What happened
Shares of ACV Auctions (ACVA -1.34%) were moving higher today after the online vehicle-wholesale marketplace posted better-than-expected results in its second-quarter earnings report.
As a result, the stock was up 13.1% as of 1:05 p.m. ET.
So what
Revenue in the quarter rose 18% to $115.1 million, which was ahead of analyst estimates at $111.4 million, as well as the company's own guidance. Marketplace gross merchandise volume (GMV), the core driver of its business, was up 27% to $2.7 billion. However, that increase was entirely due to higher prices on vehicles as units sold fell 3% to 148,047.
Management said the e-commerce stock gained market share in the quarter, and though its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss widened from $4 million in the quarter a year ago to $14 million, its EBITDA margin improved 500 basis points from the first quarter. GAAP loss per share widened from $0.06 in the quarter a year ago to $0.16, but that was still better than the consensus at a per-share loss of $0.18.
CEO George Chamoun said,
We are very pleased with our second quarter results, which once again exceeded revenue expectations, despite continued headwinds impacting the automotive industry, while also delivering strong quarter-over-quarter margin expansion. Our growth is driven by market share gains, continued strong adoption of ACV's value-added services, and traction in our growing suite of data and SaaS solutions.
Now what
Despite posting better-than-expected results in Q2, management actually trimmed its guidance for the full year to reflect weakening consumer demand and supply chain challenges. It now expects revenue of $427 million to $432 million, or 19% to 21% growth, which compares to the analyst consensus at $454.8 million and earlier guidance of $452 million to $460 million. For the third quarter, it sees just 13% to 17% revenue growth, or $104 million to $107 million, which was also below estimates.
After weak-earnings reports from peers like Carvana and Vroom, investors seemed to have low expectations, so they were still delighted by the better-than-expected Q2 results. For a stock down around two thirds over the last year, that was enough to give investors confidence that ACV can manage through a difficult environment.
