ACV Auctions Inc

Previous wording

We provide a highly efficient and vibrant marketplace platform for wholesale vehicle transactions and data services that offer transparent and accurate vehicle information to our customers. Our marketplace platform leverages data insights and technology to power our digital marketplace and data services, enabling our dealers and commercial partners to buy, sell, and value vehicles with confidence and efficiency. We strive to solve the challenges that the used automotive industry has faced for generations and provide powerful technology-enabled capabilities to our dealers and commercial partners who fulfill a critical role in the automotive ecosystem. We help dealers source and manage inventory and accurately price their vehicles as well as process payments, transfer titles, manage arbitrations, and finance and transport vehicles. Our marketplace platform encompasses:

Current wording

We provide a highly efficient and vibrant marketplace platform ("marketplace platform" or "marketplace") for wholesale vehicle transactions and data services that offer transparent and accurate vehicle information to our customers. Our marketplace platform leverages data insights and technology to power our digital marketplace and data services, enabling our dealers and commercial partners to buy, sell, and value vehicles with confidence and efficiency. We strive to solve the challenges that the used automotive industry has faced for generations and provide powerful technology-enabled capabilities to our dealers and commercial partners who fulfill a critical role in the automotive ecosystem. We help dealers source and manage inventory and accurately price their vehicles as well as process payments, transfer titles, manage arbitrations, and finance and transport vehicles. Our marketplace platform encompasses:

Previous wording

Digital Marketplace. Connects buyers and sellers of wholesale vehicles in an intuitive and efficient manner. Our core marketplace offerings are auctions in varying formats, which facilitate real time transactions of wholesale vehicles, and are accessible across multiple platforms including mobile apps, desktop, and directly through API integration. We also offer transportation, financing and assurance services to facilitate the entire transaction journey.

Current wording

•Digital Marketplace. Connects buyers and sellers of wholesale vehicles in an intuitive and efficient manner. Our core digital marketplace offerings are auctions in varying formats, which facilitate real time transactions of wholesale vehicles, and are accessible across multiple platforms including mobile apps, desktop, and directly through API integration. We also offer transportation, financing and assurance services to facilitate the entire transaction journey.

Previous wording

Data Services. Offer insights into the condition and value of used vehicles for transactions both on and off our marketplace and help dealers, their end consumers, and commercial partners make more informed decisions and transact with confidence and efficiency. We enable dealers to manage their inventory and set pricing more effectively while turning vehicles faster and maximizing profit by leveraging predictive analytics informed by artificial intelligence, machine learning, and market data.

Current wording

•Data Services. Offers insights into the condition and value of used vehicles for transactions both on and off our marketplace and helps dealers, their end consumers, and commercial partners make more informed decisions and transact with confidence and efficiency. We enable dealers to manage their inventory and set pricing more effectively while turning vehicles faster and maximizing profit by leveraging predictive analytics informed by artificial intelligence, machine learning and market data.

Previous wording

Our customers include participants on our marketplace and purchasers of our data services. Certain dealers and commercial partners purchase data services in connection with vehicle assessments, software subscriptions, and transactions that do not occur on our marketplace. Our dealer customers include a majority of the top 100 used vehicle dealers in the United States.

Current wording

Our customers include participants on our marketplace platform and purchasers of our data services. Certain dealers and commercial partners purchase data services in connection with vehicle assessments, software subscriptions, and transactions that do not occur on our marketplace. Our dealer customers include a majority of the top 100 used vehicle dealers in the United States.

Previous wording

Marketplace Units is a key indicator of our potential for growth in Marketplace GMV and revenue. It demonstrates the overall engagement of our customers on the marketplace platform, the vibrancy of our marketplace platform and our market share of wholesale transactions in the United States. We define Marketplace Units as the number of vehicles transacted on our marketplace platform within the applicable period. Marketplace Units transacted includes any vehicle that successfully reaches sold status, even if the auction is subsequently unwound, meaning the buyer or seller does not complete the transaction. These instances have been immaterial to date. Marketplace Units exclude vehicles that were inspected by ACV, but not sold on our marketplace. Since the launch of our marketplace platform, Marketplace Units have generally increased as we have expanded our territory coverage, added new Marketplace Buyers and Marketplace Sellers to our marketplace platform and increased our share of wholesale transactions from existing customers. Because we only earn auction and ancillary fees in the case of a successful auction, Marketplace Units will remain a critical driver of our revenue growth.

Current wording

Marketplace Units is a key indicator of our potential for growth in Marketplace GMV and revenue. It demonstrates the overall engagement of our customers and our market share of wholesale transactions in the United States. We define Marketplace Units as the number of vehicles transacted within the applicable period. Marketplace Units transacted includes any vehicle that successfully reaches sold status, even if the auction is subsequently unwound, meaning the buyer or seller does not complete the transaction. These instances were immaterial in the periods presented. Marketplace Units exclude vehicles that were inspected by ACV, but not sold. Marketplace Units have generally increased as we have expanded our territory coverage, added new Marketplace Buyers and Marketplace Sellers increased our share of wholesale transactions from existing customers. Because we only earn auction and ancillary fees in the case of a successful auction, Marketplace Units will remain a critical driver of our revenue growth.

Previous wording

Marketplace GMV is primarily driven by the volume and dollar value of Marketplace Units transacted on our marketplace platform. We believe that Marketplace GMV acts as an indicator of the success of our marketplace, signaling satisfaction of dealers and buyers on our marketplace, and the health, scale, and growth of our business. We define Marketplace GMV as the total dollar value of vehicles transacted through our marketplace platform within the applicable period, excluding any auction and ancillary fees. Because our definition of Marketplace Units does not include vehicles inspected but not sold on our marketplace platform, and because the value of the vehicle sold is not recognized as revenue, GMV does not represent revenue earned by us. We expect that Marketplace GMV will continue to grow as Marketplace Units grow, though at a varying rate within a given applicable period, as Marketplace GMV is also impacted by the value of each vehicle transacted. In periods of declining used vehicle values, Marketplace GMV may decline even while Marketplace Units increase.

Current wording

Marketplace GMV is primarily driven by the volume and dollar value of Marketplace Units transactions. We believe that Marketplace GMV acts as an indicator of our success, signaling satisfaction of dealers and buyers, and the health, scale, and growth of our business. We define Marketplace GMV as the total dollar value of vehicles transacted within the applicable period, excluding any auction and ancillary fees. Because our definition of Marketplace Units does not include vehicles inspected but not sold, and because the value of the vehicle sold is not recognized as revenue, GMV does not represent revenue earned by us. We expect that Marketplace GMV will continue to grow as Marketplace Units grow, though at a varying rate within a given applicable period, as Marketplace GMV is also impacted by the value of each vehicle transacted. In periods of declining used vehicle values, Marketplace GMV may decline even while Marketplace Units increase.

Previous wording

Deepen Relationships with Dealers and Commercial Partners. We have a team of VCIs who work on our customers’ lots to not only provide inspection services, but also to develop strong client relationships and ensure the highest quality service.

Current wording

•Deepen Relationships with Dealers and Commercial Partners. We have a team of VCIs that regularly interact with our customers, providing high-quality inspection services and developing strong customer relationships.

Previous wording

We continue to drive customer adoption of our existing value-added and data services and introduce new and complementary products. Our ability to drive higher attachment rates of existing value-added services, such as ACV Transportation and ACV Capital, will help grow our revenue. In 2019 we launched our financing arm, ACV Capital. In 2021, we added ACV MAX (formerly doing business as MAX Digital) flagship inventory management system to our portfolio of data services offerings. We continue to drive customer adoption of our data services such as our True360 Reports that bring transparency and offer insights into the condition and value of used vehicles as well as our inventory management system, which enables dealers to accurately price wholesale and retail inventory while maximizing profit by leveraging predictive analytics informed by artificial intelligence. These data services enable our customers to make more informed inventory management decisions both on and off our digital marketplace. In addition, we will continue to focus on developing new products and services that enhance our marketplace platform in areas including new data-powered products. Our ability to drive customer adoption of these products and services is dependent on the pricing of our products, the offerings of our competitors and the effectiveness of our marketing efforts.

Current wording

We continue to drive customer adoption of our existing value-added and data services and introduce new and complementary products. Our ability to drive higher attachment rates of existing value-added services, such as ACV Transportation and ACV Capital, will help grow our revenue. In 2019 we launched our financing arm, ACV Capital. In 2021, we added ACV MAX (formerly doing business as MAX Digital) flagship inventory management system to our portfolio of data services offerings. We continue to drive customer adoption of our data services such as our inventory management system, which enables dealers to accurately price wholesale and retail inventory while maximizing profit by leveraging predictive analytics informed by artificial intelligence. These data services enable our customers to make more informed inventory management decisions both on and off our digital marketplace. In addition, we will continue to focus on developing new products and services that enhance our marketplace platform in areas including new data-powered products. Our ability to drive customer adoption of these products and services is dependent on the pricing of our products, the offerings of our competitors and the effectiveness of our marketing efforts.

Previous wording

We are actively investing in our business. In order to support our future growth and expanded product offerings, we expect this investment to continue. We anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts, expand our employee base and invest in our technology development. The investments we make in our marketplace platform are designed to grow our revenue opportunity and to improve our operating results in the long term, but these investments could also delay our ability to achieve profitability or reduce our profitability in the near term. Our success is dependent on making value-generative investments that support our future growth.

Current wording

We are actively investing in our business. In order to support our future growth and expanded product offerings, we expect this investment to continue. We anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts, expand our employee base and invest in our technology development. The investments we make in our marketplace platform are designed to grow our revenue opportunity and to improve our operating results in the long term, but these investments could also delay our ability to achieve or sustain profitability in the near term. Our success is dependent on making value-generative investments that support our future growth.

Previous wording

Our success depends in part on sufficient demand for used vehicles. Our recent growth over the last several years has coincided with a rising consumer demand for used vehicles. Since early 2020 demand for cars has outpaced supply. During this period we have seen new car supply have a significant impact on the supply of wholesale vehicles available within our marketplace. More recently, new vehicle supply has begun to increase, although still below 2019 levels. However, this increase in new vehicle supply has been coupled with an increase in interest rates which has made both new and used vehicles more expensive for retail consumers utilizing financing. Used car demand will be in part dependent on the economic health of the retail consumer and their ability to afford a vehicle purchase.

Current wording

Our success depends in part on sufficient demand for used vehicles. Our growth over the last several years has coincided with a rising consumer demand for used vehicles. Since early 2020 demand for cars has outpaced supply. During this period we have seen new car supply have a significant impact on the supply of wholesale vehicles available within our marketplace. More recently, new vehicle supply has begun to increase, although still below 2019 levels. However, this increase in new vehicle supply has been coupled with an increase in interest rates which has made both new and used vehicles more expensive for retail consumers utilizing financing. Used car demand will be in part dependent on the economic health of the retail consumer and their ability to afford a vehicle purchase.

Previous wording

The increase was primarily driven by an increase in auction marketplace revenue from our buyers and sellers, as well as increases in revenue earned from arranging for the transportation of vehicles to buyers and an increase in revenue earned from the financing of vehicles sold on our marketplace. Revenue increases in the current year were primarily volume-driven. Additionally, we raised the buyer fees charged on our marketplace effective in September 2023 which further contributed to the increase in revenue year-over-year, and specifically within the fourth quarter. For the year ended December 31, 2023 compared to the year ended December 31, 2022, auction marketplace revenue increased to $210.9 million from $175.7 million, other marketplace revenue increased to $179.0 million from $153.0 million, and data services revenue decreased to $32.6 million from $32.9 million.

Current wording

The increase was primarily driven by an increase in auction marketplace revenue from our buyers and sellers, as well as increases in revenue earned from arranging for the transportation of vehicles to buyers. Revenue increases were primarily volume-driven. In addition, buyer fee rates were higher for the year ended December 31, 2024 compared to the year ended December 31, 2023. For the year ended December 31, 2024 compared to the year ended December 31, 2023, auction marketplace revenue increased to $303.0 million from $210.9 million and other marketplace revenue increased to $236.7 million from $179.0 million. The increase in other marketplace revenue was primarily related to an increase in the revenue earned from the transportation of vehicles due to an increase in the number of units transported.

Previous wording

Customer assurance revenue decrease was primarily driven by a decrease in Go Green assurance revenue. For the year ended December 31, 2023, Go Green assurance revenue decreased to $52.1 million from $53.8 million in the year ended December 31, 2022 as a result of a lower fair value per guaranteed unit. Other assurance revenue increased to $6.6 million for the year ended December 31, 2023 from $6.1 million for the year ended December 31, 2022 as a result of increased unit volume of other guarantees.

Current wording

The customer assurance revenue increase was primarily driven by an increase in Go Green assurance revenue. For the year ended December 31, 2024 compared to the year ended December 31, 2023, Go Green assurance revenue increased to $57.0 million from $52.1 million, driven by an increase in units that elected the Go Green offering and an increase in the fair value per unit sold that elected the Go Green offering year over year. Other assurance revenue increased to $7.2 million for the year ended December 31, 2024 from $6.6 million for the year ended December 31, 2023.

Previous wording

The increase consisted of higher costs related to generating marketplace and other marketplace revenue. For the year ended December 31, 2023 compared to the year ended December 31, 2022, total cost attributed to generating auction marketplace revenue increased to $35.8 million from $29.1 million. The increase in auction marketplace cost of revenue is primarily due to increased units sold through our marketplace. Other marketplace cost of revenue increased to $135.3 million from $132.8 million due to a higher number of units adding other marketplace services to the auction transaction. The cost of generating data services revenue decreased to $21.6 million from $22.1 million. Marketplace and service cost of revenue as a percentage of revenue decreased during the year ended December 31, 2023 compared to the year ended December 31, 2022 as we continued to grow revenue and scale our business.

Current wording

The increase primarily consisted of higher costs related to generating auction marketplace and other marketplace cost of revenue. For the year ended December 31, 2024 compared to the year ended December 31, 2023, total cost attributed to generating auction marketplace revenue increased to $54.4 million from $35.8 million. The increase in auction marketplace cost of revenue is primarily due to increased units sold through our marketplace and costs associated with our acquired remarketing centers' delivery of auction marketplace revenue. Other marketplace cost of revenue increased to $173.0 million for the year ended December 31, 2024, compared to $135.3 million for the year ended December 31, 2023, primarily due to an increase in the units transported to buyers from sellers. Marketplace and service cost of revenue as a percentage of revenue decreased during the year ended December 31, 2024 compared to the year ended December 31, 2023 as we continued to grow revenue and scale our business.

Previous wording

The decrease primarily consisted of costs attributable to our Go Green and other assurance offerings and was primarily driven by lower costs to settle guarantees. For the year ended December 31, 2023, Go Green assurance cost of revenue decreased to $46.5 million from $47.0 million in the year ended December 31, 2022, and other assurance cost of revenue decreased to $5.2 million from $5.7 million. Customer assurance cost of revenue as a percentage of revenue decreased during the year ended December 31, 2023 compared to the year ended December 31, 2022 as we continued our efforts to effectively manage costs.

Current wording

The increase primarily consisted of costs attributable to our Go Green assurance offerings and was primarily driven by an increase in the number of arbitration claims, due to increased volume of completed auctions where the customer elected the Go Green offering, and an increase in arbitration cost per unit sold. For the year ended December 31, 2024, Go Green assurance cost of revenue increased to $50.9 million from $46.5 million in the year ended December 31, 2023. Other assurance cost of revenue increased to $5.3 million from $5.2 million during the year ended December 31, 2024 and the year ended December 31, 2023. Customer assurance cost of revenues as a percentage of revenue decreased during the year ended December 31, 2024 compared to the year ended December 31, 2023 as we continued to manage arbitration costs and grow revenue.

Previous wording

The increase primarily consisted of higher software and technology expenses and personnel-related costs. For the year ended December 31, 2023, personnel and related costs increased to $118.8 million from $117.7 million in the year ended December 31, 2022 as a result of increased headcount. Software and technology expenses increased to $15.2 million from $13.9 million in the year ended December 31, 2022 as a result of continued investment in our technology and infrastructure. Other expenses increased to $7.0 million from $4.9 million in the year ended December 31, 2023 compared to the year ended December 31, 2022. Operations and technology expense as a percentage of revenue decreased during the year ended December 31, 2023 compared to the year ended December 31, 2022 as we continued our efforts to effectively manage costs while investing in future growth.

Current wording

The increase primarily consisted of higher personnel expenses and related charges. For the year ended December 31, 2024 compared to the year ended December 31, 2023, personnel-related costs increased to $138.5 million from $118.8 million as a result of headcount increases and stock-based compensation in 2024. Software and technology expenses increased to $16.3 million from $15.2 million. Other expenses increased to $7.9 million from $7.0 million in the year ended December 31, 2024 compared to the year ended December 31, 2023. Operations and technology expense as a percentage of revenue decreased during the year ended December 31, 2024 compared to the year ended December 31, 2023 as we continued our efforts to effectively manage costs while growing revenue.

Previous wording

The increase primarily consisted of higher personnel-related costs. For the year ended December 31, 2023, personnel related costs increased to $138.7 million from $117.7 million in the year ended December 31, 2022, primarily as a result of headcount increases and increased stock-based compensation. Non-personnel expenses increased to $27.8 million in the year ended December 31, 2023 from $25.9 million in the year ended December 31, 2022. Selling, general, and administrative expense as a percentage of revenue remained consistent during the years ended December 31, 2023 and December 31, 2022 as we continue to invest in our business to support future growth.

Current wording

The increase primarily consisted of higher personnel-related costs. For the year ended December 31, 2024 compared to the year ended December 31, 2023, personnel-related costs increased to $178.6 million from $138.7 million, primarily as a result of headcount increases and increased stock-based compensation in 2024. Non-personnel expenses increased to $38.9 million in the year ended December 31, 2024 from $27.8 million in the year ended December 31, 2023 as a result of increased facilities costs associated with our acquired remarketing centers and increased investment to support our future growth. Selling, general, and administrative expenses as a percentage of revenue decreased during the year ended December 31, 2024 compared to the year ended December 31, 2023 as we continued our efforts to effectively manage costs while growing revenue.

Previous wording

The increase was primarily due to an increase of $6.5 million in amortization of internal-use software costs. The remaining year-over-year increase is due to $0.6 million of acquired intangible asset amortization and $0.9 million of depreciation. The increase in depreciation and amortization as a percentage of revenue is due to the placing of internal-use software projects into service and the subsequent recognition of amortization expense.

Current wording

The increase was primarily due to an increase of $11.4 million in amortization of internal-use software costs along with an increase of $6.2 million in amortization related to acquired intangible assets. The increase in depreciation and amortization as a percentage of revenue is primarily due to the placing of internal-use software projects into service and the subsequent recognition of amortization expense as well as increased amortization costs related to intangible assets from recent acquisitions.

Previous wording

The increase was primarily driven by an increase in borrowings and interest rates during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Current wording

The increase was primarily driven by an increase in borrowings and debt issuance fees during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Previous wording

Our effective tax rate was (0.7)% for the year ended December 31, 2023 and (0.1)% for the year ended December 31, 2022, respectively. The principal differences between the federal statutory rate and the effective tax rate are related to state income taxes, net of federal income tax benefit, foreign taxes and credits, executive compensation disallowance and the non-recognition of tax benefits for certain entities in a loss position for which a full valuation allowance has been recorded.

Current wording

Our effective tax rate was approximately (0.9)% and (0.7%) for the year ended December 31, 2024 and 2023, respectively. The principal differences between the federal statutory rate and the effective tax rate are related to state taxes, foreign taxes and credits and the non-recognition of tax benefits for certain entities in a loss position for which a full valuation allowance has been recorded.

Previous wording

We report our financial results in accordance with GAAP. However, management believes that Non-GAAP Net income (loss), a financial measure that is not presented in accordance with GAAP, provides investors with additional useful information to measure operating performance and current and future liquidity when taken together with our financial results presented in accordance with GAAP. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our organic, continuing operations.

Current wording

We report our financial results in accordance with GAAP. However, management believes that Non-GAAP Net income (loss), a financial measure that is not presented in accordance with GAAP, provides investors with additional useful information to measure operating performance and current and future liquidity when taken together with our financial results presented in accordance with GAAP. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our continuing operations.

Previous wording

In the calculation of Non-GAAP Net income (loss), we exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

Current wording

We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

Previous wording

We have financed operations since our inception primarily through our marketplace revenue and proceeds from sales of equity securities.

Current wording

We have financed operations since our inception primarily through our marketplace revenue, proceeds from sales of equity securities, and debt facilities.

Previous wording

As of December 31, 2023, our principal sources of liquidity were cash and cash equivalents totaling $182.6 million, and investments in marketable securities totaling $228.8 million. We believe that our existing cash and cash equivalents, marketable securities, and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months and for the long-term. Our future capital requirements over the long-term will depend on many factors, including volume of sales with existing customers, expansion of sales and marketing activities to acquire new customers, timing and extent of spending to support development efforts and introduction of new and enhanced services. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations and financial condition.

Current wording

As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents totaling $224.1 million, and investments in marketable securities totaling $46.0 million. We believe that our existing cash and cash equivalents, marketable securities, and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months and for the long-term. Our future capital requirements over the long-term will depend on many factors, including volume of sales with existing customers, expansion of sales and marketing activities to acquire new customers, timing and extent of spending to support development efforts and introduction of new and enhanced services. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations and financial condition.

Previous wording

As of December 31, 2023, our principal commitments primarily consist of long-term debt and leases for facilities. We have $3.2 million of lease obligations due within a year, and an additional $25.1 million of lease obligations due at various dates through 2038. Refer to Note 10. Leases, of our consolidated financial statements for more information.

Current wording

As of December 31, 2024, our principal commitments primarily consist of long-term debt and leases for facilities. We have $3.8 million of lease obligations due within a year, and an additional $37.3 million of lease obligations due at various dates through 2038. Refer to Note 10. Leases, of our consolidated financial statements.

Previous wording

We settle transactions among buyers and sellers using the marketplace, and as a result the value of the vehicles passes through our balance sheet. Because our receivables typically have been, on average, settled faster than our payables, our cash position at each balance sheet date has been bolstered by marketplace float. Changes in working capital vary from quarter-to-quarter as a result of GMV and the timing of collections and disbursements of funds related to auctions held near period end.

Current wording

We settle transactions among buyers and sellers using the marketplace, and as a result the value of the vehicles passes through our balance sheet. Because our receivables typically have been, on average, settled faster than our payables, our cash position at each balance sheet date has been bolstered by marketplace float. Changes in working capital vary from quarter-to-quarter as a result of GMV and the timing of collections and disbursements of funds related to auctions completed near period end.

Previous wording

We entered into a revolving credit facility with Credit Suisse AG, New York Branch, or the 2019 Revolver, in December 2019. On June 26, 2023, we entered into an agreement to extinguish the 2019 Revolver.

Current wording

We entered into a revolving credit facility with JP Morgan Chase Bank, N.A., or the 2021 Revolver, on August 24, 2021. On June 1, 2023, we entered into an Amendment on the 2021 Revolver which modified the rate at which interest payments are indexed from LIBOR to Secured Overnight Financing Rate ("SOFR"). On June 20, 2024, we entered into a Second Amendment on the 2021 Revolver, pursuant to which we, ACV Capital and ACV Capital Funding II LLC ("ACV Funding"), a wholly owned, bankruptcy-remote, special-purpose subsidiary of ACV Capital, were permitted to enter into the transactions contemplated by the Warehouse Facility. On October 7, 2024, we entered into Amendment No. 3 on the 2021 Revolver which allows us to make investments and other acquisitions (i) if Total Liquidity (as defined therein) immediately prior to the consummation of such investment or acquisition and after giving pro forma effect to such investment or acquisition is equal to or greater than $200.0 million, in an unlimited amount or (ii) if Total Liquidity immediately prior to the consummation of such investment or acquisition and after giving pro forma effect to such investment or acquisition is less than $200.0 million, in an amount not to exceed $25.0 million in the aggregate for any fiscal year of the Company.

Previous wording

The 2021 Revolver provides for a revolving line of credit in the aggregate principal amount of up to $160.0 million. The 2021 Revolver also includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time. The 2021 Revolver is guaranteed by substantially all of our material domestic subsidiaries and is secured by substantially all of our and such subsidiaries’ assets except for ACV Capital Receivables. The interest rate applicable to the 2021 Revolver is, at our option, either (a) SOFR (or a replacement rate established in accordance with the terms of the credit agreement for the 2021 Revolver) (subject to a 0.00% SOFR floor), plus a margin of 2.75% per annum plus an additional credit spread adjustment of 0.11% for daily and one-month terms, 0.26% for three-month terms and 0.43% for six-month terms or (b) the Alternate Base Rate plus a margin of 1.75% per annum. The Alternate Base Rate is the highest of (a) the Wall Street Journal prime rate, (b) the NYFRB rate plus 0.5% and (c)(i) 1.00% plus (ii) the adjusted SOFR rate for a one-month interest period. The 2021 Revolver has a maturity date of August 24, 2026. The 2021 Revolver contains customary covenants that limit our ability to enter into indebtedness, make distributions and make investments, among other restrictions. The 2021 Revolver also contains financial covenants that require us to maintain a minimum liquidity level and achieve specified trailing four quarter revenue targets.

Current wording

The 2021 Revolver provides for a revolving line of credit in the aggregate principal amount of up to $160.0 million. The 2021 Revolver also includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time. The 2021 Revolver is guaranteed by substantially all of our material domestic subsidiaries and is secured by substantially all of our and such subsidiaries’ assets except for ACV Capital receivables. The interest rate applicable to the 2021 Revolver is, at our option, either (a) SOFR (or a replacement rate established in accordance with the terms of the credit agreement for the 2021 Revolver) (subject to a 0.00% SOFR floor), plus a margin of 2.75% per annum plus an additional credit spread adjustment of 0.11% for daily and one-month terms, 0.26% for three-month terms and 0.43% for six-month terms or (b) the Alternate Base Rate plus a margin of 1.75% per annum. The Alternate Base Rate is the highest of (a) the Wall Street Journal prime rate, (b) the NYFRB rate plus 0.5% and (c)(i) 1.00% plus (ii) the adjusted SOFR rate for a one-month interest period. The 2021 Revolver has a maturity date of August 24, 2026. The 2021 Revolver contains customary covenants that limit our ability to enter into indebtedness, make distributions and make investments, among other restrictions. The 2021 Revolver also contains financial covenants that require us to maintain a minimum liquidity level and achieve specified trailing four quarter revenue targets. As of December 31, 2024, $56.5 million was drawn under the 2021 Revolver, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.3 million.

Previous wording

We were in compliance with all such applicable covenants as of December 31, 2023, and believe we are in compliance as of the date of this Annual Report on Form 10-K. As of December 31, 2023, $115.0 million was drawn under the 2021 Revolver, and there was an outstanding letter of credit issued under the 2021 Revolver in the amount of $2.1 million.

Current wording

We were in compliance with all such applicable covenants as of December 31, 2024, and believe we are in compliance as of the date of this Yearly Report on Form 10-K.

Previous wording

Our largest source of operating cash is cash collection from fees earned on our marketplace. Our primary uses of cash from operating activities are for personnel expenses, marketing expenses and overhead expenses. In the year ended December 31, 2023, net cash used in operating activities was $17.9 million. In the year ended December 31, 2022, net cash used in operating activities was $75.2 million. The decrease in net cash used in operating activities during the year ended December 31, 2023 relative to the year ended December 31, 2022 was primarily driven by a year-over-year decrease in net loss, an increase in non-cash activity, and a decrease in operating asset and liability cash outflow.

Current wording

Our largest source of operating cash is cash collection from fees earned on our marketplace. Our primary uses of cash from operating activities are for personnel expenses, sales and marketing expenses and overhead expenses.

Previous wording

In the years ended December 31, 2023, and 2022, net cash provided by financing activities was $30.6 million and $72.9 million, respectively. The decrease was primarily the result of lower net proceeds from long term debt, net of repayments of long term debt during the period, and an increase in payments of RSU tax withholdings in exchange for shares of common stock surrendered by RSU holders.

Current wording

The decrease during the year ended December 31, 2024 relative to the year ended December 31, 2023 was primarily the result of lower proceeds from long term debt, net of repayments of long term debt during the period.

Previous wording

On August 22, 2023, the Company completed its acquisition of all of the ownership interests of a business (“the August 2023 acquisition”) for estimated cash consideration of $16.6 million. The aggregate purchase price was preliminarily allocated to $5.9 million of goodwill, $14.2 million of intangible assets, and $3.6 million of net liabilities assumed. The purchase price allocations are subject to adjustments as they are finalized over the 12-month measurement period. Goodwill acquired in connection with this acquisition will be deductible for tax purposes in the United States and will be amortized on a straight-line basis over 15 years.

Current wording

We completed four business acquisitions during the year ended December 31, 2024. Purchase price allocations related to these acquisitions are subject to adjustments as they are finalized over the 12 month measurement period from the respective acquisition date. Goodwill acquired in connection with these acquisitions will be deductible for tax purposes in the United States and will be amortized on a straight-line basis over 15 years.

Previous wording

The volume of vehicles sold through our auctions generally fluctuates from quarter to quarter. This seasonality is caused by several factors, including holidays, weather, the seasonality of the retail market for used vehicles and the timing of federal tax returns, which affects the demand side of the auction industry. As a result, revenue and operating expenses related to volume will fluctuate accordingly on a quarterly basis. In the fourth quarter, we typically experience lower used vehicle auction volume as well as additional costs associated with the holidays. Seasonally depressed used vehicle auction volume typically continues during the winter months through the beginning part of the first quarter. Typical seasonality trends may not be observed in periods where other external factors more significantly impact the industry.

Current wording

The volume of vehicles sold through our auctions generally fluctuates from quarter to quarter. This seasonality is caused by several factors, including holidays, weather, the seasonality of the retail market for used vehicles and the timing of federal tax returns, which affects the demand side of the auction industry. As a result, revenue and operating expenses related to volume will fluctuate accordingly on a quarterly basis. In the fourth quarter, we typically experience lower used vehicle auction volume as well as additional costs associated with the holidays. Seasonally depressed used vehicle auction volume typically continues during the winter months through the beginning of the first quarter. Typical seasonality trends may not be observed in periods where other external factors more significantly impact the industry.

Previous wording

We generate auction and other marketplace revenue from contracts with customers. Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration that we expect to receive in exchange for those services. Determining whether performance obligations should be accounted for separately or combined may require significant judgment. For each performance obligation within a contract, we evaluate whether we act as the principal or as an agent. When we act as the principal, revenue is recognized in the gross amount of the consideration received from the customer recognized at the point in time the services are completed. When we act as the agent, revenue is recognized net of the consideration due to a third party at the point in time when the services are provided.

Current wording

We generate auction and other marketplace revenue from contracts with customers. Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration that we expect to receive in exchange for those services. Determining whether performance obligations should be accounted for separately or combined may require judgment. For each performance obligation within a contract, we evaluate whether we act as the principal or as an agent. When we act as the principal, revenue is recognized in the gross amount of the consideration received from the customer recognized at the point in time the services are completed. When we act as the agent, revenue is recognized net of the consideration due to a third party at the point in time when the services are provided.

Previous wording

For information on recently issued accounting pronouncements, refer to Note 1. Nature of Business and Summary of Significant Accounting Policiesin our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Current wording

For information on recently issued accounting pronouncements, refer to Note 1. Nature of Business and Summary of Significant Accounting Policies in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.