ACV Auctions (ACVA) Q4 2025 Earnings Transcript

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DATE

Monday, Feb. 23, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — George G. Chamoun
• Chief Financial Officer — William R. Zerella
• Chief Legal Officer and Secretary — Timothy M. Fox

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TAKEAWAYS

• Revenue -- $184 million, reflecting 15% growth year over year, at the high end of guidance.
• Adjusted EBITDA -- $8 million, up 36% year over year and above the high end of guidance.
• Units sold -- 193,000 vehicles in Q4; full-year unit growth over 86,000 vehicles, or 12%.
• Full-year revenue growth -- 19% increase compared to prior year.
• Adjusted EBITDA growth (full year) -- Grew by over 100%, signaling significant scaling leverage.
• Unique sellers and buyers -- 15,000 unique sellers and over 22,000 unique buyers used the platform in 2025.
• Franchise rooftop penetration -- Achieved 35%, hitting a new milestone for the year.
• Major account rooftop penetration -- Increased 300 basis points year over year.
• ClearCar impact -- Dealers using ClearCar increased wholesale volumes on the platform by over 50% after implementation.
• ACV MAX impact -- New ACV MAX dealers raised wholesale vehicle sales by an average of 40% within one quarter.
• Marketplace services revenue -- Accounted for 39% of total revenue with 23% year-over-year growth, led by ACV Transport and ACV Capital.
• Transport revenue and volume -- ACV Transport saw 20% revenue growth and completed 110,000 transports; margin in the low-20% range met midterm target.
• ACV Capital revenue -- Delivered 48% revenue growth, with risk exposure actively reduced.
• ACV Guarantee -- No-reserve auctions rose to 19% of sales, with conversion rate improving by 150 basis points year over year.
• Auction and assurance revenue -- Comprised 55% of total revenue, growing 11% year over year despite a tough comparison; Auction and Assurance ARPU reached $528, up 6% year over year and 4% sequentially.
• SaaS and data services revenue -- 5% of total revenue, growing 8% year over year, with growth accelerating.
• Non-GAAP cost of revenue -- Increased approximately 400 basis points as a percentage of revenue due to higher arbitration costs in a targeted customer cohort; mitigation actions begun and showing early positive returns.
• Non-GAAP operating expense -- Excluding cost of revenue, decreased approximately 400 basis points as a percentage of revenue year over year, demonstrating operating leverage.
• Q1 2026 guidance -- Revenue expected between $200 million and $204 million, up 9%-12%; adjusted EBITDA between $14 million and $16 million with a margin target of 7%-8%.
• 2026 full-year guidance -- Revenue projected at $845 million to $855 million (11%-13% growth); adjusted EBITDA between $73 million and $77 million, an approximate 28% increase.
• Cash and debt -- Ended Q4 with $270 million in cash and cash equivalents, including $171 million of marketplace flow, and $190 million in debt.
• OpEx guidance -- Non-GAAP OpEx (excluding cost of revenue) to grow approximately 9% in 2026, down from 12% in 2025; includes $11 million for go-to-market initiatives.
• Field expansion -- Ongoing hiring and training of 20-30 inspectors underway to hit footprint goals by Q3 2026.
• Viper launch plan -- Early access implementation pacing at five to ten units monthly, with the goal of fielding 100-200 units by year-end; over 200 dealers have expressed interest.

SUMMARY

Management forecasted adjusted EBITDA margin expansion for 2026, even as operating expenses grow due to investments in field and technology initiatives such as Viper. Operational improvements in arbitration handling include more direct validation by inspectors, which may improve arbitration cost trend normalization. The company’s no-reserve guarantee offering saw accelerating buyer engagement, as average bidders per car surpassed ten, indicating higher platform liquidity. Geographically, leadership attributed robust unit growth in regions like the Carolinas and South Florida to targeted management changes and redeployment of high-performing employees. Subscription-based models are under consideration for future revenue streams, with pilots bundling software and wholesale services already underway at select dealer rooftops.

• Management noted that competitive concerns over ARPU pressure are not expected to materially impact forward ARPU, stating, “I do not anticipate ARPU to go down meaningfully.”
• Dealers using Viper and ClearCar have begun acquiring 4%-10% of all repair orders passing through their service drives, with several sites surpassing 100 cars monthly through this channel.
• Market share gains are conservatively modeled for 2026, with expectations for acceleration in the second half as new investments take effect.
• CEO Chamoun described ACV Auctions (NYSE:ACVA) as the “AI disruptor in this category” and emphasized the company’s data-driven guarantee model as a distinguishing moat relative to potential new entrants.
• Dealer adoption of bundled offerings is positioned to expand total addressable market at the rooftop level, leveraging integration with DMS and CRM platforms.

INDUSTRY GLOSSARY

• Rooftop penetration: The proportion of franchised dealership physical locations ("rooftops") using a company’s platform relative to the total addressable market in that channel.
• ARPU (Average Revenue Per Unit): Average revenue earned per vehicle sold in the Auction and Assurance segments.
• TAM (Total Addressable Market): The aggregate revenue opportunity available if the company achieved full market penetration for a particular service or product.
• Service drive: The dealership department where repair, service, and maintenance are performed; a key location for consumer vehicle acquisitions.
• Arbitration: The process of resolving disputes between buyers and sellers regarding post-sale vehicle conditions on the platform.
• ClearCar: Data product that helps dealers make instant consumer appraisals and offers within their service departments.
• ACV MAX: Inventory management and appraisal tool offered to dealers.
• Viper: An AI-driven inspection and vehicle data capture system aimed at enabling scalable consumer car acquisition at dealerships.
• No-reserve auction/guarantee offering: Auctions conducted without a minimum selling price, backed by the company’s guarantee to sellers; buyers benefit from greater assurance of sale closure.
• Flow: Cash-in-transit, representing funds temporarily held as part of marketplace operations before settlement.
• Major account: Large dealership group or high-volume client managed via specialized engagement teams.
• VCI: Refers to field roles for territory expansion, likely “Vehicle Condition Inspectors.”
• Repair order (RO): The documented summary of service work performed on a vehicle at a dealership.

Full Conference Call Transcript

George G. Chamoun: Good afternoon, everyone, and thank you for joining us today. We are pleased with the ACV Auctions Inc. team's execution in Q4, delivering revenue at the high end of guidance and adjusted EBITDA above the high end. Our performance was driven by solid execution in our dealer wholesale business despite challenging market conditions. As we continue to gain market share, expand our dealer partner network, and drive adoption of our value-added dealer solution. And, ACV Transport and Capital delivered strong revenue performance. We also executed on our product road map to further differentiate ACV Auctions Inc.'s marketplace experience, support our commercial wholesale strategy, and expand our TAM.

Turning to 2026, we are expecting revenue growth in the low double digits and adjusted EBITDA growth of approximately 28%, which includes additional growth investments to support our medium-term financial targets. We are confident that on this profitable growth strategy will create significant long-term shareholder value. With that, let's turn to a recap of our results on Slide 4. Q4 revenue was $184 million, growth of 15% year over year. And we sold 193,000 vehicles. For the full year, we delivered 19% revenue growth and grew units by over 86,000. Or 12% year over year. And adjusted EBITDA grew by over 100%. Demonstrating the scale in our model.

Next on Slide 5, we will again focus our discussion around the three pillars of our strategy to maximize long-term shareholder value. Growth, innovation, and scale. I will begin with growth. On Slide 7, we highlight how ACV Auctions Inc. is leveraging AI to attract new buyers and sellers. Increased penetration and wallet share and gain traction with large dealer groups. Let's begin with our marketplace. Our highly accurate condition-adjusted pricing guidance enables sellers to set more informed reserve prices. Flexible auction durations and scheduling allow dealers to customize their marketplace experience. Given the challenging market conditions in Q4, dealers increasingly leaned into ACV Auctions Inc. technology.

For buyers in our marketplace, we tailor their experience across buyer personas and optimize the bidding process by providing AI-enabled recommendations informed by dealer preferences and current market factors. These investments in our leading marketplace experience were key to growing our dealer network in 2025, with 15,000 unique sellers, and over 22,000 unique buyers, transacting with ACV Auctions Inc. Our franchise rooftop penetration achieved a new milestone, reaching 35% during the year. And our major account team delivered impressive results with a 300 basis point increase in rooftop penetration. Next on Slide 8, I will provide some highlights on our data services. Market traction for ClearCar remains strong.

Especially for ClearCar Service that enables dealers to seamlessly produce consumer appraisals and offers in their service lanes. ClearCar is also an effective lever to increase wholesale wallet share and attract new dealers to our marketplace. During 2025, existing dealers that launched ClearCar increased their wholesale volumes on ACV Auctions Inc. over 50% after going live. We are also seeing early momentum with our strategy to bundle ACV MAX with wholesale. A recent cohort of new ACV MAX dealers increased their wholesale vehicle sales on our marketplace by an average of 40% within one quarter of launching MAX. Our strategy to offer a broader set of value-added solutions is creating another growth lever for ACV Auctions Inc.

Again this quarter, we are excited to share feedback from one of our dealer partners. The Hendrick Automotive Group, which is using ACV Auctions Inc.'s full suite of offerings. We posted a video on our IR website highlighting the significant value they are driving from ACV Auctions Inc. solutions. Turning to Slide 9. From a geographic perspective, we continue to drive strong growth within our more established regions, where network effects are driving significant market share. At the same time, our footprint has expanded across the country, as highlighted in these four regions, which delivered strong year-over-year unit growth in Q4.

As we discussed on our Q3 call, there are certain emerging regions where we are increasing our territory manager and VCI footprint to drive accelerated growth. These efforts began in Q4, will continue during 2026, and we are confident in the medium-term growth outlook for these markets. Turning to Slide 10. Let's review our Marketplace service offerings, beginning with ACV Transportation. The Transport team had strong execution in Q4, with 20% revenue growth and 110,000 transports delivered. AI-optimized pricing continues to drive strong growth and operating efficiency. Revenue margin has already achieved our midterm target in the low 20s. And our off-platform transportation service continues to gain traction from our dealer partners, creating additional growth opportunities.

Last, I will wrap up the growth section on Slide 11 with ACV Capital highlights. ACV Capital delivered strong revenue performance, with 48% year-over-year growth in Q4, despite actively lowering our exposure to higher-risk customer segments. The ACV Capital team implemented new growth strategies while driving process enhancements to mitigate portfolio risk. As such, we are confident that ACV Capital will remain an important value-added service for our dealers and a long-term growth opportunity. Next on Slide 12, I will address the second element of our strategy to drive long-term shareholder value: innovation. Turning to Slide 13, let's go deeper into how we are leveraging ACV Auctions Inc.

AI to drive growth and to deliver value to our dealer and commercial partners. Using machine learning, we combine inspection data and dynamic market data to provide real-time pricing for every vehicle within ACV Auctions Inc.'s pricing platform. For example, we are leveraging our pricing platform to offer ACV Guarantee to sellers and deliver no-reserve auctions to buyers. This offering remains the fastest-growing channel in our marketplace. We are pleased to see ACV Guarantee mix increase to 19% in Q4. As a reminder, our guarantee sales is a highly differentiated offering that benefits buyers, sellers, and ACV Auctions Inc. by accelerating bidder engagement, increasing buyer satisfaction, removing seller market risk, while delivering a 100% conversion rate.

We are confident our guarantee offering will be another key driver of market share gains. On Slide 14, we highlight how we are further differentiating ACV Auctions Inc. in the market.

William R. Zerella: With AI-driven next-gen products like Viper and Virtual Lift. We are extending our industry-leading inspection technology, vehicle data, and pricing capabilities to dealers looking to unlock consumer vehicle acquisition at scale in their service lane. At the recent NADA Industry Conference, we announced the next wave of availability for the Viper early access program, and dealer reception was tremendous. We are excited to kick off the commercial launch of Viper with select dealer partners, providing them with a unique and scalable consumer sourcing platform. It will expand our TAM at a rooftop level by tapping into the large peer-to-peer segment.

And by leveraging pricing models that bundle Viper with wholesale, we are creating a powerful new lever to drive wallet share expansion and unit growth. Wrapping up on innovation, let's turn to our commercial wholesale strategy on Slide 15. We are pleased to see the initial range of capabilities developed over the past year powering our first greenfield remarketing center in Houston. Our team has been in active conversations with commercial customers to deepen our understanding of their requirements for the next phase of our software build. We believe this new digital model and end-to-end experience will transform commercial vehicle remarketing, and we also look forward to launching an additional greenfield location in Chicago this year.

With that, I will hand over to Bill to 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. We are pleased with our Q4 financial performance, with revenue at the high end of our guidance range and adjusted EBITDA exceeding the range. On Slide 17, let's begin with a brief recap of our fourth quarter results. Revenue of $184 million grew 15% year over year compared to very strong results in Q4 2024. Adjusted EBITDA of $8 million grew 36% year over year, reflecting strong expense discipline. Finally, non-GAAP net loss of $1 million was favorable relative to our guidance range. Next, on Slide 18, let's review additional revenue details.

Auction and Assurance revenue was 55% of total revenue and grew 11% year over year against a very tough comparison of 40% growth in Q4 2024. This performance reflects 5% unit growth, which also faced a tough comparison of 27% growth in Q4 2024. Auction and Assurance ARPU of $528 grew 6% year over year and 4% quarter over quarter. Marketplace Services revenue was 39% of total revenue and grew 23% year over year, reflecting continued strong performance for ACV Transport and ACV Capital. Lastly, our SaaS and data services product comprised 5% of total revenue, with year-over-year growth accelerating to 8%. Next, I will review Q4 costs on Slide 19.

Non-GAAP cost of revenue as a percentage of revenue increased approximately 400 basis points year over year. The increase was primarily driven by higher arbitration costs as expected within a specific cohort of customers. Recall that our Q4 guidance assumed arbitration would remain elevated in the quarter but that trends would normalize in 2026 following mitigation steps we implemented. These steps are already showing positive returns in early 2026. Non-GAAP operating expense excluding cost of revenue as a percentage of revenue decreased approximately 400 basis points year over year, reflecting operating leverage in our model. Moving to Slide 20, I will frame our investment strategy as we drive profitable growth.

In 2026, we expect OpEx growth of approximately 9%, which is a decline from 12% in 2025. Note that 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 approximately 100 basis points year over year. Next, I will highlight our strong capital structure on Slide 21. We ended Q4 with $270 million in cash and cash equivalents and $190 million of debt. Note that our cash balance includes $171 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. Now turning to guidance on Slide 22.

First-quarter revenue is expected to be $200 million to $204 million, growth of 9% to 12%. Adjusted EBITDA is expected to be $14 million to $16 million, reflecting a 7% to 8% margin. 2026 revenue is expected to be $845 million to $855 million, growth of 11% to 13%. Note that full-year revenue guidance assumes that our go-to-market investments will drive slightly higher growth in the second half of the year. 2026 adjusted EBITDA is expected to be $73 million to $77 million, growth of approximately 28% year over year. We are expecting non-GAAP OpEx excluding cost of revenue to grow approximately 9% year over year. And with that, let me turn it back to George.

George G. Chamoun: Thanks, Bill. Before we take your questions, I will summarize. We are pleased with our Q4 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 to 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: Thank you. We will now be conducting a question-and-answer session. You may press 2 to remove yourself from the queue. Our first question comes from the line of Andrew Boone with Citizens Bank. Please proceed with your question.

Andrew Boone: Thanks so much for taking my questions. I would love to just double click in terms of 4Q 2025 units sold. We have seen this deceleration. Can you just help us understand whether that is competitive pressure, the market, macro, anything you want to call out in terms of highlighting 4Q results? And then I would love to ask about MAX. It sounds like you are seeing real results in terms of better integrating with dealers to just drive more volume. Can you help us understand what is the roadmap to drive better MAX adoption more broadly? Thank you.

George G. Chamoun: Yes. Hey, Andrew. When you look at Q4, first, we delivered, as you can see, on our revenue executions. We think we had a strong quarter from a revenue perspective. For the year, we grew units 12%, so that was solid. And when you look at the Q4 compare, it was a tougher compare. But what we are doing about creating more growth are the things we talked about. We are adding more inspectors out in the field. So we will start to see that benefit throughout this year. That is one area we are adding. We also talked about investing in a few more of the regions where we are adding additional territory managers.

Andrew, we talked about that on the call. And then we also talked about our differentiation with our products like MAX that you brought up. But I do want to actually bring up the real backdrop here. Dealer wholesale is growing from the physical auction. Still 70% of the business out there is happening at physical auction. So the broader need is still just to bring more and more business being had at physical auctions over to digital. Between our differentiated offerings, it is starting to happen more and more. On your second question on MAX, we are really starting to scale that business where it is now being connected more to wholesale.

For some of the rooftops, we added an additional offering that put the guarantee on units. So not only are we providing pricing guidance, but we will put a guarantee. And we are starting to scale that with additional rooftops. So we look forward to scaling MAX additionally throughout the year.

Operator: Thank you. Our next question comes from the line of Rajat Gupta with JPMorgan. Please proceed with your question.

Rajat Gupta: Great. Thanks for taking the question. So I had a question just following up on the previous one. It looks like your 2026 guidance does not assume much of a change in overall market share growth versus what you saw in recent quarters, and despite your incremental margins moving lower versus where you were last year. I am curious why that would be the case. If there are any one-time investments, maybe Viper and other initiatives around commercial, that might be causing that incremental margin to slow down. I mean, it just seems a little counterintuitive looking at incremental margin dropping versus market share not accelerating. Could you clarify that? And then I have a quick follow-up. Thanks.

George G. Chamoun: Yes, certainly, Rajat. Yes, so I will start, and then Bill can chime in. Two of the investments we are making, at least two, and Bill can chime in with the additional, are what we have made in the field, which are additional inspectors. We are hiring some additional territory managers, as I mentioned a few minutes ago. So that is one area of additional expense. And Bill can go a little deeper. And second is, yes, starting to invest in the Viper rollout. So that is also part of the numbers.

So we believe, Rajat, as we are making these investments throughout the year, we will start to see more of an impact towards the back half of the year because, obviously, it takes a little time to get these things going. But maybe you can chime in with some more of those. Yeah. So Rajat, just to go through the numbers again. So

William R. Zerella: So the incremental spend that we baked into our guidance for this year in terms of those go-to-market investments is approximately $11 million. If you look at our incrementals excluding that, it would have actually grown 500 bps year on year from 25% to 30%. So that is number one, to ensure you got the right numbers, right? And as George said, at this point, it is early in the year. We are making these investments, obviously, with the objective of driving more share gains. But we are pretty conservative at this point in terms of what we are going to bake into our guidance until we start to see these investments pay off over time.

Rajat Gupta: Understood. So the market share, essentially you are implying higher market share acceleration later in the year, assuming these investments bear some fruit? Right?

William R. Zerella: Yes, there is a slight increase in the second half of the year versus the first half. But again, we are taking a more conservative perspective at this point until we start to see this play out over time.

Rajat Gupta: Understood. Just a quick follow-up, a little more high-level question. Could you maybe comfort investors around the risk of AI to the business? I mean, clearly, there seems to be a lot of interpretation around anything you can help provide more clarity around that? What differentiates ACV Auctions Inc.? What differentiates your business model? Is there risk? Is there benefit from AI? Maybe if you could dig a little deeper into that and just how you are thinking about that. Thanks.

George G. Chamoun: Yeah. I mean, the irony, Rajat, is we are that disruptor. We are the AI disruptor in this category. So we are that company that is aiming to change automotive for the better. We are the company that is trying to help a traditional retailer, like a franchise dealer, have cars drive through a service drive, take pictures and videos, and predict the retail price within $38 of what it is going to sell for, and estimate the wholesale value within $100 to the point we will guarantee it. We are the ones making predictions on what types of inventory they should be buying and selling.

We are adding new capabilities throughout the year that we believe will help franchise dealers become more efficient and actually need fewer people. So yes, we are huge fans of what you can do with AI. We are aiming to be that disruptor. We are aiming to be the one that helps franchise dealers modernize their use of these tools. We are integrating with a lot of different vendors. It is not like we are picking one widget or one thing. We are integrating with all the CRMs and all the DMS solutions. And so regardless of what tech stack the dealer chooses, we should be one of the beneficiaries of the theme that you are hearing from investors.

All industries will change. AI will change every single industry. This will be one of them. And we should benefit from that.

Rajat Gupta: I guess the interpretation is that there might be a new startup or a young company that could do what you are doing in a much easier fashion, in a much simpler fashion, maybe providing that inspection capability to the dealers directly, or the pricing capabilities. Is there anything you can do to protect your position, or do you even see that as something realistic or practical? Thanks.

William R. Zerella: Yeah. I think, look. I think investors should do their homework. They should watch the video we posted regarding what we do for

George G. Chamoun: the largest private automotive company in the country, posted in our Hendrick Automotive. Watch that video, see what we are doing. They should do the research. We are doing this for some of the public automotive groups who speak very highly about what ACV Auctions Inc. is doing for them.

William R. Zerella: I think

George G. Chamoun: when you do your homework, you will see we are not just predicting numbers. We are predicting them to the point where we can back them and guarantee them. So yes, there could be startups that emerge in this category. But I think they would have to raise hundreds of millions of dollars, if not billions, to then have the balance sheet and the data, which will be very difficult to do, where we have inspected over 1 million cars a year. We know all these scratches, all these dents. We have now earned the credibility to be part of the workflow for all these dealer groups.

So I could see why in other industries they would be concerned, but in this one, Rajat, we are that disruptor.

Rajat Gupta: Fair enough. Great. Thanks for all the color and good luck.

Timothy M. Fox: Yes. Thank you. Thank you.

Operator: Next question comes from the line of Ron Josey with Citi. Please proceed with your question.

Ron Josey: Great. Thanks for taking the question. George, I want to ask about conversion rates, just wondering if they returned back to normal seasonality in the quarter after some sort of ups and downs last year, and then some conversion rates into 2026. And then maybe bigger picture, when we look at the unit growth improvements across the Carolinas, South Florida, Southern California, East Texas, remind us what led to that outsized growth here and what this means going forward? Thank you.

George G. Chamoun: Yes, certainly, Ron. On the first point, our conversion rate for Q4 was up year over year. Where most of our competitors were flat or down. So we did see a year-over-year improvement in conversion rate. And we saw that overall improvement where our no-reserve sale, which we refer to our investors as the guarantee offering, we give the guarantee to the seller, the buyer gets to know a no-reserve offering where they can bid without a reserve. It is really helping not only differentiate ACV Auctions Inc., but delivering a better buying experience, better seller experience. So we did see conversion rate improvements. Obviously, Q4 is always tougher on conversion rates. But we are executing well.

And we actually do see our overall guarantee and no-reserve offering continue to grow. This quarter, it started out. We are already in the 20% range of our total units now selling, and we are seeing more and more of our customers start to adopt the product. So one, I would say conversion rate, I believe we are starting to become some of the best in the industry. And we did also, to help on conversion rates, get a little harder on sellers who were giving us overpriced cars. We did get rid of a few sellers. We implemented more policies to make sure it is a better buyer experience.

So we are being more and more prudent on not just chasing units, but making sure we are building the best experience. So we started to really manage the marketplace with stricter rules. And that is really coming out. I think we are seeing higher buyer NPS as it relates to sell-through rate. Conversion rate is probably the best it has been in several years. So we are seeing some confidence from buyers coming back on conversion rate. So that was a long way to conversion.

William R. Zerella: Yes. And then, Ron, just to put a finer point on the numbers year on year, sell-through in Q4 was up 150 bps, which for us, as we think about our business and the trends that we can hopefully drive going forward, can over time become more and more material.

George G. Chamoun: And then on your second question, what did we do differently? We brought, for example, to the Carolinas, we took a very strong performer of ours that was in the New York Metro Area who was a territory manager. We promoted him to a regional director down to the Carolinas. So we brought somebody that really knew the ACV Auctions Inc. model. He then worked with the local territory managers. We also, I believe, added an additional territory manager in this region. We hired additional inspectors. And we really just doubled down. Strong execution. They really know how to present our differentiated offering.

So, yeah, I would say that market, the Carolinas, took us a little bit longer than we would like to grow. But now it is growing. And we have strong talent there. They have great momentum. And we feel really good about it. Same story with South Florida. Our team down there is just a great team. They keep differentiating the ACV Auctions Inc. offering, whether it be the sale. They also were some of the ones that are starting to leverage our inspector teammates to go out and help on the buying activity on the demand side.

So we are leveraging our inspector base not only at listings, but just getting out into the field more with both sellers and buyers. So that leader down there I met with last week is doing a fantastic job of just building out South Florida. So, yeah, we are really showing that region by region, we have more work to do over here. But I am really, really excited to see we have the right talent, we have the right folks out there. We are starting to take share at healthy rates.

Operator: Thank you. Our next question comes from the line of Bob Labick with CJS Securities. Please proceed with your question.

Bob Labick: Good. Thank you. I wanted to ask about Viper. You talked about rolling out this. You talked about a lot of dealer interest at recent shows and such. Have you said, I guess, when will it be in the field? But more importantly, what are the keys you are watching for in your launch once you get it out there before you decide to do maybe a more widespread rollout?

George G. Chamoun: Yes. Thanks, Bob. So our number one priority with Viper in these initial routes is really to help ensure the dealer is going to be able to leverage us to acquire more vehicles. We think about dealers. When dealers are optimizing their revenue, it is all about the top of the funnel, sourcing more cars. If they can source more cars, then they can optimize and decide which cars they should be retailing, which cars should they be wholesale. So these initial customers primarily have ACV MAX, their inventory management system. Our goal is to get them to buy more cars.

So think a dealer buying 30, 40, 50, 70-plus cars off what they call off the curb or off-street, primarily from their service drive. So that is a key KPI, helping them buy more cars. Some of the dealers we are talking to have very large goals. Bill and I actually met with one of them last week. And the general manager of that store was a dealer who said he would like to buy 100—

William R. Zerella: What was the number? He wants to retail 100 more used cars a month, which means he is probably going to buy more like 125 or 130.

George G. Chamoun: Yeah. Right. And retail ones that he wants to keep. So that would be an example, Bob. Here is a dealer who just got Viper, and those are the words of a specific dealer. And so we are excited because here is the simple math. They buy more cars, they are going to wholesale more. The more they buy, they are going to keep the best 60% to 70% for retail, and then they will wind up wholesaling somewhere around 30% to 40% of these cars. And so think about it as TAM expansion for us at a rooftop level.

So you will see cars that either would have gone peer to peer or cars that would have gone to one of the large big-box type companies will now get purchased by that dealership. So said another way, we think some of the best-run dealerships in the country are going to be dealers that have Viper. And if we could turn that rooftop into one of the best-run dealerships in the country, then there is an even bigger reason to be working with ACV Auctions Inc. and the ACV Auctions Inc. portfolio.

Bob Labick: Okay. That is exciting. So I cannot wait to watch that as it rolls out. And you gave us a few stats on ACV price guarantee, 19% in the quarter and ticking up already for no-reserve auctions and percent of volume. Is there a natural level or goal for that or a level that it cannot go above? Or how do you think about the progression in the no-reserve auctions and the percent of volume that could be?

George G. Chamoun: I think if we could see our no-reserve sales being—this will not, I do not know what it will hit this year—but I think if it hits the mid 20% range this year, I would be ecstatic. Maybe higher. Who knows? But we are not saying every single car should run no reserve, right? If you look at some vehicles, like a frontline vehicle, a dealer just running it 24 hours on our platform, we are not saying every single car needs to run that way. But there is a halo that is happening on ACV Auctions Inc.'s marketplace right now. Because the more cars that are running no reserve, buyers are showing up.

We are still—now I think I mentioned on a prior call that we have got 9.8 bidders per car. I think we are now at over 10 bidders per car. So that keeps climbing. We have got tremendous bid activity. That is on average, because there are some cars that might have 20 or more bidders per vehicle. So we have got great bid activity. It is allowing us to have our data science and predictions get better and better. Rajat asked the question earlier about AI.

I mean, when you think about the ultimate sort of machine learning AI predictor, it is not just using third-party data out there on the internet, but this is our data where we can put a number on a car, measure how well we execute, and then have the bidirectional integration with the DMS where we know what dealers are retailing the cars for. We are in a really unique spot. So we are really pleased with where we are today with our guarantee offering and how it is producing these no-reserve opportunities for buyers.

William R. Zerella: Thank you, Bob.

Operator: Our next question comes from the line of Christopher Alan Pierce with Needham & Company. Please proceed with your question.

Christopher Alan Pierce: Hey, good afternoon, everyone. Just to understand—I may not have the math right—but if I look at just pure auction and assurance revenue per unit, it is in line with Q3. And on the prior call, you talked about incentivizing sellers, power sellers, and people to try the price guarantee. Should we—and I know that incentivizing power sellers has sort of been a long-standing industry dynamic—should we think about that for you guys as something that is not temporary and that is going to be the new normal as industry competitive levels change? Or am I reading into something? I just want to get your thoughts on that.

George G. Chamoun: Yeah. I think that is a good point. We are revenue per unit in Q4 was healthy, to your point. And I do not think you should think of that as temporary. We are not that worried about competition. We think revenue per unit is going to hold. Bill might be able to add a little more color here. But I think that is a really good point. We did want to bring up to investors in the last earnings call that we did not want our investors, I mean analysts, significantly increasing ARPU over the next year, to give us that ability, as you said, to reinvest. Having said that, I do not anticipate ARPU to go down meaningfully.

But Bill, maybe there is more you can chime in here.

William R. Zerella: So Chris, just to look at the numbers. So in Q3, right, our Auction and Assurance ARPU declined slightly from $523 in Q2 to $508, and then it bounced back up in Q4 to $528. So what is baked into our modeling going forward and incorporated into our guidance is an assumption that $528 pretty much is flat to maybe up very modestly in 2026. So that is the modeling that we have baked into our financials in terms of what we are giving you for the year. We will see how it goes, but it is going to hold up probably slightly better than we previously were modeling on our last call.

Christopher Alan Pierce: Okay. And then just on competitive dynamics broadly, I feel like there was a school of thought that if we look back two years ago, wholesale was going digital, and it was going to be a winner-take-most market. Would you push back on maybe investor sentiment changing or industry sentiment changing—that wholesale is going to go digital, but it will be a duopoly-type market, and there will naturally be buffers for each other's growth, and comps will play a role and things like that? When you look at the industry three to five years from now, do you have a different perspective than you did maybe 18 months ago?

George G. Chamoun: I think at the end of the day, we are going to focus on being the leader. I believe we are still the dealer-to-dealer wholesale leader. We put on—how many units last year? I will call it 86,000 units. I do not believe anybody else put on 86,000 dealer wholesale units last year. And when you think about our differentiator, we are adding—we are not only in the wholesale category. We are helping dealers operate their business better. I really recommend, as folks are thinking about this, not only watching the videos but talking to our end customers. The people we are working with are happy with our wholesale results.

They are really saying ACV Auctions Inc. is helping us run our business better. Go back to Rajat's question about AI changing industries like automotive. And I think investors should be worried that AI will change industries. I think that is a legitimate worry. We are doing that in this industry. We are helping dealers execute better. Now, is there still a way to go where physical auctions are still the majority of the cars sold? Yes. And we will continue to grow. Now, I would also say there is credit to the idea that it may not be a winner-take-all. There could be a couple winners in this category. I think there is truth to that, too.

So I think we are going to be the leader. I believe we are going to have the most differentiated offering. And I believe there is also room for others, because at the end of the day, there is only roughly 30% of the industry right now that has moved to digital.

Christopher Alan Pierce: Okay. Thank you and good luck.

William R. Zerella: Thank you.

Operator: Thank you. Our next question comes from the line of Eric James Sheridan with Goldman Sachs. Please proceed with your question.

Eric James Sheridan: Thanks so much for taking the question, guys. Maybe two if I could. Given some of the moves you have made to expand footprint through 2025, how should we be thinking about investments to deepen that footprint reach in 2026 as a driver of growth and how that fits into your broader strategic priorities? That would be number one. And any update on Project Viper? I do not think I saw anything in the prepared remarks. Anything on the call so far. I just wanted to get a quick update on the technology side from Project Viper and how to think about that rollout as we get deeper into 2026 as well. Thanks so much.

George G. Chamoun: Yes, certainly, Eric. So we are hiring away on the inspectors. I think between the next couple of months, we have between this month and next month around 20 or 30 people in training right now. So we are hiring. We are training. We will hit our inspector number goals, I am hoping, by Q3, which incorporates both the hiring and training, to really get the national footprint I would like in place right now. So you will see us continually executing in that regard to increase our opportunity of going out and inspecting more cars and growing our footprint across the country. So it will take us several quarters to both get the hiring and training in place.

But I would like to get this national footprint the way I would like it to be from a talent and inspecting-more-cars-a-day perspective. My goal is to get most of this in place by Q3. It is sort of my goal. It is an aggressive goal, but we are working hard. So that is on the talent and hiring and training, because obviously that is not just hiring, but also training and getting all the people in the right places. Then second, your question on Viper: we are just we have done two things. One is starting to implement somewhere—I do not know, it is about five to 10 Vipers a month right now.

We are in the early days, Eric. We are out putting somewhere around five to 10 a month over the next—throughout the year. Think about these as the early dealers that are our dealers who are helping us not only integrate with the other third-party vendors—think about CRM companies, DMS, the various vendors—but also helping us nail down a few of the other requirements. So our goal is to put somewhere north of 100 of these out in the field, maybe as close as 200. So think 100 to 200 of these. We have at least 200 hand raisers, probably more than that. Dealers are saying they want it right now.

I do not think we will get them all live this year. We will see. So that will be getting them all live, making sure the product is accomplishing objective number one, which is helping them buy more cars; objective number two, helping them have retail photos faster on their websites, which helps them retail cars faster; and objective number three, which is on their service revenue, helping them. For example, we are predicting tire depth at a pretty incredible—my team is saying higher than 90% confidence—on tire depth. So think about cars going through, and the dealer can now upsell tires to consumers as they are coming through. And it is also a way to help value the vehicle.

So whether it is selling more cars, buying more cars, or their service revenue going up, those are the three key things we are watching. Our goal will be to start scaling this early next year, once we feel really, really good. We just do not want to go build 100 of these a month right now or some significant number, and then we find out we wanted to tweak something, we just wanted to change something. And so the thought is be prudent. As many of you know, we do move fast, but we are pretty prudent over here. Make sure we feel like everything is going in the right direction.

And then early next year, really start to scale this thing where throughout the year we will also start taking orders.

William R. Zerella: Yeah. And hey, Eric. It is Bill. So just again, going through the math. We already talked about the $11 million incremental investment on the go-to-market side. The incremental investment on the Viper side that is primarily going to flow through our financials as CapEx. We capitalize these units and then amortize those costs over a subscription period. That is also another high-single-digit millions. So call it approaching $20 million of incremental investment for those two initiatives combined. And then more to come on the business model on future calls.

George G. Chamoun: But think

Timothy M. Fox: subscription

George G. Chamoun: but also tying back to wholesale. And that will be an opportunity for us to both help the dealer achieve their objectives but also drive our wholesale wallet share and rooftops working with us.

Eric James Sheridan: Great. Thank you, guys.

Operator: Thank you. Our next question comes from the line of Naved Khan with B. Riley Securities. Please proceed with your question.

Naved Khan: Okay. Great. Thank you very much. So, George, maybe just looking back at your commentary in November, I think when you were thinking about 2026 back then, you said it is prudent to probably assume that wholesale market stays flat in 2026. And now we are in February 2026. Anything that might have changed in terms of your thinking about the market for this year versus maybe three months ago? So that is my first question. And then the second question is around arbitration expense and just wondering what are the drivers here to get this thing down.

Is it really more of a function of price volatility and as that comes down, you expect it to come down, or you did do some cleanup? Just trying to understand the drivers there and any color there would be helpful. Thanks.

George G. Chamoun: Yeah. Certainly. On your first question on market, as of right now, we are not changing our perspective of dealer wholesale being flat for the year. But obviously, very good question. In January, according to NAAA, dealer wholesale was down by 6.5%. So you saw January was—the market was down. Obviously, there was a lot of weather. February, there was also some weather, obviously. So I think it is too early to say it will be down for the whole year.

And I think there are enough things going on in the industry between what can happen with the tax refunds and, when you generally think about the benefits right now of buying a used car, from a tax perspective, there is benefit. There have got to be enough benefits on the used car side. There is going to be supply benefits of off-lease coming. Dealers are going to buy a lot of these cars. So as of right now, even though I would say the year started out with dealer wholesale being down, we are still thinking that it will be a flattish year. On your second question, arbitration, very good question.

We feel really good about where our arbitration is in Q1 and where we are going into the year. We did move out some bad actors on the platform in November and December. And we started to really just govern the platform better. And that is really playing out well. I think it is also the ACV Auctions Inc. brand of we are not letting folks take advantage of us anymore starting to get out there. And I wish I would have done this sooner, but I think as leaders, as you are growing these businesses, you sometimes are just chasing a little bit. And I am really proud of the team. Really, really proud of the team.

We executed extremely well in Q4. We are going into the year—I am seeing NPS. I am seeing buyer satisfaction. I am seeing on the seller side and the buyer side more and more accountability. So, yeah, and that plus our technology is getting better. Another thing Rajat mentioned about using AI. We are starting to use AI to figure out what is going on with sellers and buyers and other types of things. Yeah. So all in all, I am proud of how the team is executing on arbitration.

William R. Zerella: And one other item I would add to what George indicated is, with all the inspectors that we are adding—that we have already added and will continue to add this year—we are also going to leverage that increase in inspector headcount out there to also validate certain arbitration claims. So that will give us another opportunity to ensure that we are paying out when it makes sense to pay out based on validated claims.

George G. Chamoun: This is something we recently started piloting. And having the additional headcount really helps, because we right now send these cars to some type of local dealership. And we found it has been very helpful to go put our own eyes on the car. So, yeah, as Bill mentioned, that will be another positive way of us managing arbitration. And it allows us to handle these claims faster. Because it is not only us. For the good actors, it becomes a better process. Now we can send our person out there to validate the arbitration.

Naved Khan: Got it. Thank you. Thank you, Bill. Thank you, George.

Operator: Our next question comes from the line of Jeffrey Lick with Stephens. Please proceed with your question.

Jeffrey Lick: Great. Thanks for taking my question, guys. I have a series of questions around helping dealers run their business better. They are all kind of related. Firstly, could you maybe dig a little deeper on usage, the early returns on using Viper to boost service attachment and upsell in the service lane? And then along with that, if you guys do a scan, do you own the data, or does the dealer own the data, or do you both have access to it? And then I was wondering if you also elaborated too. I know you are doing some kind of private label auctions or intra-dealer auctions with different groups using your data.

Just kind of wondering if you could talk about those things.

George G. Chamoun: Yes. We have been starting to scale our service-drive acquisition, both pre-Viper and now starting to leverage Viper as well. But Jeff, we have got rooftops buying, I would say, anywhere between 4% and as high as 10% of all ROs—repair orders—coming through their service drive. So these are unbelievable numbers. So think on a rooftop basis, this could be anywhere between 40 and 100 cars a month. Bill and I met with one the other day that was already buying—what did we say—75. I know he is already buying over 150 a month. So we are already starting to see, Jeff—now, we have got to scale. Think like we have got to go from dozens of rooftops to thousands.

But where ACV Auctions Inc. is in place and where the dealer takes our best practices, our numbers are off the charts. But we have got to get more rooftops doing it. And so ClearCar by itself—then the dealers have to go around. They gave you the yes-no question, which, by the way, only takes a few minutes. So I would like to see more and more of them using it. And we now, in parallel, for a few rooftops—again, early stage—will actually put a guarantee on the cars.

That is actually helpful because one of the negatives we are finding is even with all of our tech, dealers still only go put offers on the ones they really want to buy, which is not good for them or us. So now that we have, in our pilots, actually put a guarantee, they do not feel like they are taking a risk buying a car they had no business buying. And so that is also helpful. So we just have to take it from dozens of rooftops to hundreds to thousands of rooftops. But the great thing—what I found in my entire career—I remember we were selling a few hundred cars a month at ACV Auctions Inc.

And we told the world we are going to go out there and disrupt dealer wholesale. Probably a lot of people thought we were crazy. And I am sure there are folks who are saying, you are going to do all this with AI? It sounds a little crazy. But once you can do it with dozens, you can do it with hundreds, you can do it with thousands. I have seen that throughout my entire career. So that was your question one. Your question two on data is, it is the dealer's data at the end of the day. And then we have the right to use the data in an aggregated methodology.

I do not really want to speak any more to that in a public call like this. But it is a win-win. We are respectful about their data but then how we can use the data for doing the things we are talking about, like pricing predictions, things like that. So we have a very senior team from a legal and data perspective here, and we have been doing it for ten years. And so we have been able to do this in a way that is both positive for the dealers and us.

Jeffrey Lick: Do you see eventually the ability to charge kind of non-volume-contingent recurring revenue—maybe charge more for helping the dealer run their business better and not necessarily tying that to auction volume?

George G. Chamoun: It will be both. So the way it the model will work—I will try not to talk about the model today. That is really for the middle of this year. But at a really high level, the way it will work is the dealer will pay several thousand bucks a month. I will not state the numbers just yet, just so no one is modeling it yet. And then there will be a rebate. So if we do not get the wholesale volume that we would like to get, then they will just pay us a healthy number. And by the way, that is still a win-win.

So if they end up just being a high SaaS revenue account for us, and that is what they decide. Let us just say that dealer happens to own a physical auction, as an example. There are a couple of dealers across the country that own physical auctions. So we have a great model. What we are going to charge them is still fantastic. But it would be a more significant subscription. So, yeah, it will be a win-win. Whether we get the wholesale volumes—which we think the wholesale volumes per rooftop will be—we could add TAM expansion that could be 20%, 30%, maybe more than the typical rooftop. So we are pretty excited about it.

Jeffrey Lick: Great. Thanks very much for taking the questions, and best of luck in 2026.

William R. Zerella: Thanks, Jeff.

Operator: And our next question comes from the line of Gary Prestopino with Barrington Research. Please proceed with your question.

Gary Prestopino: Hi. Good afternoon, all. Hey, George. I have a question on Guarantee, and I have a question on Viper. So with the Guarantee, once it hits the reserve, do you start to see an influx of increased bidding? Does it kind of work like some of these classic hard Mecum auctions where once the reserve comes off, the price goes up precipitously?

George G. Chamoun: Yes, Gary. That is exactly the way this world operates. Dealers that are bidding on cars want to know a car is for sale. And when they know a car is for sale, they will invest the time. They do not want to go bid on car after car and waste their time. And we believe the ACV Auctions Inc. no-reserve sale—pretend that is its own auction, as though the rest of ACV Auctions Inc. does not exist, as though the rest of the industry does not even exist—while our no-reserve sale is going on, we believe we have the highest bid activity in the industry.

And so, Gary, yes, you are seeing exactly that because dealers are willing to invest their time to say the top bidder is going to get the car.

Gary Prestopino: Okay. And then on Viper, and I realize it is real early in the game here, but what does your system do, or how are the dealers getting over the reticence of the individual that owns the car to really trust the data, to trust what is being spit out by the dealership? You know, there is always an inherent conflict of interest there. Right?

George G. Chamoun: Yeah. Good point, Gary. I think you are really bringing up that between AI and machine learning, we need the end customers to appreciate and trust the system. The good news is we have been out showing the end results of our data profile. And when you look at the last few months, and around the last few quarters, our retail prediction of what a car is going to sell for in the next 30 days—most recent results—was within $38. So that is not me saying, hey, this should work someday. This is saying our prediction of what the car is going to sell for—now, it will not always fit.

Even if it was within $100, even within $200, that is incredible. So, Gary, we did not just build a hardware unit here and say, okay, go learn. We have been learning through ACV MAX. We have been learning through ACV Auctions Inc. Our wholesale predictions are within $100. So when you have this ability to walk in there with hardware that you have already been learning, you have already been proving, it allows us to have more credibility to do what you are asking, which is how do we change their process to trust it? Because we are walking in. Now, will there still be a transitory process to get trust? Of course.

But at least we are walking into this opportunity with a lot of credibility.

William R. Zerella: Thank you, Gary.

Timothy M. Fox: So, Shmuel, I think we are at the end of the call. So from here, I will just say thank you for joining us tonight. We hope to see you on the conference circuit over this next quarter. And again, thank you for your interest in ACV Auctions Inc., and everybody have a great evening. Thanks so much.

Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

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