ACV Auctions Inc.

1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business – ACV Auctions Inc. (the "Company" or "ACV") operates inone industry segment, providing a wholesale auction marketplace to facilitate business-to-business used vehicle sales between a selling dealership (“Seller”) and a buying dealership (“Buyer”). The marketplace encompasses the digital marketplaces, remarketing centers, data services, and data and technology.

Customers using the marketplace are licensed automotive dealerships or other commercial automotive enterprises. At the election of the customer purchasing a vehicle, the Company can arrange third-party transportation services for the delivery of the purchased vehicle through its wholly owned subsidiary, ACV Transportation LLC ("ACV Transport"). The Company can also provide the customer financing for the purchased vehicle through its wholly owned subsidiary, ACV Capital LLC (“ACV Capital”). ACV also provides data services that offer insights into the condition and value of used vehicles for transactions both on and off the Company's marketplace, which help dealerships, their end customers, and commercial partners make more informed decisions to transact with confidence and efficiency. Customers using data services are licensed automotive dealerships or other commercial automotive enterprises. Services are primarily provided in the United States and certain data services are also provided internationally. Services are supported by the Company’s operations which are primarily in North America and India.

Basis of Consolidation – The condensed consolidated financial statements include the accounts of ACV Auctions Inc. and all of its controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Basis of Preparation – The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission ("SEC"). The Company has condensed or omitted certain information and notes normally included in complete annual financial statements prepared in accordance with GAAP. These financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company's financial information. The unaudited interim condensed consolidated financial statements should therefore be read in conjunction with the audited consolidated financial statements and accompanying notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 23, 2026 (the "Annual Report"). As of June 30, 2026, there have been no material changes in our significant accounting policies from those that were disclosed in the Annual Report on Form 10-K, unless otherwise discussed below. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Seasonality – The volume of vehicles sold through auctions held on ACV's marketplace platform 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 vehicle 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.

Recent Accounting Pronouncements –The following table provides a description of accounting standards that have been adopted and those accounting standards that have not yet been adopted that could have an impact to the consolidated financial statements upon adoption.

2. Fair Value Measurement

Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation of these assets or liabilities are as follows:

Level 1: Observable inputs such as quoted prices in active markets for identical assets and liabilities.

Level 2: Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data which require the Company to develop its own assumptions.

The Company’s financial instruments primarily consist of cash and cash equivalents, trade and finance accounts receivable and accounts payable. The carrying values of cash and cash equivalents, trade and finance accounts receivable, and accounts payable approximate fair value due to the short-term nature of those instruments. The carrying values of the

Company's revolving credit facility and revolving warehouse facility were determined to approximate their fair values due to their duration and variable interest rates that approximate prevailing interest rates as of each reporting period.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):

The Company classifies its highly liquid money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

3. Accounts Receivables & Allowance for Credit Losses

The Company maintains an allowance for credit losses that, in management’s judgment, reflects expected credit losses in the portfolio. A provision for credit losses is recorded to adjust the level of the allowance as deemed necessary by management.

Changes in the allowance for credit losses related to trade receivables for the three and six months ended June 30, 2026 and 2025 were as follows (in thousands):

Changes in the allowance for credit losses related to finance receivables for the three and six months ended June 30, 2026 and 2025 were as follows (in thousands):

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. During the quarter ending September 30, 2025, the Company recorded a provision for credit losses for the full amount of the floorplan finance receivables due from Tricolor. Tricolor accounted for $11.1 million and $18.7 million of the Company's finance receivable write-offs for the three and six months ended June 30, 2026, respectively.

4. Guarantees, Commitments and Contingencies

The Company provides certain guarantees to sellers in the marketplace in the ordinary course of business, which are accounted for under ASC 460, Guarantees as a general guarantee.

Vehicle Condition Guarantees – Sellers must attach a vehicle condition report in the marketplace for every auction; this vehicle condition report is used by Buyers to inform bid decisions. The Company offers guarantees to Sellers in qualifying situations where the Company performed a vehicle inspection and prepared the vehicle condition report. Sellers pay a fee in exchange for this guarantee. Such guarantees provide Sellers protection from paying remedies to Buyers related to a Buyer’s claim that the vehicle condition report did not accurately portray the condition of the vehicle purchased on the Marketplace. These guarantees provide the Company with the right to retain proceeds from the subsequent liquidation of vehicles covered under the guarantees. The guarantees are typically provided for 10 days after the successful sale of the vehicle on the Marketplace. 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. The maximum potential payment is the sale price of the vehicle. The total sale price of vehicles for which there was an outstanding guarantee was approximately $255.1 million and approximately $193.2 million at June 30, 2026 and December 31, 2025, respectively. The carrying amount of the liability included in Accrued other liabilities on the Condensed Consolidated Balance Sheets was $2.2 million and $2.1 million at June 30, 2026 and December 31, 2025, respectively.

Price Guarantees – The Company provides Sellers with a price guarantee for vehicles to be sold on the marketplace from time to time. If a vehicle sells below the guaranteed price, the Company is responsible for paying the Seller the difference between the guaranteed price and the final sale price. The term of the guarantee is typically less than one week. No material unsettled price guarantees existed at June 30, 2026 and December 31, 2025.

Litigation – The Company and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and matters in which claims for monetary damages are asserted. On an on-going basis, management, after consultation with legal counsel, assesses the Company's liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its condensed consolidated financial statements. To the extent pending or threatened litigation could result in exposure in excess of the recorded liability, the amount of such excess is not currently estimable.

5. Borrowings

There have been no material changes to the Company’s borrowing arrangements since those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025. Refer to Note 9 to the Company's consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for further details regarding our credit facilities and their key terms. As of June 30, 2026, the Company was in compliance with all of its financial covenants and non-financial covenants.

2021 Revolver

As of June 30, 2026 and December 31, 2025, outstanding borrowings under the Company's revolving credit facility (the "2021 Revolver") were $80.0 million and $70.0 million, respectively, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.1 million and $3.1 million, respectively, decreasing the availability under the 2021 Revolver by a corresponding amount. As of June 30, 2026, the interest rate on the outstanding borrowing was 6.47%.

Warehouse Facility

As of June 30, 2026 and December 31, 2025, borrowings under the Company's revolving warehouse facility (the "Warehouse Facility") were $125.0 million and $120.0 million, respectively. As of June 30, 2026, the interest rate on the outstanding borrowing was 6.59%.

6. Revenue

The following table summarizes the primary components of marketplace and service revenue. This level of disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors (in thousands):

Contract liabilities represent consideration collected prior to satisfying performance obligations. The Company had $7.3 million and $5.6 million of contract liabilities included in Accrued other liabilities on the Condensed Consolidated Balance Sheets at June 30, 2026 and December 31, 2025, respectively. Revenue recognized for the three months ended June 30, 2026 from amounts included in deferred revenue as of March 31, 2026, was $7.7 million. Revenue recognized for the six months ended June 30, 2026 from amounts included in deferred revenue as of December 31, 2025 was $5.6 million. All of the remaining performance obligations for contracts are expected to be recognized within one year.

7. Stock-Based Compensation

Refer to Note 13 to the Company's consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for further details regarding the Company's equity plans.

The following table summarizes the stock option activity for the six months ended June 30, 2026 (in thousands, except year and per share amounts):

The following table summarizes the RSU activity for the six months ended June 30, 2026 (in thousands, except per share amounts):

The compensation expense related to the unvested portion of restricted stock units was approximately $111.3 million at June 30, 2026. The unvested portion of compensation expense for restricted stock units is expected to be recognized over a weighted-average period of 2.3 years.

During the second quarter of 2026, the Company's Board of Directors approved long-term incentive awards to certain of the Company's executive officers comprised of performance share units (“PSUs”), which may only be settled in shares of the Company’s Common Stock. The PSUs are subject to both service-based vesting conditions and a requirement that the relative total shareholder return ("rTSR") of the Company's Common Stock, measured against the Russell 2000, achieve at least the 25 th percentile, at which point 50% of the award is earned, with a maximum earning potential of 200% if the 75 th percentile or above is achieved (the “rTSR Condition”). The rTSR Condition is measured over atwo-year performance period ending on December 31, 2027. The rTSR Condition earning potential is capped at 100% if the Company’s stock price is lower at the end of the performance period than at the beginning of such period. If the rTSR Condition is met at the end of the performance period,50% of the award will vest in the first quarter of 2028, with the remaining 50% of the award vesting in the first quarter of 2029. In each circumstance, vesting is subject to the executive’s continued service with the Company until the time of vesting.

8. Income Taxes

The Company had effective tax rates of approximately (7)% and 0% for the three months ended June 30, 2026 and 2025, and (6)% and (2)% for the six months ended June 30, 2026 and 2025, respectively. The principal differences between the federal statutory rate and the effective tax rates 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.

9. Net Loss Per Share

The numerators and denominators of the basic and diluted net loss per share computations for the Company's common stock are calculated as follows for the three and six months ended June 30, 2026 and 2025 (in thousands, except per share data):

The following table presents the total weighted-average number of potentially dilutive shares that were excluded from the computation of diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the period presented:

10. Segment Information

The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”) and is responsible for reviewing financial information presented on a segment basis for purposes of making operating decisions and assessing financial performance. The CEO reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating the Company’s financial performance. Accordingly, the Company has determined that it operates in a single reporting segment (the “ACV segment”).

The ACV segment provides the marketplace to facilitate business-to-business used vehicle sales between a seller and a buyer. Customers using the marketplace are licensed automotive dealerships or other commercial automotive enterprises. At the election of the customer purchasing a vehicle, the Company can arrange third-party transportation services for the delivery of the purchased vehicle through its wholly owned subsidiary, ACV Transportation LLC. The Company can also provide the customer with financing for the purchased vehicle through its wholly owned subsidiary, ACV Capital LLC. ACV also provides data services that offer insights into the condition and value of used vehicles for transactions both on and off the Company's Marketplace. The ACV segment provides a wholesale auction marketplace to dealers and derives its revenues primarily from North America. The CODM assesses performance for the ACV segment and decides how to allocate resources based on net income (loss) that also is reported on the consolidated statement of operations as consolidated net income (loss). The CODM uses net income (loss) in budget versus actual analysis to measure performance and as a key input to make resource investment and management compensation decisions.

The following is the information used by the CODM in assessing segment performance:

For the three and six months ended June 30, 2026 and 2025, revenue outside of the United States, based on the billing address of the customer, was not material. As of June 30, 2026 and December 31, 2025, long-lived assets located outside of the United States were not material.

11. Stockholders Equity

In May 2026, our Board of Directors authorized a share repurchase program authorizing up to $100.0 million in share repurchases (the “2026 Repurchase Program”). The 2026 Repurchase Program does not have an expiration date.

On May 12, 2026, the Company entered into an accelerated share repurchase agreement (the “ASR”) with Citibank, N.A. pursuant to which the Company paid $50.0 million and received an initial delivery of approximately $6.0 million shares of the Company’s common stock (the “Initial ASR Shares”), representing approximately 70% of the prepayment value based on the closing price at inception. The ASR was accounted for as two transactions: (1) a stock repurchase and (2) a forward contract classified as an equity instrument, with the delivery of the Initial ASR Shares immediately reducing weighted-average shares outstanding for both basic and diluted EPS. The Initial ASR Shares were retired upon delivery. The total number of shares to be repurchased by the Company pursuant to the ASR will be based on the volume-weighted average price of the Company’s common stock during the term of the ASR, less a discount, and subject to customary adjustments under the terms and conditions of the ASR agreement. Any incremental shares that may be delivered upon the final settlement of the ASR agreement will be reflected in basic and diluted shares outstanding at the time the shares are delivered. The transactions under the ASR agreement are expected to be completed no later than the fourth quarter of fiscal 2026.