Liquidity Services (LQDT -4.87%), an online marketplace operator for surplus assets, reported its fiscal third quarter results on August 7, 2025. The quarter stood out with a record gross merchandise volume (GMV) of $413.0 million and substantial year-over-year growth in both revenue and earnings per share, handily beating analyst expectations on a non-GAAP basis. GAAP revenue reached $119.9 million, outpacing the consensus GAAP revenue forecast of $85.4 million, while non-GAAP EPS came in at $0.34 versus a $0.30 estimate, especially in the Retail Supply Chain Group (RSCG), and raised questions about the business mix quality. Overall, the results reflect robust operational execution and continued momentum, but management points to potential headwinds in the upcoming quarter, driven by seasonality and margin trends.
Metric | Q3 2025 | Q3 2025 Estimate | Q3 2024 | Y/Y Change |
---|---|---|---|---|
EPS (Non-GAAP) | $0.34 | $0.30 | $0.30 | 13.3% |
Revenue (GAAP) | $119.9 million | $85.38 million | $93.6 million | 28.1% |
Net Income (GAAP) | $7.4 million | $6.0 million | 23.3% | |
Non-GAAP Adjusted EBITDA | $17.0 million | $14.7 million | 15.6% | |
Gross Merchandise Volume (GMV) | $413.0 million | $380.4 million | 8.6% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.
Business Overview and Strategic Focus
Liquidity Services operates online marketplaces for surplus and returned goods from businesses, government entities, and commercial sellers. Its platforms allow clients to maximize recovery for items ranging from retail returns and overstock to heavy equipment and vehicles. The company's marketplaces include GovDeals for government assets, the Retail Supply Chain Group (RSCG) for consumer returns and excess inventory, the Commercial Assets Group (CAG) for industrial equipment, and Machinio for used machinery and software solutions.
In recent years, Liquidity Services has focused on increasing its network effects by growing its base of buyers and sellers, improving its technology platforms, and expanding its service offerings. The company positions itself as a facilitator of the circular economy, emphasizing sustainability and efficient asset recovery. Its success is closely tied to driving transaction volume, expanding consignment and purchase model programs, and maintaining healthy margins while managing competition and the evolving mix of business lines.
Quarterly Highlights and Segment Performance
The company exceeded expectations in both GAAP revenue and adjusted non-GAAP earnings, with strong results across its main operating segments. Record gross merchandise volume (GMV) of $413.0 million represented a 9% increase from the previous year, reflecting higher transaction volumes in both new and ongoing programs. Total GAAP revenue grew 28%, GAAP net income rose 23.3% to $7.4 million compared to the same quarter last year. Non-GAAP adjusted EBITDA also improved by 15.6% compared to the same quarter last year.
The RSCG segment, which handles retail returns and excess inventory, drove much of the top-line growth. Its GAAP revenue grew 39% from the prior-year period, supported by a greater volume of purchase-model programs with both new and existing retail clients. Segment GMV increased by 30%. The direct profit for RSCG, however, only rose by 11.6% compared to the same quarter last year, and its segment direct profit margin declined from 30% to 24%, a trend the company notes may continue into the next quarter.
The GovDeals marketplace—which connects government sellers with buyers of surplus vehicles and equipment—posted GMV of $252.3 million, up just 1%, and GAAP revenue growth of 8%. Activity was tempered by weaker vehicle pricing and lower take rates on real estate auction activity, though the segment continued to sign new sellers and expand its service reach.
The CAG segment, specializing in commercial and industrial equipment sales, saw GMV climb 12% with revenue up 6%. Machinio & Software Solutions grew revenue by 27% and direct profit by 22.6% compared to the same quarter last year, boosted by higher subscription activity and the integration of Auction Software. Across the business, registered buyers grew 9% to 5.9 million and completed transactions increased by 9%.
During the period, Liquidity Services continued to invest in technology and service offerings. The company enhanced its online tools with expanded AI capabilities for asset description, introduced new features for seller page customization, and improved mobile listing solutions. Notably, the AllSurplus Deals program—direct-to-consumer sales in RSCG—ramped up, supported by a local pick-up initiative in Columbus, Ohio. The Machinio segment also benefited from new cross-platform integrations stemming from recent acquisitions.
On the balance sheet, Liquidity Services finished the quarter with $167 million in cash and investments and remained debt-free, preserving flexibility for further investment or share repurchases.
Outlook and Investor Considerations
For Q4 FY2025, management provided guidance indicating expectations of a sequential step-down, reflecting normal seasonality and anticipated softness in RSCG profitability as the mix shifts to more purchase transactions with thinner margins. Expected GMV is in the range of $355 million to $390 million; GAAP net income is projected at $5.0 million to $8.0 million; and non-GAAP adjusted EBITDA is guided to $13.0 million to $16.0 million. GAAP diluted EPS should fall between $0.15 and $0.25, while non-GAAP adjusted EPS is forecast at $0.24 to $0.34.
Looking ahead, management expects solid double-digit annual growth for key performance metrics but also cautions about margin pressure, the impact of changing revenue mix in RSCG, and external risks such as tariffs and supply chain uncertainties. Network effects, continued service innovation, and growth in Machinio are all positive trends, yet the evolving mix between purchase and consignment programs could affect future profitability. Investors should monitor margin trends in RSCG and GMV performance, especially as macroeconomic conditions and industry factors potentially influence both near-term and longer-term results.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.