94.3%, primarily due to lower transaction processing fees.
Previous wording
Sales and marketing expenses. Sales and marketing expenses increased $2.2 million, or 15.2%, primarily due to our market share expansion and multi-channel buyer participation initiatives, and a $0.9 million increase in stock compensation expense.
Current wording
Sales and marketing expenses. Sales and marketing expenses increased $4.5 million, or 15.9%, ($3.0 million, or 11.6%, after the effect of a $1.5 million increase in stock compensation primarily from variable stock awards tied to financial performance targets), primarily due to continued market share expansion and multi-channel buyer participation initiatives.
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 December 31, 2025, we had $169.8 million in Cash and cash equivalents and $11.6 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 March 31, 2026, we had $195.3 million in Cash and cash equivalents and $8.7 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 $9.3 million of undistributed foreign earnings as of December 31, 2025. A total of $27.6 million of cash and cash equivalents and short-term investments was held out of the U.S. as of December 31, 2025. 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.
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 $9.6 million of undistributed foreign earnings as of March 31, 2026. A total of $25.8 million of cash and cash equivalents and short-term investments was held out of the U.S. as of March 31, 2026. 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 three months ended December 31, 2025 and 2024, were $2.3 million and $1.8 million, respectively. This increase was primarily driven by the timing of enhancements to our platforms and marketplaces. As of December 31, 2025, 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 six months ended March 31, 2026 and 2025, were $4.4 million and $3.7 million, respectively. This increase was primarily driven by the timing of enhancements to our platforms and marketplaces. As of March 31, 2026, we had no significant outstanding commitments for capital expenditures.
Previous wording
The Company maintains a $25.0 million revolving credit facility with Wells Fargo Bank, National Association (as amended the Credit Agreement). On March 31, 2023, the Credit Agreement was amended to extend the maturity date by 12 months to March 31, 2025 (the First Amendment). On March 27, 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.
Current wording
The Company maintains a $35.0 million revolving credit facility with Wells Fargo Bank, National Association, maturing March 31, 2027 (the Credit Agreement).
Previous wording
The Company may draw upon the Credit Agreement for general corporate purposes. Repayments of any borrowings under the Credit Agreement shall become available for redraw at any time by the Company. The interest rate on borrowings under the Credit Agreement is a variable rate per annum equal to the Daily Simple Secured Overnight Financing Rate (SOFR) in effect plus a margin ranging from 1.25% to 1.75%. Interest is payable monthly. During the three months ended December 31, 2025, the Company did not make any draws under the Line of Credit, had no outstanding borrowings under the Line of Credit and had $9.0 million of standby letters of credit outstanding. The amount of standby letters of credit are reserved against the Line of Credit and are not available for borrowing, resulting in $26.0 million of remaining borrowing capacity under the Line of Credit as of December 31, 2025.
Current wording
The Company may draw upon the Credit Agreement for general corporate purposes. Repayments of any borrowings under the Credit Agreement shall become available for redraw at any time by the Company. The interest rate on borrowings under the Credit Agreement is a variable rate per annum equal to the Daily Simple Secured Overnight Financing Rate (SOFR) in effect plus a margin ranging from 1.25% to 1.75%. Interest is payable monthly. During the three and six months ended March 31, 2026, the Company did not make any draws under the Line of Credit, had no outstanding borrowings under the Line of Credit and had $9.0 million of standby letters of credit outstanding. The amount of standby letters of credit are reserved against the Line of Credit and are not available for borrowing, resulting in $26.0 million of remaining borrowing capacity under the Line of Credit as of March 31, 2026.
Previous wording
Auction Software Acquisition. On January 31, 2025, the Company acquired Auction Software, a private-label marketplace and SaaS solutions provider. Auction Software results are reported within our Machinio & Software Solutions reportable segment. See Note 3 - Acquisitions for more information regarding this transaction.
Current wording
Auction Software Acquisition. On January 31, 2025, the Company acquired Auction Software, a private-label marketplace and SaaS solutions provider. Auction Software results are reported within our Machinio & Software Solutions reportable segment. See Note 3 -Acquisitionsfor more information regarding this transaction.
Previous wording
The Company repurchased 55,246 shares for $1.5 million during the three months ended December 31, 2025. As of December 31, 2025, the Company had $15.0 million of remaining authorization to repurchase shares through December 31, 2027.
Current wording
The Company repurchased 1,430 shares for less than $0.1 million, and 56,676 shares for $1.5 million during the three and six months ended March 31, 2026. As of March 31, 2026, the Company had $15.0 million of remaining authorization to repurchase shares through December 31, 2027.
Previous wording
Changes in Cash Flows: Three Months Ended December 31, 2025, Compared to the Three Months Ended December 31, 2024
Current wording
Changes in Cash Flows: Six Months Ended March 31, 2026, Compared to the Six Months Ended March 31, 2025
Previous wording
Our working capital accounts are subject to natural variations depending on the rate of change of our transaction volumes, the timing of cash receipts and payments, and variations in our transaction volumes related to settlements between our buyers and sellers. RSCG's purchase program volume changes may cause operating cash flows from Accounts receivable, Accounts payable and Inventory to fluctuate. As GovDeals real estate sales with settlement services increase, operating cash flow fluctuations from Accounts payable and Payables to sellers may become more variable. The amount of cash received and settled will be substantially higher than our take-rate on such transactions, and the timing of auction events, cash collection period, and payment of settlements relative to period end dates can potentially drive substantial cash movements to the extent the timing of such activities cross fiscal periods. Our US federal income tax payments increased $2.3 million during the three months ended December 31, 2025, as our remaining federal net operating loss carryforwards was fully utilized during fiscal 2025. There have been no other significant changes to the working capital requirements for the Company.
Current wording
Our working capital accounts are subject to natural variations depending on the rate of change of our transaction volumes, the timing of cash receipts and payments, and variations in our transaction volumes related to settlements between our buyers and sellers. RSCG's purchase program volume changes may cause operating cash flows from Accounts receivable, Accounts payable and Inventory to fluctuate. As GovDeals real estate sales with settlement services increase, operating cash flow fluctuations from Accounts payable and Payables to sellers may become more variable. The amount of cash received and settled will be substantially higher than our take-rate on such transactions, and the timing of auction events, cash collection period, and payment of settlements relative to period end dates can potentially drive substantial cash movements to the extent the timing of such activities cross fiscal periods. Our US income tax payments increased $0.3 million during the six months ended March 31, 2026, due to higher pre-tax income. There have been no other significant changes to the working capital requirements for the Company.
Previous wording
Net cash used in investing activitieswas $2.5 million and $10.4 million for the three months ended December 31, 2025 and 2024, respectively. The $8.0 million decrease in cash used in investing activities was primarily driven by a $7.7 million decrease in the Company's purchase of short-term investments during the three months ended December 31, 2025, due to timing differences in the maturity and reinvestment dates of our short-term investments.
Current wording
Net cash used in investing activitieswas $1.8 million and $18.6 million for the six months ended March 31, 2026 and 2025, respectively. The $16.7 million decrease in cash used in investing activities was primarily driven by a $10.3 million decrease in the Company's purchase of short-term investments during the six months ended March 31, 2026, due to timing differences in the maturity and reinvestment dates of our short-term investments, and a $6.3 million decrease in acquisitions net of cash acquired driven by the prior year acquisition of Auction Software during the six months ended March 31, 2025; see Note 3 -Acquisitions.
Previous wording
Net cash used in financing activitieswas $1.9 million and $0.9 million for the three months ended December 31, 2025 and 2024, respectively. The $1.0 million increase in cash used in financing activities was primarily driven by a $1.4 million increase in share repurchases and a $0.3 million increase in taxes paid associated with the net settlement of stock compensation awards, partially offset by a $0.6 million increase in proceeds from the exercise of stock options.
Current wording
Net cash used in financing activitieswas $6.4 million and $4.8 million for the six months ended March 31, 2026 and 2025, respectively. The $1.6 million increase in cash used in financing activities was primarily driven by a $1.4 million increase in share repurchases.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Total revenues. Total consolidated revenue increased $3.2 million, or 1.4%. Refer to the discussion of Segment Results above for discussion of the increase in revenue.
Current report — wording carried from elsewhere
Depreciation and amortization. Depreciation and amortization expense was consistent between the six months ended March 31, 2026 and 2025.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other operating expenses, net. Other operating expenses, net was consistent between the three months ended December 31, 2025, and 2024.