Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Wednesday, May 6, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — George G. Chamoun
  • Chief Financial Officer — William R. Zerella

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

  • Revenue -- $204 million, increasing 12% year over year, at the high end of guidance.
  • Adjusted EBITDA -- $17 million, up 23% year over year and above the high end of guidance.
  • Non-GAAP Net Income -- $7 million, matching the high end of guidance range.
  • Vehicles Sold -- 213,000, representing unit growth of 3% despite a 5% decline in the dealer wholesale market.
  • Market Share -- Gains accelerated through the quarter in the context of a mid-single-digit decline in dealer wholesale volumes.
  • Auction and Assurance Revenue -- 57% of total revenue, up 9% compared to a 28% rise the previous year; unit growth was 3% against a 19% prior-year increase.
  • Auction and Assurance ARPU -- $542, rising 6% year over year and 3% sequentially from Q4 2025.
  • Marketplace Services Revenue -- 39% of total revenue, increasing 19% year over year; includes significant ACV Auctions Inc. Transport and ACV Auctions Inc. Capital growth.
  • Transport Revenue -- Saw 18% year-over-year growth with over 120,000 transports delivered; margin remained in line with the company's midterm target in the low 20s despite higher diesel prices.
  • ACV Auctions Inc. Capital Revenue -- Expanded 30% year over year with strengthened portfolio risk management processes cited.
  • SaaS and Data Services Revenue -- 4% of total revenue; high single-digit ACV MAX revenue growth offset by declines in legacy inspection services.
  • No Reserve Sales -- Penetration more than doubled year over year, driving higher costs as a percentage of revenue but contributing to a 20% rise in EBITDA per unit.
  • Adjusted EBITDA Per Unit -- Increased by 20% year over year; certain regions have already met or exceeded the $230 per unit midterm target at scale.
  • OpEx as Percentage of Revenue -- Non-GAAP operating expenses (excluding cost of revenue) decreased by 300 basis points year over year.
  • OpEx Growth Outlook -- OpEx projected to rise approximately 8% in 2026, including $11 million in extra go-to-market spending, down from 12% growth in 2025.
  • Capital Structure -- Ended the quarter with $341 million in cash and equivalents (including $230 million of marketplace flow) and $200 million in debt.
  • Share Repurchase Program -- Board authorized up to $100 million in repurchases with an immediate $50 million accelerated share repurchase to launch shortly.
  • Second Quarter Guidance -- Revenue projected at $213-$217 million (10%-12% growth), with adjusted EBITDA between $18-$20 million (8%-9% margin).
  • Full-Year 2026 Guidance -- Revenue expected at $845-$855 million (11%-13% growth) and adjusted EBITDA at $73-$77 million (approximately 28% year-over-year growth).
  • Commercial Market Expansion -- Management cited engagement with over a dozen new commercial accounts, including rental car companies, fleet operators, and auto finance providers.
  • Viper Rollout -- About 18 devices deployed, approximately 75 in backlog, and plans to build 60-70 more this year; company expects to scale deployment in 2027.
  • AI-Driven Efficiency -- Inspection times for certain clean vehicles are now believed to be under 10 minutes, with an expectation that, once Viper is fully rolled out, all vehicles will take 10-15 minutes to inspect, down from an average of 30 minutes previously.
  • Dealer Partner Network -- Record number of buyers and sellers transacted, with a record number of new dealer visits in the period.

SUMMARY

Management reaffirmed full-year revenue and adjusted EBITDA guidance despite lowering the projected dealer wholesale market outlook to a mid-single-digit decline. The share repurchase program totaling up to $100 million was announced alongside strong liquidity. Efficiency gains were achieved both operationally and through AI-driven tools, including meaningful reductions in vehicle inspection times and increased developer productivity. Adoption of new commercial accounts advanced through contracts and pilot deployments, with first commercial rental partners going live and downstream repo business expected in the coming months. The Viper platform demonstrated strong feedback in its early rollout, with integration into dealer systems and customer relationship management platforms underway.

  • CFO William R. Zerella stated, Our conversion rate in March was 1 thousand bps above what it was for the entire quarter of Q4. This indicates a meaningful sequential improvement in marketplace conversion performance.
  • Growth was regionally uneven due to weather, with Texas and the Carolinas increasing 15% and Southern California 24% in units year over year, while the Northeast underperformed because of severe weather.
  • The revenue mix shift toward no reserve sales contributed to a 300 basis point increase in non-GAAP cost of revenue as a percentage of revenue, a result management characterized as accretive to adjusted EBITDA.
  • Adjusted EBITDA margin for 2026 is expected to rise by approximately 100 basis points compared to the prior year, supported by anticipated OpEx discipline even as key investments continue.
  • Commercial initiatives resulted in live deployments or pilot arrangements with two of the top four national rental car companies and regional rollouts with major fleet operators.
  • Management described Viper as a lever for future consumer vehicle acquisitions and aftersales upsell opportunities by providing predictive analytics and streamlined data delivery directly into dealer CRMs.
  • The company does not anticipate major ongoing increases in inspector headcount following this year’s 100-person field expansion, viewing the current hiring cycle as a one-time scaling effort.
  • Annual price increases remain in place to cover inflation, with ARPU targeted to grow in line with full-year performance observed to date.
  • Management indicated that further share gains and unit growth are embedded in targets, but absolute unit guidance is not provided.

INDUSTRY GLOSSARY

  • ARPU: Average Revenue Per Unit—revenue generated per vehicle sold or transacted within the company’s marketplace or product line.
  • ASR: Accelerated Share Repurchase—a corporate action in which a company buys back its shares quickly via an upfront transaction with an intermediary, reducing shares outstanding.
  • VCI: Vehicle Condition Inspector—field staff responsible for evaluating and reporting on used vehicle conditions for auction, arbitration, and commercial services.
  • No Reserve Auction: An auction format where vehicles are sold without a minimum price, guaranteeing sale and increasing conversion rates but at the potential cost of price variability.
  • Greenfield: A new physical site or marketplace built from the ground up, used here to describe new auction locations or operational hubs.
  • TAM: Total Addressable Market—the entire revenue opportunity available for the company within its core segments or adjacent markets.
  • DMS: Dealer Management System—software used by auto dealerships to manage sales, inventory, and customer relationships, referenced for Viper integrations.

Full Conference Call Transcript

George G. Chamoun: Thanks, Timothy. Good afternoon, everyone, and thank you for joining us. We are very pleased with our first quarter performance and execution while facing a challenging market environment. We delivered record revenue, with adjusted EBITDA exceeding the high end of guidance. In addition to strong financial results, we made significant progress on our three key objectives. First, we continue to gain market share and expand our dealer partner network to a new record. The combination of expanding our field capacity and penetration of our no reserve offering contributed to our growth. Second, we had another strong quarter of performance in ACV Auctions Inc. Transport and ACV Auctions Inc. Capital, along with growing adoption of our value-added dealer solutions.

And third, we are gaining traction with our emerging growth initiatives, including the initial launch of Viper and expanding our TAM into commercial wholesale. While there are cross currents in the broader macro environment, ACV Auctions Inc. remains focused on delivering double-digit revenue growth and increased adjusted EBITDA, while continuing to invest in our exciting growth objectives. We are confident that executing on this profitable growth strategy will create significant long-term shareholder value. With that, let us turn to a recap of our results on Slide 4. The dealer wholesale market was impacted by severe weather during the quarter, resulting in a mid-single-digit decline in dealer wholesale volumes.

Despite these headwinds, Q1 revenue was $204 million and grew 12% year over year. Even with weather impacts, our market share gains accelerated throughout the quarter, selling 213 thousand vehicles, exceeding a difficult comparison in Q1 2025. Next on Slide 5. Today's discussion will focus on the pillars of our strategy to maximize long-term shareholder value, delivering innovation that is driving growth and scale. I will begin with growth. On Slide 7, I will highlight our growth initiatives in dealer wholesale. As we discussed last quarter, we continue to drive strong growth within more established regions where network effects are driving significant market share.

In order to broaden our regional growth performance, we are investing in additional field capacity to accelerate the number and frequency of dealer visits. We are pleased to see early returns on this investment, which resulted in another record number of buyers and sellers transacting in our marketplace. We also continue to enhance our marketplace experience to drive growth and deliver value to our dealer and commercial partners. We are leveraging machine learning that combines inspection data and dynamic market data to provide real-time pricing. Our platform powers ACV Auctions Inc. guarantees to sellers and delivers no reserve auctions to buyers. This offering remains the fastest-growing channel in our marketplace that benefits sellers, buyers, and ACV Auctions Inc.

We are removing seller market risk, accelerating better engagement, and increasing buyer satisfaction while delivering a 100% conversion rate. We are confident our guarantee offering will continue to be a key driver of market share gains. Turning to Slide 8, let us review our marketplace service offerings. The Transport team had strong execution in Q1, with 18% revenue growth and over 120 thousand transports delivered. By leveraging AI to optimize transport pricing, we continue to drive growth and operating efficiency. And despite the sharp increase in diesel fuel during the quarter, transport revenue margin remained in line with our midterm target in the low 20s.

Lastly, on transport, our off-platform service continues to gain traction from our dealer partners, creating additional growth opportunities. ACV Auctions Inc. Capital also delivered strong revenue performance with 30% year-over-year growth in Q1. Last quarter, we highlighted ACV Auctions Inc. Capital's expanded go-to-market strategy while also driving process enhancements to manage portfolio risk. Our Q1 results demonstrate continued strong execution by the ACV Auctions Inc. Capital team. On Slide 9, we highlight how we are further differentiating ACV Auctions Inc. and creating additional growth opportunities with our suite of AI-driven next-gen products. ClearCar and ACV MAX are adding value to our dealer partners while also contributing to our wholesale market share gain.

We are enabling our dealer partners to more intelligently optimize inventory, automate vehicle selling and buying, and strengthen their ability to source more vehicles from consumers. The Viper early access program is gaining momentum and receiving very positive feedback from major dealer groups across the country. Within minutes of driving through Viper, our industry-leading inspection data and vehicle pricing capabilities enable dealers to unlock consumer vehicle acquisition at scale in the service lane and seamlessly identify service upsell opportunities. We are on track to grow Viper's footprint in the coming quarters, offering a Viper bundle with wholesale to create a powerful new lever to drive unit growth and expand our network.

In addition to leveraging AI across our product suite, we have experienced strong adoption of AI tools across a range of operating groups, including our product and development team, where we are gaining meaningful velocity and efficiency. As such, we have even more confidence in delivering our differentiated product roadmap to support our growth objectives. Next on Slide 10, I will wrap up the growth section with our commercial wholesale strategy. As a reminder, commercial wholesale is a large adjacent market made up of four segments, with both upstream and downstream opportunities.

Our team has made significant progress on the next phase of our software build, and we believe this new digital model and end-to-end experience will transform commercial vehicle remarketing. Our differentiated offering is attracting some of the largest commercial consignors, and we have recently engaged with over a dozen accounts across major captives, banks, fleet companies, and auto finance providers. Our strategy is familiar: first land commercial accounts and then expand over time, earning wallet share as we prove our results. Commercial TAM provides another exciting growth lever for ACV Auctions Inc., and we are confident that we can deliver wholesale volumes that support our midterm financial targets.

With that, I will hand over to William and take you through our financial results and how we are driving growth at scale.

William R. Zerella: Thanks, George, and thank you for joining us today. ACV Auctions Inc.'s first quarter results reinforce our commitment to deliver profitable growth while investing to drive dealer wholesale market share gains and to support key growth initiatives. Before we jump into the details, I would like to highlight that as we scale our growth initiatives, our financial model will evolve based on revenue mix, which we believe will allow us to deliver improved unit economics over time than previously anticipated. On Slide 12, let us begin with a brief recap of our first quarter results. Revenue of $204 million was at the high end of guidance and grew 12% year over year compared to very strong results in Q1 2025.

Adjusted EBITDA of $17 million exceeded the high end of guidance and grew 23% year on year, reflecting strong unit economics and expense discipline. Finally, non-GAAP net income of $7 million was at the high end of our guidance range. Next on Slide 13, let us review additional revenue details. Auction and assurance revenue was 57% of total revenue and grew 9% year over year against a tough comparison of 28% growth in Q1 2025. This performance reflects 3% unit growth in the context of a 5% decline in the dealer wholesale market while also facing a tough comparison of 19% unit growth in Q1 2025.

Auction and assurance ARPU of $542 grew 6% year over year and 3% quarter over quarter. Marketplace services revenue was 39% of total revenue and grew 19% year over year, reflecting continued strong performance for ACV Auctions Inc. Transport and ACV Auctions Inc. Capital. Lastly, our SaaS and data services products comprised 4% of total revenue, with growth declining modestly year over year as high single-digit ACV MAX revenue growth was offset by modest declines in our legacy standalone inspection services. Next, I will review Q1 costs on Slide 14. Non-GAAP cost of revenue as a percentage of revenue increased approximately 300 basis points year over year.

The increase was primarily driven by a higher mix of no reserve sales in our marketplace, which more than doubled year over year. While no reserve sales typically have modestly higher costs than standalone auction sales, they drive strong blended conversion rates, improved marketplace liquidity, and importantly, are accretive to adjusted EBITDA. In fact, adjusted EBITDA per unit increased 20% year over year in Q1. Non-GAAP operating expense excluding cost of revenue, as a percentage of revenue, decreased approximately 300 basis points year over year, reflecting operating leverage in our model while continuing to invest in key growth initiatives. Moving to Slide 15, I will frame our investment strategy as we drive profitable growth.

In 2026, we expect OpEx growth of approximately 8%, which is a decline from 12% in 2025. As a reminder, our 2026 OpEx includes approximately $11 million in additional go-to-market spending to support regional growth objectives. Even with these growth investments, adjusted EBITDA margin is expected to increase by approximately 100 basis points year over year. Next, I will highlight our strong capital structure on Slide 16. We ended Q1 with $341 million in cash and cash equivalents, and $200 million of debt. Note that our cash balance includes $230 million of marketplace flow. In the figure on the right, we highlight our solid operating cash flow, which reflects adjusted EBITDA growth and margin expansion.

We are also pleased to announce today that ACV Auctions Inc.'s board of directors has authorized a share repurchase program of up to $100 million, and in the coming days, the company plans to enter into an accelerated share repurchase program to repurchase an aggregate of $50 million of our common stock. Turning to guidance on Slide 17, we are reaffirming our 2026 revenue and adjusted EBITDA guidance despite the uncertain macroeconomic backdrop and our updated view that the dealer wholesale market will decline in the mid-single digits this year. Now for the details. Second quarter revenue is expected to be $213 to $217 million, growth of 10% to 12%.

Adjusted EBITDA is expected to be $18 to $20 million, reflecting an 8% to 9% margin. We continue to expect 2026 revenue of $845 to $855 million, growth of 11% to 13%. Note that full-year revenue guidance assumes that our go-to-market investments are expected to drive modestly higher growth in the second half of the year. We continue to expect 2026 adjusted EBITDA to be $73 to $77 million, growth of approximately 28% year over year. We are expecting 2026 cost of revenue as a percentage of revenue to be modestly higher than in 2025. Lastly, we are expecting non-GAAP OpEx excluding cost of revenue to grow approximately 8% year over year.

And with that, let me turn it back to George.

George G. Chamoun: Thanks, William. Before we take your questions, I will summarize. We are pleased with our Q1 execution while navigating through challenging market conditions. We continue addressing these market challenges by enhancing our technology and operating models, ultimately making us even more resilient. We are attracting new dealer and commercial partners for our marketplace and expanding our addressable market, which positions ACV Auctions Inc. for attractive growth as market conditions improve. We are delivering on an exciting product roadmap powered by ACV Auctions Inc. AI to further differentiate ACV Auctions Inc. and drive operating efficiencies. We are focused on achieving strong adjusted EBITDA growth and delivering on our midterm targets that we believe will drive significant shareholder value.

We are committed to achieving these results while building a world-class team to deliver on our goals. With that, I will turn the call over to the operator to begin the Q&A.

Operator: We will now open the call for questions. Our first question comes from Bob Labick from CJS Securities. Your line is now live.

Bob Labick: Hi, good afternoon. Thank you for taking our questions. Part of your growth strategy you have talked about is filling out your territory managers and VCIs, which you restarted in Q4 last year. Can you talk about your progress in finding and hiring good candidates? We noticed that both operations and technology and SG&A grew less than sales in the quarter, and we were kind of expecting those lines, depending on where those hires fall, to pick up a little bit. How is that progress going, and what are you learning?

George G. Chamoun: Certainly. I will start and then William will chime in. We are making great progress. We have hired some exceptional teammates. I joined several of the new territory manager classes we bring here to headquarters. I am really happy with the talent. The talent comes not only from an auction background, but also from knowing dealer systems—either former general managers, used car managers—just really strong talent. From an inspector side, we have really stepped up our game where you have to go through several tests to become an ACV Auctions Inc. inspector. We really go through this gating process.

So we are getting great talent that is going to help us not only inspect cars, but also hit our other goals as it relates to making sure arbitration and everything else is in line. We have done a great job of hiring and training so far. William, if you want to chime in.

William R. Zerella: Yes. All I would add, Bob, is you are also seeing the benefit of some operating efficiencies, which flow through our operations costs. We are continuing to add, to George's point, VCIs. We are also making sure that we have the right inspectors in the right territories to ensure that we have the best quality out there in terms of our condition report. I would say we are making good progress and are pretty happy with how things are moving ahead.

Bob Labick: Great, thanks. And then, you talked about the overall market being down in the single digits in the first quarter and a similar outlook for the year. How does this impact your go-to-market strategy and your growth in finding new rooftops versus growing share at existing dealers? It is a tough market—does that change how you drive growth?

George G. Chamoun: Certainly, Bob. One data point is we had the most dealer visits between our territory managers and VCIs—number of different rooftops—last month than we have ever had as a company. If there are fewer cars available at certain rooftops, we need to go find another dealership down the road to do business. Not only did we have record-breaking sellers and buyers, but we also had a record number of new visits. We are really getting out there and getting the ACV Auctions Inc. name out there—that is blocking and tackling. Second is what you hear us doing with innovation and ACV Auctions Inc. AI.

Bringing out our products from ClearCar to Viper, you will start to hear more and more in the media about our progress. If we help dealers buy anywhere between 10 and 100 cars a month from their service drive and from local consumers, then we are not just a competitor to the local auction; we are an incredible partner to that dealership. So we are both growing—blocking and tackling by showing up more, and leading with ACV Auctions Inc. AI.

Operator: Thank you. The next question comes from Rajat Gupta from JPMorgan. Your line is now live.

Rajat Gupta: Great, thanks for taking the question. I had a question on the first quarter growth rate. It looks like industry conversion trends were pretty strong in March, a little better than seasonal given strong expectations around tax season. In the past, when we have had these brief periods of very strong conversion, you have tended to demonstrate higher share gains. It felt like your numbers came in line with what you had guided. Was there something that was coming in the way of those typical share gains you would see in strong conversion periods? And I have a quick follow-up.

George G. Chamoun: Rajat, as we mentioned on the call, it did not help that the Northeast, where we have our largest markets, had the most significant weather impact. Other parts of the country, like Texas and the Carolinas, grew 15% year over year, and Southern California grew 24% year over year. We had different results across the country depending on where weather was impacted. Our team in the Northeast still did a fantastic job, but they were impacted the most. With that said, you are seeing great execution and our opportunity to differentiate, as I mentioned earlier. We really weathered a quarter where weather was an issue and still not only hit our numbers but exceeded some expectations.

William R. Zerella: I would also add, Rajat, since you asked about March. Our conversion rate in March was 1 thousand bps above what it was for the entire quarter of Q4. We did see a significant improvement in conversion rates. If you do the simple math on our growth in March versus what the market did, we basically got back to roughly a 10% share gain when you do that same math. It is not an exact science, of course, but we did see some acceleration going into March and ending the quarter.

Rajat Gupta: Understood, that is helpful color. And the fact that you reiterated your full-year outlook despite lowering the industry outlook—where are you seeing the additional traction? Is it from commercial engagements, or how the exit rate is turning out on conversion? Can you unpack that?

George G. Chamoun: Certainly. We feel very comfortable with keeping our objectives for the year, even though the market itself is likely several hundred basis points worse than we were expecting. Why do I feel comfortable? One, growing the footprint of our field is working. Two, our differentiated offering on ACV Auctions Inc. AI broadly with Viper and ClearCar is working. Three, our commercial focus—the fact that we have over a dozen different major commercial accounts who have raised their hands to work with ACV Auctions Inc., whether upstream, pure digital, or downstream at one of our greenfields—gives us confidence. We feel good about this year even though market conditions are likely going to be a little worse than we originally projected.

Operator: Thank you. The next question comes from Andrew Boone from Citizens. Your line is now live.

Andrew Boone: Thank you for taking the questions. I would love to hear more about the Viper rollout. How are conversations with dealers going, and what should our expectations be for 2026?

George G. Chamoun: Certainly. The hardware, software, and AI capabilities all came together over the last few months. At ACV Auctions Inc. and at the majority of our initial rollout dealers, the response has been ecstatic. You will see one of these on a podcast next week with a large dealer group, where they will articulate how this is helping them in the service drive. The opportunity right now is that the hardware works, the software works, and the AI works. We can see a scratch, a dent, tire tread depths, whether there is an oil leak, whether the undercarriage has an issue—our AI can see what it needs to see. The next step is to upscale this.

This year will not be the scale year; we are rolling out about 150 of these between now and year-end. We do not want to get over our skis—make sure we can deliver, install, and support them—so we can enter early next year scaling Viper production and proving out the whole thing. We are also doing integrations with the back-end systems in dealership service lanes—companies like Tekion and others—so the data from Viper seamlessly goes right into the back-end systems. This year is about getting ready to really scale for next year. The most important thing, from an investor perspective, is the product works and the feedback is incredible.

Andrew Boone: Great. And on AI efficiency—both for inspectors in the field and internally—are you seeing a step function change?

George G. Chamoun: Yes. For inspectors, we are looking at time to inspect both pre- and post-having Viper live. Pre-Viper, we have driven meaningful reductions. For certain types of cleaner vehicles, we believe we are under 10 minutes now; for the worst vehicles, we are under 15 minutes, whereas all vehicles averaged about 30 minutes prior. We have two buckets now that are about half the time they used to be, and we have some work to do in the middle. Once Viper rolls out, we expect inspectors will spend 10 to 15 minutes per car—any car—which will be massively efficient. Internally, the amount of production we are seeing from our engineering and product team leveraging cloud platforms and LLM tooling is incredible.

Many team leads are pulling Q4 priorities into Q3. The amount of code and development on a per-person basis is supercharged. This is just getting started.

William R. Zerella: I would also add that we just signed a major enterprise agreement with one of the largest providers of LLMs. The approach will extend beyond engineering to other operational activities. We are in the early days, but we think there is huge opportunity.

Operator: Thank you. The next question comes from Naved Khan from B. Riley Securities. Your line is now live.

Naved Khan: Thank you. A couple of questions. First, I think you lowered your outlook for the industry to negative 5% for the full year, and you are reiterating your own guidance. What kind of unit growth are you embedding in that—are you still thinking about high single-digit unit volume growth? And related, we have heard commentary from others about off-lease volume coming back. Even with those factors, how do you still think about the negative 5%? Second, on pricing—are you contemplating any price increases or have you already rolled one out, and what are you seeing from competitors?

George G. Chamoun: I will start and then William can chime in. On the outlook, it is better to be prudent given the macro conditions. Many of you have heard from franchise dealerships about retail as well as from OEMs. The trade-in at the dealership creates the majority of the wholesale. As off-lease comes back, that could mitigate some of the dealer wholesale challenges. I would not bank on it yet. We are assuming the year stays the way it is now with broader macro challenges. We hope off-lease helps, but we are not planning for it. As it relates to price increases, we do minor price increases every year to take care of inflation and other costs.

That is always part of what we do. William?

William R. Zerella: In Q1, our ARPU grew 6% year on year, and that is a reasonable expectation for the full year—up in a similar fashion on a percentage basis. On unit growth, we do not guide to units. What we bake into guidance is an assumption that over time we will improve our share gains and unit growth versus whatever the market is doing. Hopefully that gives you some sense for modeling.

Operator: Thank you. The next question comes from John Healy from Northcoast Research. Your line is now live.

John Healy: Thanks for taking my questions. George, on the opportunity with commercial consignors—you mentioned “over a dozen” a couple of times. What is the line of sight to activity with those folks? Could we see activity before the end of the year, or is this more of a 2027 story? And what would be an acceptable batting average for capturing some of that business?

George G. Chamoun: Certainly. Separating upstream versus downstream: upstream is pure digital where you do not need land. We have already gone live with one of the top four national rental car companies, and we are going live with our second rental car company either later this quarter or early Q3. Of the four large rental companies, working with two shows we are making progress. We have two of the larger fleet companies who have done small tests with us, which have gone extremely well, with results as good or better than physical auctions. We are going from test to certain regional deployments with them—land and expand: get the contract, start with regional business, prove results, and then expand.

Downstream, we have two auto finance retail repo-type customers—one should go live in the next 30 to 60 days. They will start giving us 20 to 50 cars a week, we will ground the vehicles, do light recon—like putting in a battery—show it works, and start scaling. This year is about getting contracts, showing it works in at least one region, and then taking additional regions across the country.

John Healy: That is really helpful, thank you. And a follow-up for William: I think you said March implied something like a 10% growth rate—can you clarify that?

William R. Zerella: Sure. What I was implying was growth versus the market. In Q1 the market was declining. When we looked at our absolute unit growth in March versus what we understood the market did, we get closer to share gains in the 10% range, give or take. It is not exact, and I am not implying our absolute growth was 10%. The context is our growth vis-à-vis whatever the market is doing.

Operator: Thank you. The next question comes from Analyst from Barclays. Your line is now live.

Analyst: Good evening. A quick follow-up on the commercial side. You talked about traction with rental car companies and on the fleet side. Are you making traction with captive fincos and banks as well, or is it too early?

George G. Chamoun: On fleet, yes, as mentioned. On off-lease cars, we have a couple of OEMs where we are in significant conversations about giving us a window to sell some of their cars. I do not have those signed yet, which is why I did not broadcast it—I usually talk about things once signed and ready to deploy. We have another major OEM-type partner where we are now integrated into their flow, but we are not yet auctioning cars. We expect to win some captive business throughout the year. On banks and repos, we are already doing business with probably around 30% of banks today—likely more—through relationships we inherited from an acquisition.

Now it is about scaling those relationships to additional locations like Houston or Chicago.

Analyst: Thank you. And on the share repurchase, it is not a small amount. Can you talk about the decision to do shareholder returns now versus investing more in the business?

William R. Zerella: We felt this was a reasonable size for a buyback and a good ROI for shareholders based on our view of future opportunities, which we discussed today and previously. Given our liquidity—we had $341 million of cash and marketable securities on the balance sheet—we are leaning in with a $50 million ASR. We think it is a good use of capital. We still expect to generate free cash flow this year and expect that to grow over time. It is the right time and place to launch a buyback.

Operator: Thank you. The next question comes from Jeffrey Lick from Stephens. Your line is now live.

Jeffrey Lick: Afternoon, thanks for taking my question. Could you expand on commercial—where are you now in terms of standalone or greenfield sites? I think you had 10 when you opened a greenfield and maybe there was another. And can you elaborate on which commercial wins are true digital versus where you are using real estate?

George G. Chamoun: I separated that earlier into upstream versus downstream. When I mentioned we are working with one and now a second rental car company, that was upstream without land. I also mentioned a couple of fleet companies that did not require land—also upstream. For downstream at our locations, we are working with about 30% of commercial consignors today at one of our existing locations, and now it is about bringing them to our new locations. We have one open, one about to open. On the specific count of physical sites, more to come on that.

Jeffrey Lick: Understood. And on the guarantee, William, any color on penetration? You said it doubled. Why does no reserve or guarantee have higher costs?

George G. Chamoun: I will start and William can chime in. We charge a small fee for a customer that goes into no reserve. There is no fee discount on the buy side because it sells at no reserve in auction. There is higher ARPU on no reserve and higher cost, which changes the revenue margin percent. But the fascinating part is our EBITDA profile.

William R. Zerella: As mentioned on the call, our EBITDA per unit in Q1 was up 20%. Financially, slightly lower revenue margins are offset by OpEx leverage. About 70% of our OpEx is fixed, so we get full leverage of our inspection costs with a 100% conversion rate. Our midterm target for adjusted EBITDA per unit is $230 at 1.5 million units of volume. In two regions, we have already achieved or exceeded that target with future OpEx leverage. As we continue to grow volume and further populate territories with more scale, we will drive strong EBITDA margins on a per-unit basis. The geography on the P&L might change a bit, but it is all about final unit economics and profitability.

Operator: Thank you. The next question comes from Analyst from Raymond James. Your line is now live.

Analyst: Thanks and congrats on a great quarter. You said Vipers are enabling a huge breakthrough next year. Is the VCI investment cycle to support Viper deployment or just general growth? What should we expect for the future pace of VCI investment as Vipers reach scale?

George G. Chamoun: Great question. Our VCIs are being trained for multiple ways to help us scale. First, inspecting vehicles for wholesale is their primary task. Second, for arbitration, instead of sending cars to a third party—which cost us money—our inspectors now reinspect the car on-site. That improves customer satisfaction and helps us manage arbitration. Third, we use our inspectors for auditing ACV Auctions Inc. Capital. And for Viper, our last two installs were done by our ACV Auctions Inc. inspectors—no one from R&D had to fly out. The box arrived, our local inspectors assembled and brought it online within a few hours. Many inspectors are former mechanics and very skilled, and we train them across tasks.

William R. Zerella: In terms of scaling that workforce, we indicated we would add 100 inspectors this year. We are a little more than halfway there. That is more of a one-time upscaling of our field team—do not view it as an ongoing need at the same pace. That $11 million, plus adding territory managers and other go-to-market resources, is baked into guidance. Going forward, we will provide updates as we get closer to 2027.

Analyst: Thanks. Specifically on Vipers, how many are deployed so far, how many are you installing per month to get to that breakthrough next year, and how big is the backlog?

George G. Chamoun: We have about 18 live. We have somewhere around 75 waiting, and we will build another 60 to 70 more. We do have a backlog. We are prioritizing by giving each large dealer group a few—think two or three this year, not the five or 10 they are asking for—to spread the love, and we are transparent about next year being the scale year. Next year, we will be building several per month, but I am not ready to give a specific monthly number yet.

Operator: Thank you. The next question comes from Gary Prestopino from Barrington Research. Your line is now live.

Gary Prestopino: Good afternoon. George, you mentioned integrations with Viper into dealer DMS or service systems. What does the dealer do with that data? I assume at the point of service the technician or advisor can see the value of the car and make a pitch to the owner. Is the dealer also using that data for future leads with their current clients?

George G. Chamoun: Great questions. There are companies like MyKarma, Tekion, CDK’s service arm, and others. Some are both DMS and service platforms, some focus more on the service side. Whatever the dealer is using to power the service department, here is how it works: the car goes through Viper, we get an incredible data profile—every angle of the vehicle, tire treads, undercarriage—and we have additional IP coming next year. You also get ACV Auctions Inc. AI predictions on price and condition, plus the defects we typically see with that make and mileage—for example, if it is a Nissan Maxima with 120,000 miles, what is likely to happen in the next 10,000 miles. Step one was accomplishing that objective.

Step two is putting it into dealer systems so the process can scale. On the day of service, the advisor can say, “Two of your tires are bald; it will cost $800,” and, “It might be time to buy a new car.” It is not only day-of; we see consumers selling their car at our best-performing dealerships at five to seven, one is nine, out of 100 repair orders. With over 250 million repair orders a year through franchise dealers, if five out of 100 could lead to a consumer selling their car, it is massive. Dealers have a hard time scaling this manually—it takes too many people.

By leveraging hardware and our AI, it gets put into the dealership systems and then into the CRM, created as a lead. Some dealers route it to their BDC and sales team; some are using AI-driven bots for follow-up, and we are about to launch that with one of the major groups. Each deployment will be a bit different based on vendors. Our role at ACV Auctions Inc. is familiar: what is the condition and what is the price—we are the actual cash value.

Gary Prestopino: That is great. It sounds like a truly disruptive product in the market.

George G. Chamoun: Yes. Thank you, Gary.

Operator: We have reached the end of our question-and-answer session. I would like to turn the floor back over for any closing comments.

George G. Chamoun: Thank you, operator. Everybody, thank you for joining us this evening. We look forward to seeing you on the conference circuit this quarter, and thanks for your interest in ACV Auctions Inc. Have a great evening.

Operator: Thank you. That concludes today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.