What happened
Shares of ACV Auctions (ACVA +0.38%) were moving higher today after the wholesale digital auto auctioneer posted strong results in its fourth-quarter earnings report.
As of 11:35 a.m. ET on Thursday, the stock was up 15%.
NYSE: ACVA
Key Data Points
So what
In a challenging used-car market, ACV said revenue in the fourth quarter declined by 2% to $98 million, which was slightly below estimates at $99.3 million. Marketplace gross merchandise volume was down 29% to $1.8 billion as marketplace units sold fell 10% to 124,751, a reflection of falling prices and demand in the wholesale used-car market after prices soared in 2021.
Despite those headwinds on the top line, the company improved its cost structure in the quarter, and its adjusted loss on the basis of earnings before interest, taxes, depreciation, and amortization (EBITDA) narrowed from $16 million to $13 million. Its per-share loss of $0.15 under generally accepted accounting principles (GAAP) was better than estimates at $0.19.
CEO George Chamoun said: "Despite facing challenging market and macroeconomic headwinds, ACV continued to gain share, grow our dealer partnership network, expand our competitive moat, and drive adoption of our broad suite of solutions. We achieved this while expanding margins and carefully managing our cost structure."
Now what
In the first quarter, ACV Auctions expects its performance to improve, with revenue growth of 4% to 7%, reaching $107 million to $110 million. That is ahead of the consensus at $106 million. It also sees an adjusted EBITDA loss of $12 million to $14 million.
For the full year, ACV is guiding for 9% to 11% top-line growth, to $460 million to $470 million, which is better than analyst estimates at $462.4 million. It also sees its adjusted EBITDA loss narrowing from $56 million to a range of $30 million to $35 million.
With guidance indicating that the worst of the macro headwinds have passed, and as the company makes meaningful margin improvement, it's not surprising to see the stock up by double digits today.
