The used car market is in the trough – the low turning point of the business cycle – this year but things are turning around.
CEO George Chamoun expects the market to start getting back to “normal” next year and hit normalcy by 2026, according to the ACV Auctions’ (NASDAQ: ACVA) Q2 earnings call on Aug. 7. That positive outlook is reflected in some of the Buffalo-based company’s Q2 numbers and projections.
“We are very pleased with ACV’s continued momentum in the second quarter. Another record-breaking quarter in revenue that once again exceeded the high end of guidance, reflecting strong execution by the ACV team as we continued to gain marketshare,” he said during the call.
The company, an online marketplace business for automotive dealers that employs about 2,000 globally, had $124.2 million in total revenue in Q2 of this year. That’s an increase from the $115.1 million in Q2 2022.
The company’s wholesale automotive market benefits from used car sales and trades on new vehicle sales. The first step of the recovering used car market is new car production and sales coming back, which means used car values will start to come down. ACV is seeing progress there, according to Chamoun.
“These are all positive signs,” he said on the earnings call.
The next step will be used car volume and sales gradually increasing, which Chamoun expects to return to “normal” by 2026.
ACV, among the top 10 largest public companies in Buffalo based on revenue, grew year-over-year its diverse revenue streams in Q2. Software as a service and data services revenue grew by 1%, marketplace services revenue grew by 12% and auction and assurance revenue grew by 6%.
Operating expenses continue to exceed total revenue, giving the business a nearly $19.8 million in loss from operations in Q2 2023. That’s an improvement from the $24.7 million in Q2 last year.
For the first six months of the year, ACV had a $40.6 million loss from operations (with operations exceeding total revenue). That’s smaller than the $53.8 million loss for the same period of 2022.
The business projects a loss of $23 million to $27 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) this year.
“We have an exciting roadmap of innovation to drive both growth and scale,” Chamoun said.
The company, founded in 2014, continues to focus on its long-term shareholder value strategy of growth, innovation and scale.
