ACV Auctions Inc.
For the period ended Dec 31, 2025. Filed Feb 23, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 23, 2026
ACVA$10.500.0%Stored close · as of Oct 15, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-19.
0001628280-25-006439
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-23.
0001637873-26-000011
Item 7. 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 158 previous paragraphs and 157 current paragraphs.
107 unchanged; 37 reworded; 12 added; 13 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 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 (12)
Current report
Recent Developments
Current report
Tricolor Bankruptcy
Current report
On September 10, 2025, Tricolor Holdings, LLC, and certain of its affiliates (collectively, "Tricolor"), filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code with the United States Bankruptcy court for the Northern District of Texas. Several factors differentiated Tricolor from other dealership customers that have finance receivables with ACV Capital. Tricolor's significant focus on the offering of credit to consumers, the scope and complexity of Tricolor's operations including multiple large credit facilities with major U.S. banks, and the emergence of allegations of significant fraud being investigated by Federal authorities are among the differentiating factors. Due to these factors, we do not believe that the Tricolor bankruptcy losses are indicative of our ongoing operating performance. Tricolor accounted for approximately $18.6 million of our finance receivables as of December 31, 2025. The bankruptcy will not have a material negative impact on our future revenues. We are participating as a creditor in the bankruptcy proceedings, seeking to maximize the recovery of our outstanding finance receivables. However, the ultimate outcome of these collection efforts is uncertain at this time. We have recorded a loss of $18.7 million related to this event in the "selling, general, and administrative expenses" line item of the Consolidated Statement of Operations for the year ended December 31, 2025.
Current report
Settlement of Class Action Lawsuit Against Data Services Vendors
Current report
On September 16, 2025, the Company entered into a class action settlement agreement with a data services vendor, pursuant to which the Company will receive $7.9 million in settlement payments. Of this total settlement, $7.6 million is included as a reduction in marketplace and service cost of revenue in the Consolidated Statements of Operations for the year ended December 31, 2025. Based on the payment terms provided in the settlement, $0.8 million is included in other current assets and $1.5 million is included in other assets in the Consolidated Balance Sheet at December 31, 2025.
Current report
The increase was primarily driven by the interest and fees related to the Warehouse facility which was entered into on June 20, 2024. The increase in interest expense on the Warehouse facility during the year ended December 31, 2025 was due to a higher average balance during 2025 compared to 2024.
Current report
On June 26, 2025, we entered into Amendment No. 4 (the “ Fourth Amendment”) to the 2021 Revolver which modifies the credit agreement (i) to increase the committed amount of the Company’s revolving credit facility thereunder from $160 million to $250 million, (ii) to extend the maturity date thereof from August 24, 2026 to June 26, 2030, (iii) to modify the Company’s minimum total revenue financial covenant to take into account such maturity date extension, (iv) to include a new maximum total net leverage ratio that will be effective as of the earlier of five business days after the Company’s election and July 30, 2027, as more particularly described in the Revolving Credit Agreement, as amended (the “Covenant Conversion Date”), after which the Company’s minimum liquidity and minimum total revenue financial covenants will no longer be applicable, (v) to provide for more favorable pricing of the loans on and after the Covenant Conversion Date, and (vi) to amend certain other items in connection with the foregoing. Borrowings under the 2021 Revolver will continue to bear interest, at the Company’s option, at either the Term SOFR Rate, subject to a 0.00% SOFR floor, or the Alternate Base Rate plus a margin equal to the Applicable Rate. Pursuant to the Fourth Amendment, the Applicable Rate is (x) 2.75% prior to the Covenant Conversion Date and 2.500% thereafter for loans accruing interest at the Term SOFR Rate and (y) 1.750% prior to the Covenant Conversion Date and 1.500% thereafter for loans accruing interest at the Alternate Base Rate, in each case, subject to the terms of the Credit Agreement.
Current report
From and after the Covenant Conversion Date, we will be subject to a maximum total net leverage ratio covenant of (i) 4.0 to 1.0 for any measurement period ending on or prior to the second fiscal quarter following June 30, 2027 and (ii) 3.5 to 1.0 thereafter.
Current report
On December 12, 2025, ACV Capital Funding II LLC entered into the first amendment to the Warehouse Facility which modifies such agreement (i) to increase the committed amount of ACV Capital II’s revolving credit facility thereunder from $125.0 million to $200.0 million, (ii) to extend the Scheduled Commitment Termination Date thereof from June 20, 2026 to December 10, 2027, and (iii) to make certain changes to the definitions of Concentration Limits, Eligible Dealers and Eligible Vehicles, as more particularly described in the agreement. In connection with the amendment, the Applicable Margin used in calculating the Interest Rate applicable to Loans has been reduced by 0.25% to 2.75%
Current report
As of December 31, 2025 borrowings under the Warehouse Facility were $120.0 million with an interest rate of 6.71%.
Current report
Critical Accounting Policies and Estimates
Removed paragraphs (13)
Previous report
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 report
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 report
Acquisitions
Previous report
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 report
On January 30, 2024, we completed the acquisition of all of the ownership interests of Alliance Auto Auctions for total cash consideration of $66.9 million and 639,976 common shares of the Company's Class A common stock. The fair value of the consideration shares of $8.6 million was determined based upon the closing market price of the Company's Class A common shares on January 30, 2024. The aggregate purchase price was allocated to $40.4 million of goodwill, $32.7 million of intangible assets, and $2.4 million of net assets assumed.
Previous report
On March 8, 2024, we completed the acquisition of all of the ownership interests of 166 Auto Auction for total cash consideration of $27.4 million. The aggregate purchase price was allocated to $7.4 million of goodwill, $16.3 million of intangible assets, and $3.6 million of net assets assumed.
Previous report
On March 13, 2024, we completed the acquisition of all of the ownership interests of a business (the "March 13, 2024 acquisition") for total cash consideration of $19.1 million. The aggregate purchase price was allocated to $14.2 million of goodwill, $5.7 million of intangible assets, and $0.8 million of net liabilities assumed.
Previous report
On June 17, 2024, we completed the acquisition of all of the ownership interest of Indiana Auto Auction for total cash consideration of $51.5 million. The aggregate purchase price was allocated to $16.2 million of goodwill, $13.9 million of intangibles, and $21.4 million of net assets assumed.
Previous report
Critical Accounting Estimates
Previous report
We have utilized the practical expedient available under ASC 606-10-50-14 and do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
Previous report
General Guarantees
Previous report
Internal-Use Software Costs
Previous report
We capitalize internal-use software costs during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. This software is amortized on a straight-line basis over its estimated useful life, generally three years. We evaluate the useful lives of these assets on an annual basis, or more frequently when warranted.
Reworded paragraphs (37)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10- K. This discussion, particularly information with respect to our financial condition or results of operations, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K. You should review the disclosure under the heading “Item 1A. Risk Factors” in this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements contained in the following discussion and analysis.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10- K. This discussion, particularly information with respect to our financial condition or results of operations, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K. You should review the disclosure under the heading “Item 1A. Risk Factors” in this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Previous 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:
Current 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:
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 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.
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 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.
Previous 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.
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, Marketplace 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
Our success depends in part on our ability to grow our share of wholesale transactions from existing customers, increasing their engagement and spend on our marketplace platform. We remain in the early stages of penetrating our Marketplace Buyers’ and Sellers’ total number of wholesale transactions. As we continue to invest in eliminating key risks of uncertainty related to the auction process through our trusted and efficient marketplace platform, we expect that we will capture an increasing share of transactions from our existing buyers and sellers. Our ability to increase share from existing customers will depend on a number of factors, including our customers’ satisfaction with our marketplace platform, competition, pricing and overall changes in our customers’ engagement levels.
Current wording
Our success depends in part on our ability to grow our share of wholesale transactions from existing customers, increasing their engagement and spend on our marketplace platform. We remain in the early stages of penetrating our Marketplace Buyers’ and Sellers’ total number of wholesale transactions. As we continue to invest in our trusted and efficient marketplace platform, we expect that we will capture an increasing share of transactions from our existing buyers and sellers. Our ability to increase share from existing customers will depend on a number of factors, including our customers’ satisfaction with our marketplace platform, competition, pricing and overall changes in our customers’ engagement levels.
Previous 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.
Current wording
•Deepen Relationships with Dealers and Commercial Partners. We have a team of VCIs that regularly interacts 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 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, ACV Capital, and ACV MAX will help grow our revenue. 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
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.
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 higher 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, which may be impacted by macroeconomic and geopolitical conditions, including the impact of changes in trade policies.
Previous wording
We also generate revenue by providing our Go Green assurance to sellers on the condition of certain vehicles sold on the marketplace, which is considered a guarantee under GAAP. This assurance option is only available for Go Green sellers on qualifying vehicles for which we have prepared the vehicle condition report. Customer assurance revenue also includes revenue from other price guarantee products offered to sellers. Customer assurance revenue is measured based upon the fair value of the guarantees that we provide. We expect the fair value per vehicle assured to decrease over time as we continue to improve the quality of our inspection product, which in turn reduces the costs of satisfying such assurance.
Current wording
We also generate revenue by providing our Go Green assurance to sellers on the condition of certain vehicles sold on the marketplace, which is considered a guarantee under GAAP. This assurance option is only available for Go Green sellers on qualifying vehicles for which we have prepared the vehicle condition report. Customer assurance revenue also includes revenue from other price guarantee products offered to sellers. Customer assurance revenue is measured based upon the fair value of the guarantees that we provide.
Previous wording
Other income (expense) consists primarily of interest income earned on our marketable securities and cash and cash equivalents. Other income (expense) also includes interest expense on our borrowings.
Current wording
Other income (expense) consists primarily of interest expense on our borrowings and interest earned on our marketable securities and cash and cash equivalents.
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. 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.
Current wording
The increase was primarily driven by an increase in auction marketplace revenue from our Marketplace Buyers and Marketplace Sellers, as well as increases in revenue earned from transportation and financing services. For the year ended December 31, 2025 compared to the year ended December 31, 2024, other marketplace revenue increased to $295.8 million from $236.7 million and auction marketplace revenue increased to $347.7 million from $303.0 million. Revenue increases in the current year were primarily volume-driven and also impacted by higher buyer fee rates for theyear ended December 31, 2025 compared to the prior year period. The volume of Marketplace Units sold on the marketplace platform increased to 829,276 for the year ended December 31, 2025 from 743,008 for the comparable prior year period which is an indicator of increased overall customer engagement. 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. The wholesale automotive industry continues to transition to digital transactions, with an increasing amount of cust omers transacting digitally versus at physical auction houses. This industry transition, and our position as a leader in the area of digital wholesale automotive auctions, continues to drive more business to our marketplace platform. The average total revenue per Marketplace Unit increased for the year ended December 31, 2025 compared to year ended December 31, 2024 due to the aforementioned higher buyer fee rates and customers adding more optional ancillary services to the auction such as transportation services and financing services which resulted in increases to both auction marketplace and other marketplace revenue. To a lesser extent, acquisitions completed in 2024 drove increases in revenue in 2025 compared to 2024.
Previous 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.
Current wording
The increase was primarily driven by an increase in Go Green assurance revenue, driven by increases in the estimated fair value of the Go Green offering per unit and an increase in units that elected the Go Green offering. For the year ended December 31, 2025 compared to the year ended December 31, 2024, Go Green assurance revenue increased to $71.1 million from $57.0 million. Other assurance revenue increased to $10.6 million for the year ended December 31, 2025 from $7.2 million for the year ended December 31, 2024 due primarily to a $4.1 million increase in revenue from our price guarantee sales caused by an increase in units sold through our price guarantee sales.
Previous 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.
Current wording
The increase primarily consisted of higher costs related to generating auction marketplace and other marketplace revenue, partially offset by a decrease in data services cost of revenue. For the year ended December 31, 2025 compared to the year ended December 31, 2024, total cost attributed to generating auction marketplace revenue increased to $68.3 million from $54.4 million. The increase in auction marketplace cost of revenue is due to increased units sold through our marketplace and to a lesser extent, other costs of revenue associated with our prior year acquisitions. Other marketplace cost of revenue increased to $206.9 million for the year ended December 31, 2025, compared to $173.0 million for the year ended December 31, 2024, primarily due to an increase in the units transported. This was partially offset by a $7.6 million legal settlement benefit recognized in 2025, which reduced data services cost of revenue by a corresponding amount. For the year ended December 31, 2025, Data services cost of revenue was $12.9 million compared to $20.8 million in the comparable prior year period. Marketplace and service cost of revenue as a percentage of revenue decreased during the year ended December 31, 2025 compared to the year ended December 31, 2024 due primarily to the benefit from the legal settlement.
Previous 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.
Current wording
The increase primarily consisted of costs attributable to our Go Green assurance offerings due to increased volume of completed auctions where the customer elected the Go Green offering, and an increase in the arbitration cost per unit sold. For the year ended December 31, 2025, Go Green assurance cost of revenue increased to $62.3 million from $50.9 million in the year ended December 31, 2024. For the year ended December 31, 2025, other assurance cost of revenue increased to $11.0 million from $5.3 million in the year ended December 31, 2024 due primarily to a $4.5 million increase in costs incurred on the Company's price guarantee sales due to an increase in the current year in units sold through our price guarantee sales compared to the prior period. Customer assurance cost of revenues as a percentage of revenue increased during the year ended December 31, 2025 compared to the year ended December 31, 2024 due to the aforementioned increases in arbitration claim volume and arbitration costs per unit sold.
Previous 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.
Current wording
The increase is primarily due to higher personnel-related costs. For the year ended December 31, 2025 compared to the year ended December 31, 2024, personnel-related costs increased to $150.5 million from $138.5 million as a result of headcount increases from our prior year acquisitions and investment in our internal product and technology capabilities to enable future growth initiatives. Software and technology expenses increased to $21.8 million from $16.3 million as a result of continued investment in our technology and infrastructure amid ongoing business growth. Other expenses increased to $10.4 million from $7.9 million in the year ended December 31, 2025 compared to the year ended December 31, 2024. Operations and technology expense as a percentage of revenue decreased during the year ended December 31, 2025 compared to the year ended December 31, 2024 as we continued our efforts to effectively manage costs while growing our revenue.
Previous 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.
Current wording
The increase primarily consisted of higher non-personnel costs . Non-personnel costs in the year ended December 31, 2025 compared to the year ended December 31, 2024 increased to $62.0 million from $38.9 million primarily due to the $18.7 million in Tricolor bankruptcy losses recorded in the year ended December 31, 2025 as described in the Recent Developments section above. Increased bad debt provision charges on our finance receivable portfolio unrelated to Tricolor during the year ended December 31, 2025 drove the remainder of the increase in non-personnel costs compared to the year ended December 31, 2024. For the year ended December 31, 2025 compared to the year ended December 31, 2024, personnel-related costs decreased to $173.0 million from $178.6 million, primarily as a result of lower stock-based compensation. Selling, general, and administrative expenses as a percentage of revenue decreased during the year ended December 31, 2025 compared to the year ended December 31, 2024 as we continued our efforts to effectively manage costs while growing our revenue.
Previous 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.
Current wording
The increase was primarily due to an increase of $7.7 million in amortization of internal-use software costs due to the placing of internal-use software projects into service and the subsequent recognition of amortization expense. Depreciation and amortization as a percentage of revenue remained flat during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Previous wording
The decrease was primarily driven by a lower balance in our marketable securities portfolio during the year ended December 31, 2024 compared to the year ended December 31, 2023. Marketable securities were sold during the year ended December 31, 2024 and the related proceeds were used to complete acquisitions.
Current wording
The decrease was primarily driven by a lower average balance in our marketable securities portfolio as we used the proceeds from sales and maturities of marketable securities to support acquisition activity in the prior year. In addition, a lower average interest rate during the year ended December 31, 2025 compared to the year ended December 31, 2024 combined with our sales of marketable securities during the fourth quarter of 2025 also contributed to the decrease.
Previous 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.
Current wording
Our effective tax rate was approximately (2.1)% and (0.9%) for the year ended December 31, 2025 and 2024, 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
Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not properly reflect capital commitments to be paid in the future; (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (iii) it does not consider the impact of stock-based compensation expense; (iv) it does not reflect other non-operating income and expenses, including interest income and expense; (v) it does not consider the impact of any contingent consideration liability valuation adjustments; (vi) it does not reflect tax payments that may represent a reduction in cash available to us; and (vii) it does not reflect other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net loss and other results stated in accordance with GAAP.
Current wording
Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not properly reflect capital commitments to be paid in the future; (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (iii) it does not consider the impact of stock-based compensation expense; (iv) it does not reflect other non-operating income and expenses, including interest income and expense; (v) it does not consider the impact of any contingent consideration liability valuation adjustments; (vi) it does not reflect tax payments that may represent a reduction in cash available to us; (vii) it does not include the amortization of acquired intangible assets but it does include the revenue that these acquired intangible assets contribute to the enterprise; and (viii) it does not reflect other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net loss and other results stated in accordance with GAAP.
Previous wording
Non-GAAP Net income (loss) is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not consider the impact of stock-based compensation expense; (ii) although amortization is a non-cash charge, the underlying assets may need to be replaced and Non-GAAP Net income (loss) does not reflect these capital expenditures; (iii) it does not consider the impact of any contingent consideration liability valuation adjustments; and (iv) it does not consider the impact of other one-time charges, such as acquisition-related and restructuring expenses, which could be material to the results of our operations. In addition, our use of Non-GAAP Net income (loss) may not be comparable to similarly titled measures of other companies because they may not calculate Non-GAAP Net income (loss) in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Non-GAAP Net income (loss) alongside other financial measures, including our net loss and other results stated in accordance with GAAP.
Current wording
Non-GAAP Net income (loss) is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not consider the impact of stock-based compensation expense; (ii) although amortization is a non-cash charge, the underlying assets may need to be replaced and Non-GAAP Net income (loss) does not reflect these capital expenditures; (iii) it does not consider the impact of any contingent consideration liability valuation adjustments; (iv) it does not include the amortization of acquired intangible assets but it does include the revenue that these acquired intangible assets contribute to the enterprise; and (v) it does not consider the impact of other one-time charges, such as acquisition-related and restructuring expenses, which could be material to the results of our operations. In addition, our use of Non-GAAP Net income (loss) may not be comparable to similarly titled measures of other companies because they may not calculate Non-GAAP Net income (loss) in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Non-GAAP Net income (loss) alongside other financial measures, including our net loss and other results stated in accordance with GAAP.
Previous 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.
Current wording
As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents totaling $271.5 million. We believe that our existing cash and cash equivalents 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, 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.
Current wording
As of December 31, 2025, our principal commitments primarily consist of long-term debt and leases for facilities. We have $5.2 million of lease obligations due within a year, and an additional $41.8 million of lease obligations due at various dates through 2039. 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 completed 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 Marketplace GMV and the timing of collections and disbursements of funds related to auctions completed near period end.
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. 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.
Current wording
On August 24, 2021, ACV entered into a revolving credit facility (the “2021 Revolver”). The Revolver was established to provide general financing to us and is secured by substantially all of our assets except for certain finance receivables. As of December 31, 2025, the maximum borrowing capacity under the Revolver is $250.0 million and includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time. Through June 26, 2025, the interest rate on the Revolver was, at our option, either (a) the Secured Overnight Financing Rate (“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 was defined as the highest of (a) the Wall Street Journal prime rate, (b) the NYFRB rate plus 0.5% and (c) 1.00% plus the adjusted SOFR rate for a one-month interest period.
Previous wording
On June 20, 2024, we entered into a revolving credit and security agreement with CitiBank, N.A., providing for a revolving warehouse facility (the "Warehouse Facility") with a maximum principal amount of $125.0 million. The revolving feature on the facility ends on June 20, 2026 and the facility matures twelve months later, unless sooner terminated or extended in accordance with its terms. The revolving credit facility was established to provide liquidity to fund new originations of auto floorplan loans by ACV Capital. The facility is secured by all assets of ACV Funding, including the auto floorplan loans owned by it.
Current wording
On June 20, 2024, ACV Capital Funding II LLC entered into the Warehouse Facility. As of December 31, 2025 the maximum borrowing capacity under the Warehouse Facility was $200.0 million. As amended, the revolving feature on the facility ends on December 10, 2027 and the facility matures twelve months later, unless sooner terminated or extended in accordance with its terms. The Warehouse Facility was established to provide liquidity to fund new originations of auto floorplan loans by ACV Capital. The facility is secured by all assets of ACV Capital Funding II LLC, including the auto floorplan loans owned by it.
Previous wording
Advances under the Warehouse Facility funded by asset-backed commercial paper conduit through the issuance of commercial paper notes will bear interest generally at a rate equivalent to the weighted average annual rate of all commercial paper notes issued by the commercial paper conduit to fund its advances, plus a margin of 3.00%. Advances funded by lenders that are not commercial paper conduits, or by commercial paper conduits funded through means other than the issuance of commercial paper notes, will bear interest generally at a rate equal to (i) Term SOFR for a period of one-month (subject to a 0.00% floor), plus 0.11448% or, in certain circumstances, the Alternate Base Rate, plus (ii) a margin of 3.00%. The Alternate Base Rate is the highest of (a) the prime rate quoted in the Wall Street Journal, (b) the NYFRB rate plus 0.50% and (c)(i) 1.00% plus (ii) the Term SOFR rate for a one-month interest period. The interest rate may be increased under certain circumstances, including upon the occurrence of an early amortization event or event of default under the warehouse documentation. ACV Funding must also pay upfront any unused fees in connection with the facility. As of December 31, 2024 borrowings under the Warehouse Facility were $66.5 million.
Current wording
Advances under the Warehouse Facility funded by asset-backed commercial paper conduit through the issuance of commercial paper notes will bear interest generally at a rate equivalent to the weighted average annual rate of all commercial paper notes issued by the commercial paper conduit to fund its advances, plus a margin of 2.75%. Advances funded by lenders that are not commercial paper conduits, or by commercial paper conduits funded through means other than the issuance of commercial paper notes, will bear interest generally at a rate equal to (i) Term SOFR for a period of one-month (subject to a 0.00% floor), plus 0.11448% or, in certain circumstances, the Alternate Base Rate, plus (ii) a margin of 2.75%. The Alternate Base Rate is the highest of (a) the prime rate quoted in the Wall Street Journal, (b) the NYFRB rate plus 0.50% and (c)(i) 1.00% plus (ii) the Term SOFR rate for a one-month interest period. The interest rate may be increased under certain circumstances, including upon the occurrence of an early amortization event or event of default under the warehouse documentation. ACV Capital Funding II LLC must also pay upfront any unused fees in connection with the facility.
Previous wording
In the years ended December 31, 2024, and 2023, net cash provided by (used in) operating activities was $65.4 million and $(17.9) million, respectively. Net cash provided by operating activities during the year ended December 31, 2024 consisted primarily of cash arising from the generation of revenue from customers, offset by normal operating expenses, an increase in accounts payable to sellers and a decrease in accounts receivable from buyers. In the year ended December 31, 2023 net cash used in operating activities consisted primarily of a decrease to accounts receivable from buyers offset by a decrease in accounts payable to sellers. The increase in cash provided by operating activities during the year ended December 31, 2024 relative to the year ended December 31, 2023 is primarily due to increased revenues and the timing of collections and disbursements of funds related to auctions completed near period end.
Current wording
In the years ended December 31, 2025 and 2024, net cash provided by operating activities was $78.2 million and $65.4 million, respectively. Net cash provided by operating activities during the year ended December 31, 2025 consisted primarily of cash earnings and an increase in accounts payable to sellers partially offset by an increase in accounts receivable from buyers. In the year ended December 31, 2024 net cash provided by operating activities consisted primarily of cash earnings, a decrease to accounts receivable from buyers and an increase in accounts payable to sellers. The increase in cash provided by operating activities during the year ended December 31, 2025 relative to the year ended December 31, 2024 is primarily due to increased revenues and the timing of collections and disbursements of funds related to auctions completed near period end.
Previous wording
In the years ended December 31, 2024, and 2023, net cash used in investing activities was $15.9 million and $111.0 million, respectively. Net cash used in investing activities during the year ended December 31, 2024 was primarily related to the acquisition of businesses, investments in capitalized software, and growth of the financing receivables portfolio, partially offset by net proceeds from the sale and maturity of certain marketable securities. Net cash used in investing activities during the year ended December 31, 2023 was primarily due to the growth of the financing receivables portfolio, investments in capitalized software and acquisitions of businesses.
Current wording
In the years ended December 31, 2025, and 2024, net cash used in investing activities was $74.1 million and $15.9 million, respectively. Net cash used in investing activities during the year ended December 31, 2025 was primarily related to the increase in finance receivables and capitalized software development, partially offset by net proceeds from the sale and maturities of the marketable securities portfolio. Net cash used in investing activities during the year ended December 31, 2024 was primarily related to the acquisition of businesses, investments in capitalized software, and growth of the financing receivables portfolio, partially offset by net proceeds from the sale and maturity of certain marketable securities.
Previous wording
The decrease in net cash used in investing activities during the year ended December 31, 2024 relative to the year ended December 31, 2023 was primarily driven by increased net proceeds from the sale and maturity of certain marketable securities, offset by increased spending on acquisitions of businesses.
Current wording
The increase in net cash used in investing activities during the year ended December 31, 2025 relative to the year ended December 31, 2024 was primarily driven by an increase in our financing receivables portfolio.
Previous wording
In the years ended December 31, 2024, and 2023, net cash provided by (used in) financing activities was $(7.9) million and $30.6 million, respectively. Net cash provided by (used in) financing activities during the year ended December 31, 2024 relates to payments of RSU tax withholding net of proceeds from other equity plan activity, offset by proceeds from long term debt, net of repayments of long term debt . Net cash provided by (used in) in financing activities during the year ended December 31, 2023 related to proceeds, net of repayments, on long term debt, partially offset by payments of RSU tax withholding net of proceeds from other equity plan activity.
Current wording
In the years ended December 31, 2025, and 2024, net cash provided by (used in) financing activities was $43.0 million and $(7.9) million, respectively. Net cash provided by financing activities during the year ended December 31, 2025 relates to proceeds, net of repayments, from long term debt partially offset by payments of RSU tax withholdings in exchange for common shares surrendered by RSU holders. Net cash used in financing activities during the year ended December 31, 2024 related to payments of RSU tax withholdings in exchange for common shares surrendered by RSU holders partially offset by proceeds, net of repayments, on long term debt and proceeds from the exercises of stock options.
Previous 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.
Current wording
The increase in net cash provided in financing activities during the year ended December 31, 2025 relative to the year ended December 31, 2024 was primarily the result of increased net borrowing of long term debt, partially offset by lower proceeds from stock option exercises.
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 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 first quarter. Typical seasonality trends may not be observed in periods where other external factors more significantly impact the industry.
Previous wording
We believe that the following accounting policies involve a high degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. See Note 1 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a description of our other significant accounting policies. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.
Current wording
We believe that the following accounting policies and estimates involve a high degree of judgment and complexity. Accordingly, these are the policies and estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. See Note 1 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a description of our other significant accounting policies. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.
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 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 the services are completed and 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
In contracts with multiple performance obligations, we allocate the transaction price to each distinct performance obligation proportionately based on the estimated stand-alone selling price, or SSP, of each performance obligation. We use an observable price to determine the SSP for each performance obligation. Where observable prices are not available, an expected cost-plus margin approach is used. We then determine how the services are transferred to the customer to determine the timing of revenue recognition.
Current wording
In contracts with multiple performance obligations, we allocate the transaction price to each distinct performance obligation proportionately based on the estimated stand-alone selling price ("SSP") of each performance obligation. We use an observable price to determine the SSP for each performance obligation. Where observable prices are not available, an expected cost-plus margin approach is used. We then determine how the services are transferred to the customer to determine the timing of revenue recognition.
Previous wording
Vehicle Condition Guarantees—We offer guarantees to sellers in qualifying situations where we performed a vehicle inspection and prepared the vehicle condition report. The guarantee provides us with the right to retain proceeds from the subsequent liquidation of the vehicle covered under the guarantee. The fair value of vehicle condition guarantees issued is estimated based on historical results and other qualitative factors. The vehicle condition guarantee revenue is recognized on the earlier of the guarantee expiration date or the guarantee settlement date.
Current wording
We provide certain guarantees to Sellers in the marketplace in the ordinary course of business, which are accounted for under ASC 460, Guarantees ("ASC 460") as a general guarantee. Included in our guarantees are vehicle condition guarantees whereby we offer guarantees to sellers in qualifying situations where we performed a vehicle inspection and prepared the vehicle condition report. In situations where the sale of covered vehicles is unwound due to circumstances covered by the guarantee, the guarantee provides us with the right to retain proceeds from the subsequent liquidation of the vehicle covered under the guarantee. The fair value of vehicle condition guarantees issued is estimated based on historical results and other qualitative factors. Vehicle condition guarantee revenue is recognized on the earlier of the guarantee expiration date or the guarantee settlement date.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
As of December 31, 2025, $70.0 million was drawn under the 2021 Revolver with an interest rate of 8.50%, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.1 million.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
We provide certain guarantees to Sellers in the marketplace in the ordinary course of business, which are accounted for under ASC 460, Guarantees, or ASC 460, as a general guarantee.