Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10- K. This discussion, particularly information with respect to our financial condition or results of operations, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K. You should review the disclosure under the heading “Item 1A. Risk Factors” in this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 is presented below. A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K filed with the SEC on February 19, 2025.
Overview
Our mission is to build and enable the most trusted and efficient marketplace platform for buying and selling used vehicles with transparency and comprehensive data that was previously unimaginable.
We provide a highly efficient and vibrant marketplace platform for wholesale vehicle transactions and data services that offer transparent and accurate vehicle information to our customers. Our marketplace platform leverages data insights and technology to power our digital marketplace and data services, enabling our dealers and commercial partners to buy, sell, and value vehicles with confidence and efficiency. We strive to solve the challenges that the used automotive industry has faced for generations and provide powerful technology-enabled capabilities to our dealers and commercial partners who fulfill a critical role in the automotive ecosystem. We help dealers source and manage inventory and accurately price their vehicles as well as process payments, transfer titles, manage arbitrations, and finance and transport vehicles. Our marketplace platform encompasses:
•Digital Marketplace. Connects buyers and sellers of wholesale vehicles in an intuitive and efficient manner. Our core digital marketplace offerings are auctions in varying formats, which facilitate real time transactions of wholesale vehicles, and are accessible across multiple platforms including mobile apps, desktop, and directly through API integration. We also offer transportation, financing and assurance services to facilitate the entire transaction journey.
•Remarketing Centers. Provides an additional channel to provide dealers and commercial partners with auction services. At remarketing centers, vehicles may be auctioned onsite and/or launched into the digital marketplace. Additional services are offered at remarketing centers that are important to servicing commercial partners.
•Data Services. Offers insights into the condition and value of used vehicles for transactions both on and off our Marketplace and helps dealers, their end consumers, and commercial partners make more informed decisions and transact with confidence and efficiency. We enable dealers to manage their inventory and set pricing more effectively while turning vehicles faster and maximizing profit by leveraging predictive analytics informed by artificial intelligence, machine learning and market data.
•Data and Technology. Underpins everything we do, and powers our vehicle inspections, comprehensive vehicle intelligence reports, digital marketplace, inventory management software, and operations automation.
We have historically generated the majority of our revenue from our digital marketplace where we earn auction and ancillary fees from both buyers and sellers in each case only upon a successful auction. Buyer auction fees are variable based on the price of the vehicle, while seller auction fees include a fixed auction fee and an optional fee for the elective condition report associated with the vehicle. We also earn ancillary fees through additional value-added services to buyers and sellers in connection with the auction.
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Our customers include participants on our marketplace platform and purchasers of our data services. Certain dealers and commercial partners purchase data services in connection with vehicle assessments, software subscriptions, and transactions that do not occur on our Marketplace. Our dealer customers include a majority of the top 100 used vehicle dealers in the United States.
Key Operating and Financial Metrics
We regularly monitor a number of operating and financial metrics in order to measure our current performance and estimate our future performance. Our business metrics may be calculated in a manner different than similar business metrics used by other companies.
Year ended December 31,
Marketplace GMV $ 10.4 billion $ 9.5 billion
Adjusted EBITDA $ 58.8 million $ 28.1 million
Marketplace Units
Marketplace Units is a key indicator of our potential for growth in Marketplace GMV and revenue. It demonstrates the overall engagement of our customers and our market share of wholesale transactions in the United States. We define Marketplace Units as the number of vehicles transacted within the applicable period. Marketplace Units transacted includes any vehicle that successfully reaches sold status, even if the auction is subsequently unwound, meaning the buyer or seller does not complete the transaction. These instances were immaterial in the periods presented. Marketplace Units exclude vehicles that were inspected by ACV, but not sold. Marketplace Units have generally increased as we have expanded our territory coverage, added new Marketplace Buyers and Marketplace Sellers and increased our share of wholesale transactions from existing customers. Because we only earn auction and ancillary fees in the case of a successful auction, Marketplace Units will remain a critical driver of our revenue growth.
Marketplace GMV
Marketplace GMV is primarily driven by the volume and dollar value of Marketplace Units transactions. We believe that Marketplace GMV acts as an indicator of our success, signaling satisfaction of dealers and buyers, and the health, scale, and growth of our business. We define Marketplace GMV as the total dollar value of vehicles transacted within the applicable period, excluding any auction and ancillary fees. Because our definition of Marketplace Units does not include vehicles inspected but not sold, and because the value of the vehicle sold is not recognized as revenue, Marketplace GMV does not represent revenue earned by us. We expect that Marketplace GMV will continue to grow as Marketplace Units grow, though at a varying rate within a given applicable period, as Marketplace GMV is also impacted by the value of each vehicle transacted. In periods of declining used vehicle values, Marketplace GMV may decline even while Marketplace Units increase.
Marketplace Buyers
We define Marketplace Buyers as dealers or commercial partners with a unique customer ID that have transacted at least once in the last 12 months as a buyer on our marketplace platform. Marketplace Buyers include independent and franchise dealers buying on our marketplace.
Marketplace Sellers
We define Marketplace Sellers as dealers or commercial partners with a unique customer ID that have transacted at least once in the last 12 months as a seller on our marketplace platform. Marketplace Sellers include independent and franchise dealers selling on our marketplace, as well as commercial partners, consisting of commercial leasing companies, rental car companies, bank or other finance companies, who use our marketplace to sell their inventory.
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We monitor the growth in both Marketplace Buyers and Marketplace Sellers as they each promote a more vibrant and healthy marketplace. We believe that our growth in Marketplace Sellers and Marketplace Buyers over time has been driven by the value proposition of our offerings, and our sales and marketing success, including our ability to attract new dealers and commercial partners to our marketplace platform. Based on our current position in the market, we believe that we have significant opportunity to continue to increase the number of Marketplace Buyers and Marketplace Sellers.
Adjusted EBITDA
Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business. We define Adjusted EBITDA as net income (loss), adjusted to exclude: depreciation and amortization, stock-based compensation expense, interest (income) expense, provision for income taxes, and other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses. We monitor Adjusted EBITDA as a non-GAAP financial measure to supplement the financial information we present in accordance with generally accepted accounting principles, or GAAP, to provide investors with additional information regarding our financial results. For further explanation of the uses and limitations of this measure and a reconciliation of our Adjusted EBITDA to the most directly comparable GAAP measure, net income (loss), please see “—Non-GAAP Financial Measures.”
We expect Adjusted EBITDA to fluctuate in the near term as we continue to invest in our business and improve over the long term as we achieve greater scale in our business and efficiencies in our operating expenses.
Factors Affecting Our Performance
We believe that the growth and future success of our business depend on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth, improve our results of operations, and increase profitability.
Increasing Marketplace Units
Increasing Marketplace Units is a key driver of our revenue growth. The transparency, efficiency and vibrancy of our marketplace is critical to our ability to grow our share of wholesale transactions from existing customers and attract new buyers and sellers to our marketplace platform. Failure to increase the number of Marketplace Units would adversely affect our revenue growth, operating results, and the overall health of our marketplace.
Grow Our Share of Wholesale Transactions from Existing Customers
Our success depends in part on our ability to grow our share of wholesale transactions from existing customers, increasing their engagement and spend on our marketplace platform. We remain in the early stages of penetrating our Marketplace Buyers’ and Sellers’ total number of wholesale transactions. As we continue to invest in our trusted and efficient marketplace platform, we expect that we will capture an increasing share of transactions from our existing buyers and sellers. Our ability to increase share from existing customers will depend on a number of factors, including our customers’ satisfaction with our marketplace platform, competition, pricing and overall changes in our customers’ engagement levels.
Add New Marketplace Buyers and Marketplace Sellers
We believe we have a significant opportunity to add new marketplace participants. As we expand our presence within our existing territories, we are able to drive increased liquidity and greater vehicle selection, which in turn improves our ability to attract new Marketplace Buyers and Marketplace Sellers. Additionally, we intend to add more commercial consignors to our marketplace platform and capture a greater share of vehicles in the wholesale market that are sold to dealers by commercial consignors through auctions and private sales.
Our ability to attract new Marketplace Buyers and Marketplace Sellers will depend on a number of factors including: the ability of our sales team to onboard dealers and commercial consignors onto our marketplace platform and ensure their satisfaction, the ability of our territory managers to build awareness of our brand, the ability of our vehicle condition inspectors, or VCIs, to cultivate relationships with our customers in their respective territories, and the effectiveness of our marketing efforts.
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Grow Awareness for Our Offerings and Brand
Wholesale vehicle online penetration is in the early stages, lagging the consumer automotive market, and we expect more dealers and commercial partners to source and manage their inventory online. As the digitization of the wholesale automotive market accelerates, we believe that our digital marketplace is well positioned to capture a disproportionate share of that growth. We use targeted sales and marketing efforts to educate potential Marketplace Buyers and Marketplace Sellers as to the benefits of our offerings and drive adoption of our marketplace platform. Our ability to grow awareness of our offerings and brand depend on a number of factors, including:
•Secure Trusted Supply. The more trusted supply on our marketplace, the more buyers we can attract to our marketplace platform.
•Deepen Relationships with Dealers and Commercial Partners. We have a team of VCIs that regularly interacts with our customers, providing high-quality inspection services and developing strong customer relationships.
•Drive Customer Loyalty. Our loyal customers and referrals serve as a highly effective customer acquisition tool, and help drive our growth in a given territory.
•Grow Brand Awareness. We invest in promoting our brand via targeted marketing spend to increase customer awareness in the territories in which we operate.
Our future success is dependent on our ability to successfully grow our market presence and market and sell products to both new and existing customers.
Grow Value-Added and Data Services
We continue to drive customer adoption of our existing value-added and data services and introduce new and complementary products. Our ability to drive higher attachment rates of existing value-added services, such as ACV Transportation, ACV Capital, and ACV MAX will help grow our revenue. We continue to drive customer adoption of our data services such as our inventory management system, which enables dealers to accurately price wholesale and retail inventory while maximizing profit by leveraging predictive analytics informed by artificial intelligence. These data services enable our customers to make more informed inventory management decisions both on and off our digital marketplace. In addition, we will continue to focus on developing new products and services that enhance our marketplace platform in areas including new data-powered products. Our ability to drive customer adoption of these products and services is dependent on the pricing of our products, the offerings of our competitors and the effectiveness of our marketing efforts.
Investment in Growth
We are actively investing in our business. In order to support our future growth and expanded product offerings, we expect this investment to continue. We anticipate that our operating expenses will increase as we continue to build our sales and marketing efforts, expand our employee base and invest in our technology development. The investments we make in our marketplace platform are designed to grow our revenue opportunity and to improve our operating results in the long term, but these investments could also delay our ability to achieve or sustain profitability in the near term. Our success is dependent on making value-generative investments that support our future growth.
Used Car Demand
Our success depends in part on sufficient demand for used vehicles. Our growth over the last several years has coincided with a rising consumer demand for used vehicles. Since early 2020 demand for cars has outpaced supply. During this period, we have seen new car supply have a significant impact on the supply of wholesale vehicles available within our marketplace. More recently, new vehicle supply has begun to increase, although still below 2019 levels. However, this increase in new vehicle supply has been coupled with higher interest rates which has made both new and used vehicles more expensive for retail consumers utilizing financing. Used car demand will be in part dependent on the economic health of the retail consumer and their ability to afford a vehicle purchase, which may be impacted by macroeconomic and geopolitical conditions, including the impact of changes in trade policies.
Used vehicle sales are also seasonal. Sales typically peak late in the first quarter and early in the second quarter, with the lowest relative level of industry vehicle sales occurring in the fourth quarter. Due to our growth since launch, our sales patterns to date have not been entirely reflective of the general seasonality of the used vehicle market, but we expect this to normalize as our business matures. Seasonality also impacts used vehicle pricing, with used vehicles depreciating at a
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faster rate in the last two quarters of each year and a slower rate in the first two quarters of each year. We may experience seasonal and other fluctuations in our quarterly results of operations, which may not fully reflect the underlying performance of our business. See the section titled “Seasonality” for additional information on the impacts of seasonality on our business.
Recent Developments
Tricolor Bankruptcy
On September 10, 2025, Tricolor Holdings, LLC, and certain of its affiliates (collectively, "Tricolor"), filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code with the United States Bankruptcy court for the Northern District of Texas. Several factors differentiated Tricolor from other dealership customers that have finance receivables with ACV Capital. Tricolor's significant focus on the offering of credit to consumers, the scope and complexity of Tricolor's operations including multiple large credit facilities with major U.S. banks, and the emergence of allegations of significant fraud being investigated by Federal authorities are among the differentiating factors. Due to these factors, we do not believe that the Tricolor bankruptcy losses are indicative of our ongoing operating performance. Tricolor accounted for approximately $18.6 million of our finance receivables as of December 31, 2025. The bankruptcy will not have a material negative impact on our future revenues. We are participating as a creditor in the bankruptcy proceedings, seeking to maximize the recovery of our outstanding finance receivables. However, the ultimate outcome of these collection efforts is uncertain at this time. We have recorded a loss of $18.7 million related to this event in the "selling, general, and administrative expenses" line item of the Consolidated Statement of Operations for the year ended December 31, 2025.
Settlement of Class Action Lawsuit Against Data Services Vendors
On September 16, 2025, the Company entered into a class action settlement agreement with a data services vendor, pursuant to which the Company will receive $7.9 million in settlement payments. Of this total settlement, $7.6 million is included as a reduction in marketplace and service cost of revenue in the Consolidated Statements of Operations for the year ended December 31, 2025. Based on the payment terms provided in the settlement, $0.8 million is included in other current assets and $1.5 million is included in other assets in the Consolidated Balance Sheet at December 31, 2025.
Components of Results of Operations
Revenue
Marketplace and Service Revenue
We have historically generated the majority of our revenue from our digital marketplace where we earn auction and ancillary fees from both buyers and sellers, in each case only upon a successful auction. Our marketplace and service revenue consists principally of revenue earned from facilitating auctions and arranging for the transportation of vehicles purchased in such auctions.
We act as an agent when facilitating a vehicle auction through the marketplace. Auction and related fees charged to the buyer and seller are reported as revenue on a net basis, excluding the price of the auctioned vehicle in the transaction.
We act as a principal when arranging for the transportation of vehicles purchased on the marketplace and leverage our network of third-party transportation carriers to secure the arrangement. Transportation fees charged to the buyer are reported on a gross basis.
We also generate data services revenue through our True360 reports and ACV MAX inventory management software subscriptions and offer short-term inventory financing to eligible customers purchasing vehicles through the marketplace.
Customer Assurance Revenue
We also generate revenue by providing our Go Green assurance to sellers on the condition of certain vehicles sold on the marketplace, which is considered a guarantee under GAAP. This assurance option is only available for Go Green sellers on qualifying vehicles for which we have prepared the vehicle condition report. Customer assurance revenue also
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includes revenue from other price guarantee products offered to sellers. Customer assurance revenue is measured based upon the fair value of the guarantees that we provide.
Operating Expenses
Marketplace and Service Cost of Revenue
Marketplace and service cost of revenue consists of third-party transportation carrier costs, titles shipping costs, customer support, website hosting costs, inspection costs related to data services and various other costs. These costs include salaries, benefits, bonuses and related stock-based compensation expenses, which we refer to as personnel expenses. We expect our marketplace and service cost of revenue to continue to increase in absolute dollars as we continue to scale our business and introduce new product and service offerings.
Customer Assurance Cost of Revenue
Customer assurance cost of revenue consists of the costs related to satisfying claims against the vehicle condition guarantees, and other price guarantees.
Operations and Technology
Operations and technology expense consists of costs for wholesale auction inspections, personnel costs related to payments and titles processing, transportation processing, product and engineering and other general operations and technology expenses. These costs include personnel-related expenses and other allocated facility and office costs. We expect that our operations and technology expense will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our marketplace, transportation capabilities and other technologies.
Selling, General and Administrative
Selling, general and administrative expense consists of costs resulting from sales, accounting, finance, legal, marketing, human resources, executive, and other administrative activities. These costs include personnel-related expenses, legal and other professional services expenses and other allocated facility and office costs. Also included in selling, general and administrative expense is advertising and marketing costs to promote our services. We expect that our selling, general and administrative expense will increase in absolute dollars as our business grows. However, we expect that our selling, general and administrative expense will decrease as a percentage of our revenue as our revenue grows over the longer term.
Depreciation and Amortization
Depreciation and amortization expense consists of depreciation of fixed assets, and amortization of acquired intangible assets and internal-use software.
Other Income (Expense)
Other income (expense) consists primarily of interest expense on our borrowings and interest earned on our marketable securities and cash and cash equivalents.
Provision for Income Taxes
Provision for income taxes consists of U.S. federal, state and foreign income taxes.
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Results of Operations
The following table sets forth our Consolidated Statements of Operations data expressed as a percentage of total revenue for the periods presented:
Year ended December 31,
Amount % ofRevenue Amount % ofRevenue
(in thousands)
Revenue:
Operating expenses:
Other income (expense):
Total other income (expense) (1,612) 5,093
Provision for income taxes 1,338 688
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(1)Includes stock-based compensation expense as follows: Year ended December 31,
(in thousands)
(in thousands)
(3)Includes litigation-related costs as follows: Year ended December 31,
(in thousands)
Selling, general, and administrative $ 1,100 $ 1,553
(in thousands)
Depreciation and amortization $ 6,214 $ 4,675
(5)Includes acquisition-related costs as follows: Year ended December 31,
(in thousands)
Selling, general, and administrative $ 403 $ 3,966
(6)Includes other adjustments as follows: Year ended December 31,
(in thousands)
Operations and technology $ 66 $ 46
Selling, general, and administrative 2,078 737
(7) Includes Tricolor bankruptcy losses as follows: Year ended December 31,
(in thousands)
Selling, general, and administrative 18,711 —
Comparison of the Years Ended December 31, 2025 and December 31, 2024
Revenue
Marketplace and Service Revenue
Year ended December 31, $ Change % Change
(in thousands)
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The increase was primarily driven by an increase in auction marketplace revenue from our Marketplace Buyers and Marketplace Sellers, as well as increases in revenue earned from transportation and financing services. For the year ended December 31, 2025 compared to the year ended December 31, 2024, other marketplace revenue increased to $295.8 million from $236.7 million and auction marketplace revenue increased to $347.7 million from $303.0 million. Revenue increases in the current year were primarily volume-driven and also impacted by higher buyer fee rates for the year ended December 31, 2025 compared to the prior year period. The volume of Marketplace Units sold on the marketplace platform increased to 829,276 for the year ended December 31, 2025 from 743,008 for the comparable prior year period which is an indicator of increased overall customer engagement. The increase in other marketplace revenue was primarily related to an increase in the revenue earned from the transportation of vehicles due to an increase in the number of units transported. The wholesale automotive industry continues to transition to digital transactions, with an increasing amount of customers transacting digitally versus at physical auction houses. This industry transition, and our position as a leader in the area of digital wholesale automotive auctions, continues to drive more business to our marketplace platform. The average total revenue per Marketplace Unit increased for the year ended December 31, 2025 compared to year ended December 31, 2024 due to the aforementioned higher buyer fee rates and customers adding more optional ancillary services to the auction such as transportation services and financing services which resulted in increases to both auction marketplace and other marketplace revenue. To a lesser extent, acquisitions completed in 2024 drove increases in revenue in 2025 compared to 2024.
Customer Assurance Revenue
Year ended December 31, $ Change % Change
(in thousands)
The increase was primarily driven by an increase in Go Green assurance revenue, driven by increases in the estimated fair value of the Go Green offering per unit and an increase in units that elected the Go Green offering. For the year ended December 31, 2025 compared to the year ended December 31, 2024, Go Green assurance revenue increased to $71.1 million from $57.0 million. Other assurance revenue increased to $10.6 million for the year ended December 31, 2025 from $7.2 million for the year ended December 31, 2024 due primarily to a $4.1 million increase in revenue from our price guarantee sales caused by an increase in units sold through our price guarantee sales.
Operating Expenses
Marketplace and Service Cost of Revenue
Year ended December 31, $ Change % Change
(in thousands)
Percentage of revenue 38 % 39 %
The increase primarily consisted of higher costs related to generating auction marketplace and other marketplace revenue, partially offset by a decrease in data services cost of revenue. For the year ended December 31, 2025 compared to the year ended December 31, 2024, total cost attributed to generating auction marketplace revenue increased to $68.3 million from $54.4 million. The increase in auction marketplace cost of revenue is due to increased units sold through our marketplace and to a lesser extent, other costs of revenue associated with our prior year acquisitions. Other marketplace cost of revenue increased to $206.9 million for the year ended December 31, 2025, compared to $173.0 million for the year ended December 31, 2024, primarily due to an increase in the units transported. This was partially offset by a $7.6 million legal settlement benefit recognized in 2025, which reduced data services cost of revenue by a corresponding amount. For the year ended December 31, 2025, Data services cost of revenue was $12.9 million compared to $20.8 million in the comparable prior year period. Marketplace and service cost of revenue as a percentage of revenue decreased during the year ended December 31, 2025 compared to the year ended December 31, 2024 due primarily to the benefit from the legal settlement.
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Customer Assurance Cost of Revenue
Year ended December 31, $ Change % Change
(in thousands)
Percentage of revenue 10 % 9 %
The increase primarily consisted of costs attributable to our Go Green assurance offerings due to increased volume of completed auctions where the customer elected the Go Green offering, and an increase in the arbitration cost per unit sold. For the year ended December 31, 2025, Go Green assurance cost of revenue increased to $62.3 million from $50.9 million in the year ended December 31, 2024. For the year ended December 31, 2025, other assurance cost of revenue increased to $11.0 million from $5.3 million in the year ended December 31, 2024 due primarily to a $4.5 million increase in costs incurred on the Company's price guarantee sales due to an increase in the current year in units sold through our price guarantee sales compared to the prior period. Customer assurance cost of revenues as a percentage of revenue increased during the year ended December 31, 2025 compared to the year ended December 31, 2024 due to the aforementioned increases in arbitration claim volume and arbitration costs per unit sold.
Operations and Technology Expenses
Year ended December 31, $ Change % Change
(in thousands)
Percentage of revenue 24 % 26 %
The increase is primarily due to higher personnel-related costs. For the year ended December 31, 2025 compared to the year ended December 31, 2024, personnel-related costs increased to $150.5 million from $138.5 million as a result of headcount increases from our prior year acquisitions and investment in our internal product and technology capabilities to enable future growth initiatives. Software and technology expenses increased to $21.8 million from $16.3 million as a result of continued investment in our technology and infrastructure amid ongoing business growth. Other expenses increased to $10.4 million from $7.9 million in the year ended December 31, 2025 compared to the year ended December 31, 2024. Operations and technology expense as a percentage of revenue decreased during the year ended December 31, 2025 compared to the year ended December 31, 2024 as we continued our efforts to effectively manage costs while growing our revenue.
Selling, General, and Administrative Expenses
Year ended December 31, $ Change % Change
(in thousands)
Percentage of revenue 31 % 34 %
The increase primarily consisted of higher non-personnel costs . Non-personnel costs in the year ended December 31, 2025 compared to the year ended December 31, 2024 increased to $62.0 million from $38.9 million primarily due to the $18.7 million in Tricolor bankruptcy losses recorded in the year ended December 31, 2025 as described in the Recent Developments section above. Increased bad debt provision charges on our finance receivable portfolio unrelated to Tricolor during the year ended December 31, 2025 drove the remainder of the increase in non-personnel costs compared to the year ended December 31, 2024. For the year ended December 31, 2025 compared to the year ended December 31, 2024, personnel-related costs decreased to $173.0 million from $178.6 million, primarily as a result of lower stock-based compensation. Selling, general, and administrative expenses as a percentage of revenue decreased during the year ended December 31, 2025 compared to the year ended December 31, 2024 as we continued our efforts to effectively manage costs while growing our revenue.
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Depreciation and Amortization
Year ended December 31, $ Change % Change
(in thousands)
Percentage of revenue 6 % 6 %
The increase was primarily due to an increase of $7.7 million in amortization of internal-use software costs due to the placing of internal-use software projects into service and the subsequent recognition of amortization expense. Depreciation and amortization as a percentage of revenue remained flat during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Interest Income
Year ended December 31, $ Change % Change
(in thousands)
The decrease was primarily driven by a lower average balance in our marketable securities portfolio as we used the proceeds from sales and maturities of marketable securities to support acquisition activity in the prior year. In addition, a lower average interest rate during the year ended December 31, 2025 compared to the year ended December 31, 2024 combined with our sales of marketable securities during the fourth quarter of 2025 also contributed to the decrease.
Interest Expense
Year ended December 31, $ Change % Change
(in thousands)
The increase was primarily driven by the interest and fees related to the Warehouse facility which was entered into on June 20, 2024. The increase in interest expense on the Warehouse facility during the year ended December 31, 2025 was due to a higher average balance during 2025 compared to 2024.
Provision for Income Taxes
Year ended December 31, $ Change % Change
(in thousands)
Our effective tax rate was approximately (2.1)% and (0.9%) for the year ended December 31, 2025 and 2024, respectively. The principal differences between the federal statutory rate and the effective tax rate are related to state taxes, foreign taxes and credits and the non-recognition of tax benefits for certain entities in a loss position for which a full valuation allowance has been recorded.
Non-GAAP Financial Measures
Adjusted EBITDA
We report our financial results in accordance with GAAP. However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our performance.
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Adjusted EBITDA is a financial measure that is not presented in accordance with GAAP. We believe that Adjusted EBITDA, when taken together with our financial results presented in accordance with GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of Adjusted EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business and evaluating our operating performance, as well as for internal planning and forecasting purposes.
Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not properly reflect capital commitments to be paid in the future; (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (iii) it does not consider the impact of stock-based compensation expense; (iv) it does not reflect other non-operating income and expenses, including interest income and expense; (v) it does not consider the impact of any contingent consideration liability valuation adjustments; (vi) it does not reflect tax payments that may represent a reduction in cash available to us; (vii) it does not include the amortization of acquired intangible assets but it does include the revenue that these acquired intangible assets contribute to the enterprise; and (viii) it does not reflect other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net loss and other results stated in accordance with GAAP.
The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure stated in accordance with GAAP, for the periods presented:
Year ended December 31,
Interest expense (income), net 1,612 (5,093)
Provision for income taxes 1,338 688
Tricolor bankruptcy losses (2) 18,711 —
Non-GAAP Net income (loss)
We report our financial results in accordance with GAAP. However, management believes that Non-GAAP Net income (loss), a financial measure that is not presented in accordance with GAAP, provides investors with additional useful information to measure operating performance and current and future liquidity when taken together with our financial results presented in accordance with GAAP. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our continuing operations.
We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.
We exclude amortization of acquired intangible assets from the calculation of Non-GAAP Net income (loss). We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons
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between operating results from period to period as the underlying intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.
We exclude contingent consideration liability valuation adjustments associated with the purchase consideration of transactions accounted for as business combinations. We also exclude certain other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses, because we do not consider such amounts to be part of our ongoing operations nor are they comparable to prior periods nor predictive of future results.
Non-GAAP Net income (loss) is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not consider the impact of stock-based compensation expense; (ii) although amortization is a non-cash charge, the underlying assets may need to be replaced and Non-GAAP Net income (loss) does not reflect these capital expenditures; (iii) it does not consider the impact of any contingent consideration liability valuation adjustments; (iv) it does not include the amortization of acquired intangible assets but it does include the revenue that these acquired intangible assets contribute to the enterprise; and (v) it does not consider the impact of other one-time charges, such as acquisition-related and restructuring expenses, which could be material to the results of our operations. In addition, our use of Non-GAAP Net income (loss) may not be comparable to similarly titled measures of other companies because they may not calculate Non-GAAP Net income (loss) in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Non-GAAP Net income (loss) alongside other financial measures, including our net loss and other results stated in accordance with GAAP.
The following table presents a reconciliation of Non-GAAP Net income (loss) to net loss, the most directly comparable financial measure stated in accordance with GAAP, for the periods presented:
Year ended December 31,
Amortization of acquired intangible assets 10,554 11,687
Amortization of capitalized stock-based compensation 6,214 4,675
Tricolor bankruptcy losses (2) 18,711 —
Liquidity and Capital Resources
We have financed operations since our inception primarily through our marketplace revenue, proceeds from sales of equity securities, and debt facilities.
As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents totaling $271.5 million. We believe that our existing cash and cash equivalents and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months and for the long-term. Our future capital requirements over the long-term will depend on many factors, including volume of sales with existing customers, expansion of sales and marketing activities to acquire new customers, timing and extent of spending to support development efforts and introduction of new and enhanced services. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations and financial condition.
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As of December 31, 2025, our principal commitments primarily consist of long-term debt and leases for facilities. We have $5.2 million of lease obligations due within a year, and an additional $41.8 million of lease obligations due at various dates through 2039. Refer to Note 10.Leases, of our consolidated financial statements.
In order to compete successfully and sustain operations at current levels over the next 12 months, we will be required to devote a significant amount of operating cash flow to our human capital in the form of salaries and wages. Additionally, we enter into purchase commitments for goods and services made in the ordinary course of business. These purchase commitments include goods and services received and recorded as liabilities as of December 31, 2025 as well as goods and services which have not yet been delivered or performed and have, therefore, not been reflected in our Consolidated Balance Sheets and Consolidated Statements of Operations. These commitments typically become due after the delivery and completion of such goods or services.
We settle transactions among buyers and sellers using the marketplace, and as a result the value of the vehicles passes through our balance sheet. Because our receivables typically have been, on average, settled faster than our payables, our cash position at each balance sheet date has been bolstered by marketplace float. Changes in working capital vary from quarter-to-quarter as a result of Marketplace GMV and the timing of collections and disbursements of funds related to auctions completed near period end.
Our Debt Arrangements
2021 Revolver
On August 24, 2021, ACV entered into a revolving credit facility (the “2021 Revolver”). The Revolver was established to provide general financing to us and is secured by substantially all of our assets except for certain finance receivables. As of December 31, 2025, the maximum borrowing capacity under the Revolver is $250.0 million and includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time. Through June 26, 2025, the interest rate on the Revolver was, at our option, either (a) the Secured Overnight Financing Rate (“SOFR”) (or a replacement rate established in accordance with the terms of the credit agreement for the 2021 Revolver) subject to a 0.00% SOFR floor, plus a margin of 2.75% per annum plus an additional credit spread adjustment of 0.11% for daily and one-month terms, 0.26% for three-month terms and 0.43% for six-month terms or (b) the Alternate Base Rate plus a margin of 1.75% per annum. The Alternate Base Rate was defined as the highest of (a) the Wall Street Journal prime rate, (b) the NYFRB rate plus 0.5% and (c) 1.00% plus the adjusted SOFR rate for a one-month interest period.
On June 26, 2025, we entered into Amendment No. 4 (the “ Fourth Amendment”) to the 2021 Revolver which modifies the credit agreement (i) to increase the committed amount of the Company’s revolving credit facility thereunder from $160 million to $250 million, (ii) to extend the maturity date thereof from August 24, 2026 to June 26, 2030, (iii) to modify the Company’s minimum total revenue financial covenant to take into account such maturity date extension, (iv) to include a new maximum total net leverage ratio that will be effective as of the earlier of five business days after the Company’s election and July 30, 2027, as more particularly described in the Revolving Credit Agreement, as amended (the “Covenant Conversion Date”), after which the Company’s minimum liquidity and minimum total revenue financial covenants will no longer be applicable, (v) to provide for more favorable pricing of the loans on and after the Covenant Conversion Date, and (vi) to amend certain other items in connection with the foregoing. Borrowings under the 2021 Revolver will continue to bear interest, at the Company’s option, at either the Term SOFR Rate, subject to a 0.00% SOFR floor, or the Alternate Base Rate plus a margin equal to the Applicable Rate. Pursuant to the Fourth Amendment, the Applicable Rate is (x) 2.75% prior to the Covenant Conversion Date and 2.500% thereafter for loans accruing interest at
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the Term SOFR Rate and (y) 1.750% prior to the Covenant Conversion Date and 1.500% thereafter for loans accruing interest at the Alternate Base Rate, in each case, subject to the terms of the Credit Agreement.
From and after the Covenant Conversion Date, we will be subject to a maximum total net leverage ratio covenant of (i) 4.0 to 1.0 for any measurement period ending on or prior to the second fiscal quarter following June 30, 2027 and (ii) 3.5 to 1.0 thereafter.
As of December 31, 2025, $70.0 million was drawn under the 2021 Revolver with an interest rate of 8.50%, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.1 million.
Warehouse Facility
On June 20, 2024, ACV Capital Funding II LLC entered into the Warehouse Facility. As of December 31, 2025 the maximum borrowing capacity under the Warehouse Facility was $200.0 million. As amended, the revolving feature on the facility ends on December 10, 2027 and the facility matures twelve months later, unless sooner terminated or extended in accordance with its terms. The Warehouse Facility was established to provide liquidity to fund new originations of auto floorplan loans by ACV Capital. The facility is secured by all assets of ACV Capital Funding II LLC, including the auto floorplan loans owned by it.
Advances under the Warehouse Facility funded by asset-backed commercial paper conduit through the issuance of commercial paper notes will bear interest generally at a rate equivalent to the weighted average annual rate of all commercial paper notes issued by the commercial paper conduit to fund its advances, plus a margin of 2.75%. Advances funded by lenders that are not commercial paper conduits, or by commercial paper conduits funded through means other than the issuance of commercial paper notes, will bear interest generally at a rate equal to (i) Term SOFR for a period of one-month (subject to a 0.00% floor), plus 0.11448% or, in certain circumstances, the Alternate Base Rate, plus (ii) a margin of 2.75%. The Alternate Base Rate is the highest of (a) the prime rate quoted in the Wall Street Journal, (b) the NYFRB rate plus 0.50% and (c)(i) 1.00% plus (ii) the Term SOFR rate for a one-month interest period. The interest rate may be increased under certain circumstances, including upon the occurrence of an early amortization event or event of default under the warehouse documentation. ACV Capital Funding II LLC must also pay upfront any unused fees in connection with the facility.
On December 12, 2025, ACV Capital Funding II LLC entered into the first amendment to the Warehouse Facility which modifies such agreement (i) to increase the committed amount of ACV Capital II’s revolving credit facility thereunder from $125.0 million to $200.0 million, (ii) to extend the Scheduled Commitment Termination Date thereof from June 20, 2026 to December 10, 2027, and (iii) to make certain changes to the definitions of Concentration Limits, Eligible Dealers and Eligible Vehicles, as more particularly described in the agreement. In connection with the amendment, the Applicable Margin used in calculating the Interest Rate applicable to Loans has been reduced by 0.25% to 2.75%
As of December 31, 2025 borrowings under the Warehouse Facility were $120.0 million with an interest rate of 6.71%.
We were in compliance with all such applicable covenants as of December 31, 2025, and believe we are in compliance as of the date of this Yearly Report on Form 10-K.
Cash Flows from Operating, Investing, and Financing Activities
The following table shows a summary of our cash flows for the periods presented:
Year ended December 31,
(in thousands)
Net cash provided by operating activities $ 78,232 $ 65,397
Net cash used in investing activities (74,051) (15,863)
Net cash provided by (used in) financing activities 42,974 (7,874)
Effect of exchange rate changes 277 (166)
Net increase in cash and equivalents $ 47,432 $ 41,494
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Operating Activities
Our largest source of operating cash is cash collection from fees earned on our marketplace. Our primary uses of cash from operating activities are for personnel expenses, sales and marketing expenses and overhead expenses.
In the years ended December 31, 2025 and 2024, net cash provided by operating activities was $78.2 million and $65.4 million, respectively. Net cash provided by operating activities during the year ended December 31, 2025 consisted primarily of cash earnings and an increase in accounts payable to sellers partially offset by an increase in accounts receivable from buyers. In the year ended December 31, 2024 net cash provided by operating activities consisted primarily of cash earnings, a decrease to accounts receivable from buyers and an increase in accounts payable to sellers. The increase in cash provided by operating activities during the year ended December 31, 2025 relative to the year ended December 31, 2024 is primarily due to increased revenues and the timing of collections and disbursements of funds related to auctions completed near period end.
Investing Activities
In the years ended December 31, 2025, and 2024, net cash used in investing activities was $74.1 million and $15.9 million, respectively. Net cash used in investing activities during the year ended December 31, 2025 was primarily related to the increase in finance receivables and capitalized software development, partially offset by net proceeds from the sale and maturities of the marketable securities portfolio. Net cash used in investing activities during the year ended December 31, 2024 was primarily related to the acquisition of businesses, investments in capitalized software, and growth of the financing receivables portfolio, partially offset by net proceeds from the sale and maturity of certain marketable securities.
The increase in net cash used in investing activities during the year ended December 31, 2025 relative to the year ended December 31, 2024 was primarily driven by an increase in our financing receivables portfolio.
Financing Activities
In the years ended December 31, 2025, and 2024, net cash provided by (used in) financing activities was $43.0 million and $(7.9) million, respectively. Net cash provided by financing activities during the year ended December 31, 2025 relates to proceeds, net of repayments, from long term debt partially offset by payments of RSU tax withholdings in exchange for common shares surrendered by RSU holders. Net cash used in financing activities during the year ended December 31, 2024 related to payments of RSU tax withholdings in exchange for common shares surrendered by RSU holders partially offset by proceeds, net of repayments, on long term debt and proceeds from the exercises of stock options.
The increase in net cash provided in financing activities during the year ended December 31, 2025 relative to the year ended December 31, 2024 was primarily the result of increased net borrowing of long term debt, partially offset by lower proceeds from stock option exercises.
Seasonality
The volume of vehicles sold through our auctions generally fluctuates from quarter to quarter. This seasonality is caused by several factors, including holidays, weather, the seasonality of the retail market for used vehicles and the timing of federal tax returns, which affects the demand side of the auction industry. As a result, revenue and operating expenses related to volume will fluctuate accordingly on a quarterly basis. In the fourth quarter, we typically experience lower used vehicle auction volume as well as additional costs associated with the holidays. Seasonally depressed used vehicle auction volume typically continues during the winter months through the first quarter. Typical seasonality trends may not be observed in periods where other external factors more significantly impact the industry.
Critical Accounting Policies and Estimates
We believe that the following accounting policies and estimates involve a high degree of judgment and complexity. Accordingly, these are the policies and estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. See Note 1 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a description of our other significant accounting policies. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.
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Revenue Recognition of Auction and Other Marketplace Revenue
We generate auction and other marketplace revenue from contracts with customers. Revenue is recognized when the services are completed and control of the promised services is transferred to customers in an amount that reflects the consideration that we expect to receive in exchange for those services. Determining whether performance obligations should be accounted for separately or combined may require judgment. For each performance obligation within a contract, we evaluate whether we act as the principal or as an agent. When we act as the principal, revenue is recognized in the gross amount of the consideration received from the customer recognized at the point in time the services are completed. When we act as the agent, revenue is recognized net of the consideration due to a third party at the point in time when the services are provided.
In contracts with multiple performance obligations, we allocate the transaction price to each distinct performance obligation proportionately based on the estimated stand-alone selling price ("SSP") of each performance obligation. We use an observable price to determine the SSP for each performance obligation. Where observable prices are not available, an expected cost-plus margin approach is used. We then determine how the services are transferred to the customer to determine the timing of revenue recognition.
From time to time, we provide promotions and incentives to buyers and sellers in various forms including discounts on fees, credits and rebates. Promotions and incentives which are consideration payable to a customer are recognized as a reduction of revenue when revenue is recognized.
Guarantees
We provide certain guarantees to Sellers in the marketplace in the ordinary course of business, which are accounted for under ASC 460, Guarantees ("ASC 460") as a general guarantee. Included in our guarantees are vehicle condition guarantees whereby we offer guarantees to sellers in qualifying situations where we performed a vehicle inspection and prepared the vehicle condition report. In situations where the sale of covered vehicles is unwound due to circumstances covered by the guarantee, the guarantee provides us with the right to retain proceeds from the subsequent liquidation of the vehicle covered under the guarantee. The fair value of vehicle condition guarantees issued is estimated based on historical results and other qualitative factors. Vehicle condition guarantee revenue is recognized on the earlier of the guarantee expiration date or the guarantee settlement date.
Recently Adopted Accounting Pronouncements
For information on recently issued accounting pronouncements, refer to Note 1. Nature of Business and Summary of Significant Accounting Policiesin our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates.
Interest Rate Risk
We had cash and cash equivalents of $271.5 million as of December 31, 2025, which includes interest-bearing investments with maturities of three months or less. Interest-earning instruments carry a degree of interest rate risk as increases in rates will negatively affect the fair value of our cash equivalents. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We had borrowings from banks of $190.0 million as of December 31, 2025. The interest rate paid on these borrowings is variable, indexed to SOFR. Therefore, increases in interest rates will increase the interest expense on these borrowings. A hypothetical 100 basis point change in interest rates would not result in a material impact on our consolidated financial statements.
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Item 8. Financial Statements and Supplementary Data.
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Consolidated Balance Sheets as of December 31, 2025 and 2024 65
Notes to Consolidated Financial Statements 68
Note 1 - Nature of Business and Summary of Significant Accounting Policies 68
Note 2 - Concentration of Credit Risk 74
Note 3 - Financial Instruments 75
Note 4 - Fair Value Measurement 75
Note 5 - Accounts Receivables & Allowance for Doubtful Receivables 76
Note 6 - Property and Equipment, net 77
Note 7 - Internal-Use Software Costs, net 77
Note 8 - Guarantees, Commitments and Contingencies 78
Note 9 - Borrowings 78
Note 11 - Stockholders' Equity 80
Note 13 - Stock-Based Compensation 81
Note 14 - Employee Benefit Plan 83
Note 15 - Income Taxes 83
Note 16 - Acquisitions 86
Note 17 - Goodwill and Acquired Intangibles 88
Note 18 - Net Income (Loss) Per Share 89
Note 19 - Segment Information 89
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of ACV Auctions Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ACV Auctions Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
We have audited the accompanying consolidated balance sheets of ACV Auctions Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, 2026 expressed an unqualified opinion thereon.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
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Revenue – highly automated processes within auction & other marketplace revenue
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2018.
Buffalo, NY
February 23, 2026
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of ACV Auctions Inc.
Opinion on Internal Control Over Financial Reporting
We have audited ACV Auctions Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, ACV Auctions Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 23, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Buffalo, N Y
February 23, 2026
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ACV AUCTIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Year ended December 31,
Revenue:
Operating expenses:
Other (expense) income:
Net loss per share - basic and diluted $ (0.39) $ (0.48) $ (0.47)
The accompanying notes are an integral part of these consolidated financial statements.
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ACV AUCTIONS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Year ended December 31,
Other comprehensive loss:
Net unrealized gains on available-for-sale securities 68 660 1,737
Foreign currency translation gain (loss) 4,010 (1,871) 509
The accompanying notes are an integral part of these consolidated financial statements.
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ACV AUCTIONS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
Assets
Current Assets:
Marketable securities — 46,036
Liabilities and Stockholders' Equity
Current Liabilities:
Commitments and Contingencies (Note 8)
Stockholders' Equity:
Accumulated other comprehensive income (loss) 1,338 (2,740)
The accompanying notes are an integral part of these consolidated financial statements.
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ACV AUCTIONS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)
Shares Par Value Shares Par Value
Other comprehensive loss — — — — — — 2,246 2,246
Issuance of shares for employee stock purchase plan 296 — — — 3,062 — — 3,062
Other comprehensive income — — — — — — (1,211) (1,211)
Issuance of shares for employee stock purchase plan 266 — — — 3,910 — — 3,910
Other comprehensive loss — — — — — — 4,078 4,078
Issuance of shares for employee stock purchase plan 504 1 — — 4,665 — — 4,666
(1) - Following the approval by the Company's shareholders of certain amendments to the Company's Certificate of Incorporation at the 2025 Annual Shareholder Meeting, the Company filed with the State of Delaware the Eleventh Amended and Restated Certificate of Incorporation of ACV Auctions Inc. The changes include, among other things, the removal of all references to Class B Common Stock and the reclassification of Class A Common Stock to Common Stock.
The accompanying notes are an integral part of these consolidated financial statements.
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ACV AUCTIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Proceeds from sale of real estate — 14,083 —
Acquisition of businesses (net of cash acquired) — (156,475) (29,623)
Cash Flows from Financing Activities
Payments for debt issuance and other financing costs (3,265) (2,023) —
Other financing activities — (66) (169)
Net cash provided by (used in) financing activities 42,974 (7,874) 30,633
Supplemental disclosure of cash flow information
Cash paid during the period for:
Non-cash investing and financing activities:
The accompanying notes are an integral part of these consolidated financial statements.
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ACV AUCTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business – ACV Auctions Inc. (the "Company" or "ACV") operates in one industry segment, providing a wholesale auction marketplace to facilitate business-to-business used vehicle sales between a selling dealership (“Seller”) and a buying dealership (“Buyer”). The Marketplace encompasses the digital marketplaces, remarketing centers, data services, and data and technology.
Customers using the Marketplace are licensed automotive dealerships or other commercial automotive enterprises. At the election of the customer purchasing a vehicle, the Company can arrange third-party transportation services for the delivery of the purchased vehicle through its wholly owned subsidiary, ACV Transportation LLC. The Company can also provide the customer financing for the purchased vehicle through its wholly owned subsidiary, ACV Capital LLC (“ACV Capital”). ACV also provides data services that offer insights into the condition and value of used vehicles for transactions both on and off the Company's Marketplace, which help dealerships, their end customers, and commercial partners make more informed decisions to transact with confidence and efficiency. Customers using data services are licensed automotive dealerships or other commercial automotive enterprises. Services are primarily provided in the United States and certain data services are also provided internationally. Services are supported by the Company’s operations which are primarily in North America and India.
Basis of Consolidation– The consolidated financial statements include the accounts of ACV Auctions Inc. and all of its controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Basis of Preparation –The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Management Estimates – The preparation of consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and these differences may be material. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, allowance for doubtful receivables, contingent consideration, fair value of guarantees, impairment of goodwill, loss estimates related to guarantee claims, fair value and useful lives of acquired intangible assets, and accounting for income taxes, including the valuation allowance on deferred tax assets.
Cash and Cash Equivalents – The Company considers all highly liquid instruments originally purchased with a maturity of three months or less to be cash equivalents. Included within Cash and cash equivalents on the Consolidated Balance Sheets are restricted cash balances which were not material at December 31, 2025 and December 31, 2024.
Receivables– Trade receivables include the price of the auctioned vehicle and fees due for services. Trade receivables are recorded net of the allowance for doubtful receivables. Trade receivables are due either upon the close of an auction, or upon the delivery of title from the Seller to the Company, depending on the terms agreed with the customer.
Finance receivables represent amounts borrowed by the purchaser of a vehicle to finance the purchase. Finance receivables are collateralized by the purchased vehicle.Finance receivables are recorded net of the allowance for credit losses. Finance receivables are due upon maturity or upon the subsequent sale of the purchased vehicle, whichever comes first.
For trade receivables and finance receivables, management considers factors such as age of the receivable, customer history, existing economic conditions, overall portfolio credit quality, and reasonable and supportable expectations about the future to estimate an allowance. Upon management’s determination of uncollectibility, such accounts are written off against the allowance for doubtful receivables or allowance for credit losses.
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Property and Equipment, net – Property and equipment is stated at cost, net of accumulated depreciation. Improvements are generally capitalized. The costs of maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the approximate economic useful lives of the assets. Depreciation of the cost of improvements to leased properties is made using the straight-line method based on the shorter of the estimated useful life of the improvement or applicable lease period.The estimated useful lives of the Company's property and equipment are generally as follows:
Computer equipment 2-3 years
Auction and inspection equipment 2-5 years
Furniture and fixtures 5-7 years
Vehicles 5 years
Leasehold improvements Lesser of economic life or lease term
Internal-Use Software Costs, net – The Company capitalizes its internal-use software costs during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. This software is amortized, once it is placed into service, on a straight-line basis over its estimated useful life which is generally three years. The Company evaluates the useful lives of these assets on an annual basis, or more frequently when warranted.
Leases – The Company determines if an arrangement is a lease at inception. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and related lease liabilities related to operating leases with a term greater than twelve months are included in Other assets and Other long-term liabilities, respectively, in the Company's Consolidated Balance Sheets. The portions of such lease liabilities due within one year are included in Accrued other liabilities in the Company’s Consolidated Balance Sheets. The Company has elected to account for operating leases with a term less than twelve months to be expensed as incurred. Short-term operating lease expenses were not material for the years ended December 31, 2025, 2024, and 2023.
The Company’s operating leases have lease and non-lease components for which the Company has elected to apply the practical expedient and account for each lease component and related non-lease component as one single component. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company is unable to determine the lessor’s implicit rate and uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. An individual lease’s term may include an option to extend or terminate the lease when it is reasonably certain that the option will be exercised. Operating lease expense is recognized on a straight-line basis over the lease term.
Goodwill & Acquired Intangible Assets, net – Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives. The Company evaluates the estimated remaining useful lives of acquired intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Goodwill is not amortized, but rather is subject to an impairment test.
The Company evaluates goodwill for impairment annually as one singular reporting unit on October 1 or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. The Company’s policy is to first perform a qualitative assessment to determine whether it was more likely than not that the reporting unit's carrying value is less than its fair value, indicating the potential for goodwill impairment. If the reporting unit fails the qualitative test, then the Company proceeds with a quantitative test. The Company then determines whether the reporting unit fair value is less than its carrying amount and, if it is, the Company recognizes a goodwill impairment equal to the difference between the carrying amount of the reporting unit and its fair value, not to exceed the carrying amount of goodwill. The Company did not identify any impairment of its goodwill for the years ended December 31, 2025, 2024, and 2023.
Impairment of Long-Lived Assets –The Company periodically reviews long-lived assets, which consist of its property and equipment, internal-use software and other finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may be impaired or the estimated useful lives are no longer appropriate. If indicators of impairment exist and the undiscounted projected cash flows associated with such
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assets are less than the carrying amount of the asset group and the carrying value of the asset group is determined to be unrecoverable, an impairment charge would be recognized in an amount equal to the amount by which the carrying value of the asset group exceeds its fair value. The Company did not identify any material impairment losses related to the Company's long-lived assets during the years ended December 31, 2025, 2024, and 2023.
Commitments and Contingencies –The Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the consolidated financial statements taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can reasonably be made. Accruals for contingencies including litigation are included in Accrued other liabilities at undiscounted amounts. These accruals are adjusted periodically as additional information becomes available. If the amount of an actual loss is greater than the amount accrued, this could have an adverse impact on the Company's operating results in that period.
Revenue Recognition – The Company generates revenue from contracts with customers. Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those services. Determining whether performance obligations should be accounted for separately or combined may require significant judgment. For each performance obligation within a contract, the Company evaluates whether it acts as the principal or as an agent. When the Company acts as the principal, revenue is recognized in the gross amount of the consideration received from the customer at the point in time the services are completed. When the Company acts as the agent, revenue is recognized net of the consideration due to a third party at the point in time when the services are provided.
In contracts with multiple performance obligations, the Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated stand-alone selling price (“SSP”) of each performance obligation. The Company uses an observable price to determine the SSP for each performance obligation. Where observable prices are not available, an expected cost-plus margin approach is used. The Company then determines how the services are transferred to the customer to determine the timing of revenue recognition.
From time to time the Company provides promotions and incentives to Buyers and Sellers in various forms including discounts on fees, credits and rebates. Promotions and incentives, which are consideration payable to a customer, are recognized as a reduction of revenue when revenue is recognized.
Commissions paid to sales representatives and related payroll taxes are considered costs to obtain a contract. ASC 340, Other Assets and Deferred Costs, requires costs to obtain a contract with a customer within the scope of ASC 606 to be capitalized and amortized over the period of benefit. The Company has elected the practical expedient available under ASC 340-40-25-4 to immediately expense the incremental cost of obtaining a contract when the underlying related asset would have been amortized over one year or less.
The Company has utilized the practical expedient available under ASC 606-10-50-14 and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company has also utilized the practical expedient available under ASC 606-10-32-2A to exclude from revenue all taxes assessed by a governmental authority, including sales, use and excise taxes, that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer.
Marketplace and service revenue – Marketplace and service revenue consists principally of revenues earned from facilitating an auction on the Marketplace and arranging for the transportation of vehicles purchased on the Marketplace to the Buyer. In the course of facilitating an auction on the Marketplace, the Seller may elect for the Company to perform a wholesale auction inspection of the vehicle. Marketplace and service revenue also consists of data services that offer insights into the condition and value of used vehicles for transactions both on and off the Company's Marketplace, by providing the customer an inspection of the vehicle and an inspection report and other software-related services.
Revenue earned from facilitating a vehicle auction through the Marketplace is recognized at a point in time when the vehicle is sold. The Company acts as an agent when facilitating a vehicle auction through the Marketplace. Accordingly, auction and related fees charged to the Buyer and Seller are reported as revenue on a net basis, excluding the price of the auctioned vehicle in the transaction.
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Revenue from transportation services is recognized over time as delivery is completed. In providing its transportation services, the Company leverages its network of third-party transportation carriers and arranges for the transportation of the vehicle to the Buyer. The Company is the principal for transportation services. Transportation fees charged to the Buyer are reported on a gross basis.
Data services revenue is recognized at a point in time when the vehicle inspection and report is completed and delivered to the customer. The Company also generates data services revenue from software related services. Subscription revenue is recognized on a ratable basis over the contractual subscription term of the arrangement, beginning on the date that the Company's services are made available to the customer. Implementation and training revenue is recognized over time as services are transferred to the Company's customers.
Timing of revenue recognition may differ from the timing of payment from customers. Accounts receivable represents amounts invoiced, which include the price of the auctioned vehicle and related fees charged to a Buyer, where the Company has the unconditional right to payment.
The Company offers short-term financing to eligible borrowers who have purchased a vehicle. These financing fees and interest income are accounted for under ASC 310-20, Nonrefundable Fees and Other Costs, and therefore are not subject to evaluation under ASC 606. Financing fees and interest income earned on financing receivables are recognized ratably over the duration of the financing arrangement.
Customer assurance revenue – Customer assurance revenue represents the implied premium received for certain guarantees. Refer to Note 8 for additional information.
Marketplace and service cost of revenue – Marketplace and service cost of revenue consists of third-party transportation carrier costs, titles shipping costs, customer support, website hosting costs, inspection costs related to data services, and various other costs. These costs include personnel-related costs and related stock-based compensation expenses.
Customer assurance cost of revenue – Customer assurance cost of revenue consists of the costs related to satisfying claims against guarantees. Refer to Note 8 for additional information.
Operations and technology – Operations and technology costs consist of expenses for wholesale auction inspections, personnel costs related to payments and titles processing, transportation processing, product and engineering, and other general operations and technology expenses. These costs include personnel-related costs and related stock-based compensation expenses.
Selling, general and administrative – Selling, general and administrative expense consists of costs resulting from sales, accounting, finance, legal, marketing, human resources, executive, and other administrative activities. These costs include personnel-related costs, related stock-based compensation expenses, and legal and other professional services expenses.
Also included in selling, general and administrative are advertising and marketing costs to promote the Company's services, which are expensed as incurred. Advertising and marketing expenses were $6.2 million, $5.8 million, and $4.6 million for the years ended December 31, 2025, 2024 and 2023 respectively.
Depreciation and amortization – Depreciation and amortization expense consists of depreciation of fixed assets and amortization of acquired intangible assets and internal-use software. Amortization of implementation costs for hosted software arrangements is included within Operations and technology and Selling, general, and administrative, as applicable, consistent with the classification of the related hosted software fees.
Stock-Based Compensation – The Company uses the fair value recognition provisions of ASC 718, Compensation – Stock Compensation. The Company's most recent issuance of stock options occurred during 2021. The estimated fair value of each Common Stock option award or employee stock purchase right was calculated on the date of grant using the Black-Scholes option pricing model. Application of the Black-Scholes option pricing model requires significant judgment, and involves the use of subjective assumptions including:
Expected Term — The expected term represents the period that the stock-based awards were expected to be outstanding. As the Company did not have sufficient historical experience at the time of grant, for determining the
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expected term of the stock option awards granted, the simplified method was used to determine the expected term for awards issued to employees. With respect to employee stock purchase rights, the Company used a term assumption consistent with the purchase period.
Risk-Free Interest Rate — The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury constant maturity notes with terms approximately equal to the stock-based awards’ or employee stock purchase rights' expected term.
Expected Volatility — Expected volatility was estimated based upon the historical volatility of the daily closing prices of the Company's Common stock, which is traded publicly on the New York Stock Exchange, over periods that correlate with the expected terms of the awards granted.
Dividend Rate — The expected dividend rate was zero as the Company has not paid and does not anticipate paying any dividends in the foreseeable future.
Fair Value of Common Stock — Prior to the Company's IPO, the Company estimated the fair value of common stock. The Board of Directors, with input from management considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards were approved.
Valuations of the common stock performed by a third-party valuation specialist are in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation. Factors taken into consideration in assessing the fair value of the Company’s common stock include, but are not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s convertible preferred stock relative to those of its common stock; (iii) the likelihood and timing of achieving a qualifying event, such as an IPO or sale of the Company given prevailing market conditions; (iv) actual operating and financial results; and (v) precedent transactions involving the Company’s shares.
Subsequent to the IPO, the fair value of the underlying common stock was determined by the closing price, on the date of grant, of the Company's Common stock.
The Company measures all stock options and other stock-based awards granted to employees, directors, consultants and other nonemployees based on the fair value on the date of the grant. The options vest based on a graded scale over the stated vesting period, and compensation expense is recognized based on their grant date fair value on a straight-line basis over the requisite service period. Forfeitures are recognized as they occur.
The fair value of restricted stock units are determined based on the closing price of the Company’s Common stock on the grant date. The awards and units vest over time and compensation expense is recognized based on their grant fair value ratably over the requisite service period. For market-based performance share units, the Company estimates the fair value at the date of grant using a Monte Carlo valuation methodology and recognize as expense those fair values over the requisite service period. The Monte Carlo methodology estimates the fair value of market-based performance share units at the date of grant and incorporates into the valuation the possibility that the market condition may not be satisfied. Provided that the requisite service is rendered, the total fair value of the market-based performance share units at the date of grant must be recognized as compensation expense even if the market condition is not achieved.
The Company classifies stock-based compensation expense in its Consolidated Statements of Operations in the same way the payroll costs or service payments are classified for the related stock-based award recipient.
Income Taxes – The Company accounts for income taxes in accordance with ASC 740, Income Taxes. This standard requires, among other things, recognition of deferred tax assets andliabilities for future tax consequences, measured by enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities,and net operating loss and tax credit carryforwards to the extent that realization of such benefitsis more likely than not.
The Company’s management evaluates its tax positions to determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the tax position. Management has analyzed the Company’s tax positions and has concluded that as of
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December 31, 2025, there are no uncertain positions taken or expected to be taken that would require recognition or disclosure in the consolidated financial statements. Under the Company’s policy, interest and penalties would be expensed as incurred and reported within the Other income (expense) section of the Consolidated Statements of Operations.
Foreign Currency – The functional currencies of the Company’s international subsidiaries are the applicable local currency. The translation of the applicable foreign currency into U.S. dollars is performed for assets and liabilities using current exchange rates in effect at the balance sheet date, and for revenue and expense activity using the applicable month’s average exchange rates. Foreign currency translation gains and losses are included as a component of the Consolidated Statements of Comprehensive Loss. Foreign currency transaction gains and losses are reported within the Selling, general, and administrative financial statement line item of the Consolidated Statements of Operations.
Net Loss Per Share Attributable to Common Stockholders – Basic net loss per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.
Diluted net loss per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, adjusted to reflect potentially dilutive securities using the treasury stock method for the purchase of the Company's common stock, stock option awards and restricted stock units. Due to the Company’s loss from continuing operations, net of income taxes: (i) convertible preferred stock, (ii) unvested restricted stock and other awards, (iii) stock options, and (iv) shares subject to the employee stock purchase plan, were not included in the computation of diluted net loss per share attributable to common stockholders, as the effects would be anti-dilutive. Accordingly, basic and diluted net loss per share attributable to common stockholders are equal for the years presented.
Fair Value Measurements and Financial Instruments – Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation of these assets or liabilities are as follows:
Level 1: Observable inputs such as quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs other than the quoted prices in active markets that are observable either directly or indirectly.
Level 3: Unobservable inputs in which there is little or no market data which require the Company to develop its own assumptions.
The Company’s financial instruments primarily consist of cash and cash equivalents, debt securities, trade and finance accounts receivable and accounts payable. The carrying values of cash and cash equivalents, trade and finance accounts receivable, and accounts payable approximate fair value due to the short-term nature of those instruments.
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Recent Accounting Pronouncements – The following table provides a description of accounting standards that were adopted by the Company as well as standards that are not yet adopted that could have an impact to the consolidated financial statements upon adoption.
Accounting Standards Adopted
Accounting Standards Not Yet Adopted
The Company reviewed all other recently issued accounting standards and concluded that they were not applicable to the consolidated financial statements.
2. Concentration of Credit Risk
Financial instruments that potentially subject the company to credit risk primarily consist of cash and cash equivalents, short-term high credit-quality money market funds at financial institutions that management believes are of high credit quality, and marketable investment securities with investment-grade ratings. The Company has not realized any material losses on such amounts.
Due to the nature of the Company's business, substantially all revenue is earned and trade and finance receivables are due from dealerships and commercial partners. No individual customer accounted for more than 10% of revenue for the years ended December 31, 2025, 2024, and 2023. No individual customer accounted for more than 10% of accounts receivable at December 31, 2025 and 2024.
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3. Financial Instruments
The Company did not have any available-for-sale marketable securities as of December 31, 2025.
The following is a summary of available-for-sale marketable securities as of December 31, 2024 (in thousands):
Amortized Cost Unrealized Gain Unrealized Losses Fair Value
Marketable securities:
U.S. treasury and agency securities 3,097 — (4) 3,093
(1)Comprised primarily of corporate bonds
The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio.
The Company did not believe that any unrealized losses are attributable to credit-related factors based on its evaluation of available evidence. To determine whether a decline in value was related to credit loss, the Company evaluated, among other factors: the extent to which the fair value was less than the amortized cost basis, changes to the rating of the security by a rating agency and any adverse conditions specifically related to an issuer of a security or its industry. As of December 31, 2024 the Company did not intend to sell the instruments and it was not more likely than not that the Company would be required to sell the investments before recovery of their amortized cost bases, which may be maturity. Unrealized gains and losses on marketable securities are presented net of tax.
4. Fair Value Measurement
The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2025 and 2024, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
Level 1 Level 2 Level 3 Total
Cash equivalents:
Level 1 Level 2 Level 3 Total
Cash equivalents:
Marketable securities:
U.S. treasury and agency securities — 3,093 — 3,093
The Company classifies its highly liquid money market funds and U.S treasury securities within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its corporate bonds and U.S. agency securities within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.
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5. Accounts Receivables & Allowance for Doubtful Receivables
The Company maintains an allowance for doubtful receivables that, in management’s judgment, reflects expected credit losses in the portfolio. A provision for doubtful receivables is recorded to adjust the level of the allowance as deemed necessary by management.
Changes in the allowance for doubtful trade receivables for the year ended December 31, 2025, 2024 and 2023 were as follows (in thousands):
Year ended December 31,
Net write-offs
Changes in the allowance for doubtful finance receivables for the year ended December 31, 2025, 2024 and 2023 were as follows (in thousands):
Year ended December 31,
Net write-offs
On September 10, 2025, Tricolor Holdings, LLC, and certain of its affiliates (collectively, "Tricolor") filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code with the United States Bankruptcy court for the Northern District of Texas. Floorplan loans to Tricolor accounted for approximately $18.7 million of the Company's finance receivables as of December 31, 2025. There are allegations against Tricolor of significant fraud that are being investigated by Federal authorities. The Company is participating as a creditor in the bankruptcy proceedings, seeking to maximize the recovery of the outstanding finance receivables. However, the ultimate outcome of these collection efforts is uncertain at this time.
In regards to the collectability of the Company's finance receivables, in the year ended December 31, 2025, the Company recorded a provision for credit losses of $18.7 million on finance receivables due from Tricolor. The loss was recorded in selling, general, and administrative expenses within the Consolidated Statement of Operations.
In addition to the provision recorded related to the previously described Tricolor bankruptcy, the Company recorded an increase in the allowance for doubtful finance receivables during 2025 primarily due to reserves on specific borrowers exhibiting signs of stress and to a lesser degree, due to deterioration in collection experience on the Company's broader finance receivable portfolio.
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6. Property and Equipment, net
Property and equipment, net consisted of the following at December 31, 2025 and 2024 (in thousands):
Auction and inspection equipment 6,006 3,161
Less accumulated depreciation (6,589) (5,227)
Depreciation expense for the year ended December 31, 2025, 2024 and 2023 totaled $3.9 million, $3.5 million and $3.4 million, respectively.
7. Internal-Use Software Costs, net
Internal-use software costs, net consisted of the following for the year ended December 31, 2025 (in thousands):
Internal-Use Software - Work in Progress N/A 39,168 — 39,168
Internal-use software costs, net consisted of the following for the year ended December 31, 2024 (in thousands):
Internal-Use Software - Work in Progress N/A 24,995 — 24,995
Amortization expense for the years ended December 31, 2025, 2024 and 2023, totaled $29.2 million, $21.5 million and $10.1 million, respectively.
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Estimated amortization expense on existing internal-use software costs for the next three years is as follows (in thousands):
Year ended December 31,
8. Guarantees, Commitments and Contingencies
The Company provides certain guarantees to Sellers in the Marketplace in the ordinary course of business, which are accounted for under ASC 460 as a general guarantee.
Vehicle Condition Guarantees – Sellers must attach a vehicle condition report in the Marketplace for every auction; this vehicle condition report is used by Buyers to inform bid decisions. The Company offers guarantees to Sellers in qualifying situations where the Company performed a vehicle inspection and prepared the vehicle condition report. Sellers pay a fee in exchange for this guarantee. Such guarantees provide Sellers protection from paying remedies to Buyers related to a Buyer’s claim that the vehicle condition report did not accurately portray the condition of the vehicle purchased on the Marketplace. These guarantees provide the Company with the right to retain proceeds from the subsequent liquidation of vehicles covered under the guarantee. The guarantees are typically provided for 10 days after the successful sale of the vehicle on the Marketplace. The fair value of vehicle condition guarantees issued is estimated based on historical results and other qualitative factors. Vehicle condition guarantee revenue is recognized on the earlier of the guarantee expiration date or the guarantee settlement date. The maximum potential payment is the sale price of the vehicle. The total sale price of vehicles for which there was an outstanding guarantee was approximately $193.2 million and approximately $161.7 million at December 31, 2025 and 2024, respectively. The carrying amount of the liability presented on the Consolidated Balance Sheets was $2.1 million and $1.4 million at December 31, 2025 and 2024, respectively.
Other Price Guarantees – The Company provides Sellers with a price guarantee for vehicles to be sold on the Marketplace from time to time. If a vehicle sells below the guaranteed price, the Company is responsible for paying the Seller the difference between the guaranteed price and the final sale price. The term of the guarantee is typically less than one week. No material unsettled price guarantees existed at December 31, 2025 and 2024.
Litigation – The Company and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings and matters in which claims for monetary damages are asserted. On an on-going basis, management, after consultation with legal counsel, assesses the Company's liabilities and contingencies in connection with such proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent pending or threatened litigation could result in exposure in excess of the recorded liability, the amount of such excess is not currently estimable.
ACV was a member of a class action lawsuit which sought damages from one of the Company's data services vendors. During September 2025, ACV was awarded a total of $7.9 million from the settlement of this class action lawsuit. Of this total settlement, $7.6 million is included as a reduction in marketplace and service cost of revenue in the Consolidated Statements of Operations for the year ended December 31, 2025. Based on the payment terms provided in the settlement, $0.8 million is included in other current assets and $1.5 million is included in other assets in the Consolidated Balance Sheet at December 31, 2025.
9. Borrowings
2021 Revolver
On August 24, 2021, ACV entered into a revolving credit facility (the “2021 Revolver”). The 2021 Revolver was established to provide general financing to the Company and is secured by substantially all of the Company’s assets except for certain finance receivables. As of December 31, 2025, the maximum borrowing capacity under the 2021 Revolver is $250.0 million and includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time. Through June 26, 2025, the interest rate on the 2021 Revolver was, at the Company’s option,
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either (a) the Secured Overnight Financing Rate (“SOFR”) (or a replacement rate established in accordance with the terms of the credit agreement for the 2021 Revolver) subject to a 0.00% SOFR floor, plus a margin of 2.75% per annum plus an additional credit spread adjustment of 0.11% for daily and one-month terms, 0.26% for three-month terms and 0.43% for six-month terms or (b) the Alternate Base Rate plus a margin of 1.75% per annum. The Alternate Base Rate was defined as the highest of (a) the Wall Street Journal prime rate, (b) the NYFRB rate plus 0.5% and (c) 1.00% plus the adjusted SOFR rate for a one-month interest period.
On June 26, 2025, the Company entered into Amendment No. 4 (the “ Fourth Amendment”) to the 2021 Revolver which modifies the credit agreement (i) to increase the committed amount of the Company’s revolving credit facility thereunder from $160 million to $250 million, (ii) to extend the maturity date thereof from August 24, 2026 to June 26, 2030, (iii) to modify the Company’s minimum total revenue financial covenant to take into account such maturity date extension, (iv) to include a new maximum total net leverage ratio that will be effective as of the earlier of five business days after the Company’s election and July 30, 2027, as more particularly described in the Revolving Credit Agreement, as amended (the “Covenant Conversion Date”), after which the Company’s minimum liquidity and minimum total revenue financial covenants will no longer be applicable, (v) to provide for more favorable pricing of the loans on and after the Covenant Conversion Date, and (vi) to amend certain other items in connection with the foregoing. Borrowings under the 2021 Revolver will continue to bear interest, at the Company’s option, at either the Term SOFR Rate, subject to a 0.00% SOFR floor, or the Alternate Base Rate plus a margin equal to the Applicable Rate. Pursuant to the Fourth Amendment, the Applicable Rate is (x) 2.75% prior to the Covenant Conversion Date and 2.500% thereafter for loans accruing interest at the Term SOFR Rate and (y) 1.750% prior to the Covenant Conversion Date and 1.500% thereafter for loans accruing interest at the Alternate Base Rate, in each case, subject to the terms of the Credit Agreement.
From and after the Covenant Conversion Date, the Company will be subject to a maximum total net leverage ratio covenant of (i) 4.0 to 1.0 for any measurement period ending on or prior to the second fiscal quarter following June 30, 2027 and (ii) 3.5 to 1.0 thereafter.
As of December 31, 2025 and December 31, 2024, outstanding borrowings under the 2021 Revolver were $70.0 million and $56.5 million, respectively, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.1 million and $3.3 million, respectively, decreasing the availability under the 2021 Revolver by a corresponding amount. As of December 31, 2025, the interest rate on the outstanding borrowing was 8.50%.
Warehouse Facility
On June 20, 2024, ACV Capital Funding II LLC entered into a revolving credit and security agreement, providing for a revolving warehouse facility (the "Warehouse Facility"). As a result of the amendment discussed below, the maximum borrowing principal amount of the Warehouse Facility at December 31, 2025 is $200.0 million. The Warehouse Facility was established to provide liquidity to fund new originations of auto floorplan loans by ACV Capital. The facility is secured by all assets of ACV Capital Funding II LLC, including the auto floorplan loans owned by it. The revolving feature on the facility, as amended, ends on December 10, 2027. The facility matures twelve months later, unless sooner terminated or extended in accordance with its terms.
Prior to the amendment discussed below, advances under the Warehouse Facility funded by asset-backed commercial paper conduit through the issuance of commercial paper notes will bear interest generally at a rate equivalent to the weighted average annual rate of all commercial paper notes issued by the commercial paper conduit to fund its advances, plus a margin of 3.00%. Advances funded by lenders that are not commercial paper conduits, or by commercial paper conduits funded through means other than the issuance of commercial paper notes, will bear interest generally at a rate equal to (i) Term SOFR for a period of one-month (subject to a 0.00% floor), plus 0.11448% or, in certain circumstances, the Alternate Base Rate, plus (ii) a margin of 3.00%. The Alternate Base Rate is the highest of (a) the prime rate quoted in the Wall Street Journal, (b) the NYFRB rate plus 0.50% and (c)(i) 1.00% plus (ii) the Term SOFR rate for a one-month interest period. The interest rate may be increased under certain circumstances, including upon the occurrence of an early amortization event or event of default under the warehouse documentation. ACV Capital Funding II LLC must also pay upfront any unused fees in connection with the facility.
On December 12, 2025, the Company entered into an amendment (the “Warehouse Facility Amendment”) to the Warehouse Facility. The Warehouse Facility Amendment modifies the credit agreement (i) to increase the committed amount of the revolving credit facility from $125.0 million to $200.0 million, (ii) to extend the scheduled commitment termination date from June 20, 2026 to December 10, 2027, and (iii) to make certain changes to the definitions of Concentration Limits, Eligible Dealers and Eligible Vehicles, as more particularly described in the Credit Agreement. In connection with the Warehouse Facility Amendment, the applicable margin used in calculating the interest rate applicable to loans under the Credit Agreement has been reduced by 0.25% to 2.75%.
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As of December 31, 2025 and December 31, 2024, borrowings under the Warehouse Facility were $120.0 million and $66.5 million, respectively. As of December 31, 2025, the interest rate on the outstanding borrowing was 6.71%.
As of December 31, 2025, the Company was in compliance with all of its financial covenants and non-financial covenants.
10. Leases
The Company leases office space under operating leases expiring at various dates through 2039. For the years ended December 31, 2025, 2024 and 2023, the Company incurred operating lease costs of $8.3 million, $7.3 million, and $2.5 million, respectively. For operating leases, the weighted-average remaining term is 8.5, 10.4, and 12.3 years with weighted-average discount rates of approximately 10%, 10%, and 10% for the years ended December 31, 2025, 2024, and 2023, respectively.
Maturities of lease liabilities as of December 31, 2025 were as follows (in thousands):
Total lease payments 69,600
Less imputed interest (22,596)
The following amounts relate to operating leases that were recorded on the Company's Consolidated Balance Sheets at December 31, 2025 and 2024 (in thousands):
Operating lease right of use assets:
Operating lease liabilities:
The Company recorded right of use assets, in exchange for new lease liabilities, of $9.8 million, $25.9 million, and $15.3 million during the years ended December 31, 2025, 2024, and 2023, respectively.
11. Stockholders' Equity
Common Stock
On March 11, 2021, the Board of Directors and the stockholders of the Company approved an amended and restated certificate of incorporation that implemented a dual class common stock structure where all existing shares of common stock converted to Class B common stock and a new class of common stock, Class A common stock, became authorized. The amended and restated certificate of incorporation became effective immediately prior to the closing of the IPO on March 26, 2021. The authorized share capital of Class A common stock of the Company is 2,000,000 and the authorized share capital for Class B common stock is 160,000. The Class A common stock is entitled to one vote per share and the Class B common stock is entitled to ten votes per share. The Class A and Class B common stock have the same rights and privileges and rank equally, share ratably, and are identical in all respects for all matters except for the voting, conversion, and transfer rights. Holders of the Company's common stock are entitled to receive dividends as may be declared by the Company's Board of Directors. No cash dividends had been declared or paid during the years ended December 31, 2025 and 2024. The Class B common stock converts to Class A common stock at any time at the option of the holder. During the
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year ended December 31, 2024, 24,088,310 Class B common stock converted to an equal number of Class A common stock.
During the fourth quarter of 2024, the number of outstanding shares of our Class B common stock declined such that the total number of outstanding shares of our Class B common stock represented less than 5% of the aggregate number of outstanding shares of our Class A common stock and our Class B common stock. Under the terms of our amended and restated certificate of incorporation, our Class B common stock automatically converted to Class A common stock effective as of December 31, 2024. This resulted in 3,550,142 shares of Class A common stock being issued on December 31, 2024 with the related shares of Class B common stock being cancelled. Such conversion is included in Conversion of Class B common stock to Class A common stock on the Consolidated Statement of Changes in Stockholders' Equity.
Following the approval by the Company's shareholders of certain amendments to the Company's Certificate of Incorporation at the 2025 Annual Shareholder Meeting, the Company filed with the State of Delaware the Eleventh Amended and Restated Certificate of Incorporation of ACV Auctions Inc. The changes include, among other things, the removal of all references to Class B Common Stock and the reclassification of Class A Common Stock to Common Stock.
12. Revenue
The following table summarizes the primary components of Marketplace and service revenue. This level of disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors (in thousands):
Contract liabilities represent consideration collected prior to satisfying performance obligations. The Company had $5.6 million and $4.5 million of contract liabilities included in Accrued other liabilities on the Consolidated Balance Sheets at December 31, 2025 and December 31, 2024, respectively. Revenue recognized for the year ended December 31, 2025 from amounts included in deferred revenue as of December 31, 2024 was $4.5 million. All the remaining performance obligations for contracts are expected to be recognized within one year.
13. Stock-Based Compensation
Effective March 23, 2021, the Company adopted the ACV Auctions Inc. 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan became effective on the date of the underwriting agreement related to the IPO, and no further grants were made under the 2015 Plan. All shares that remained available for issuance under the 2015 Plan at that time were transferred to the 2021 Plan. Employees, outside directors, consultants and advisors of the Company are eligible to participate in the 2021 Plan. The 2021 Plan allows the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units ("RSUs"), performance awards, and other forms of awards.
Common stock options generally vest and become exercisable over a four-year service period with 25% vesting one year from the date of grant or service-inception date and ratably vesting monthly over the remaining three-year period. RSUs generally vest and become exercisable over a three- or four-year service period. There were 33.1 million shares available for future grants under the 2021 Plan at December 31, 2025.
Effective March 23, 2021, the Company adopted the ACV Auctions Inc. 2021 Employee Stock Purchase Plan (the "ESPP"), which became effective on the date of the underwriting agreement related to the IPO, and was subsequently amended and restated as of May 22, 2025. The ESPP authorizes the issuance of shares of the Company's Common stock pursuant to purchase rights granted to employees ("employee stock purchase rights"). As of December 31, 2025, 6.3 million shares of the Company's Common stock have been reserved for future issuance under the ESPP. The price at which Common stock is purchased under the ESPP is equal to 85% of the fair market value of the Company's Common stock on the first or last day of the offering period, whichever is lower. During the year ended December 31, 2025, 504,327
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shares were issued under the ESPP. As of December 31, 2025, unrecognized compensation expense related to the ESPP was $0.9 million and is expected to be recognized over the remaining term of the current offering period.
During the second quarter of 2024, the Company's Board of Directors approved long-term incentive awards to certain of the Company's executive officers comprised of performance share units (“PSUs”), which may only be settled in shares of the Company’s Common stock. The PSUs are subject to both service-based vesting conditions and a requirement that the average closing price of the Company’s Common stock, as measured over a period of 30 trading days commencing at the grant date and ending July 1, 2027, equal or exceed a designated level (the “Stock Price Condition”). The PSUs will vest in one-third installments on each of July 1, 2025, 2026 and 2027, provided that the Stock Price Condition has been satisfied prior to the relevant date. If the Stock Price Condition has not yet been satisfied prior to the relevant date, then the PSUs that otherwise would have vested on such date will remain unvested unless and until the Stock Price Condition has been satisfied. If the Stock Price Condition has not been satisfied by July 1, 2027, then the PSUs will be forfeited on that date. In each circumstance, vesting is subject to the executive’s continued service with the Company until the time of vesting.
During the second quarter of 2025, the Company's Board of Directors approved long-term incentive awards to certain of the Company's executive officers comprised of PSUs, which may only be settled in shares of the Company’s Common stock. The PSUs are subject to both service-based vesting conditions and a requirement that the relative total shareholder return ("rTSR") of the Company's Common stock, measured against the Russell 2000, achieve at least the 25th percentile, at which point 50% of the award is earned, with a maximum earning potential of 200% if the 75th percentile or above is achieved (the “rTSR Condition”). The rTSR Condition is measured over a two-year performance period ending on December 31, 2026. The rTSR Condition earning potential is capped at 100% if the Company’s stock price is lower at the end of the performance period than at the beginning of such period. If the rTSR Condition is met at the end of the performance period, 50% of the award will vest in the first quarter of 2027, with the remaining 50% of the award vesting in the first quarter of 2028. In each circumstance, vesting is subject to the executive’s continued service with the Company until the time of vesting.
The following table summarizes the stock option activity for the year ended December 31, 2025 (in thousands, except for per share amounts):
Stock options exercised during the years ended December 31, 2024 and 2023 were 2.4 million and 1.4 million, respectively.
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The following table summarizes the RSU activity for the year ended December 31, 2025 (in thousands, except for per share amounts):
Number of RSUs Weighted-AverageGrant-DateFair Value
The weighted-average grant-date fair value of RSU's granted during the years ended December 31, 2024 and 2023 was $17.56 and $14.04, respectively.
The fair value of stock awards vested and the intrinsic value from the exercise of options for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands):
Total stock-based compensation expense recognized for restricted stock units and common stock options has been reported in the Consolidated Statements of Operations as follows (in thousands):
The compensation expense related to the unvested portion of restricted stock units was approximately $117.5 million at December 31, 2025. The unvested portion of compensation expense for restricted stock units is expected to be recognized over a weighted-average period of 2.5 years.
14. Employee Benefit Plan
The Company sponsors a 401(k) Profit Sharing Plan covering eligible employees. The Company may contribute to this plan on a discretionary basis. No discretionary contributions were made during the years ended December 31, 2025, 2024 and 2023.
15. Income Taxes
The Company’s management evaluates its tax positions to determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the tax position. Management has analyzed the Company’s tax positions, and concluded that, as of December 31, 2025 , 2024 and 2023, there are no uncertain tax positions taken or expected to be taken that would require recognition or disclosure in the consolidated financial statements. The Company recorded no material interest expense or penalties in its Consolidated Statements of Operations during the years ended December 31, 2025, 2024 and 2023. The Company believes it is no longer subject to examination by United States federal and state taxing authorities for years prior to December 31,
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2022 and December 31, 2021, respectively. The Company believes it is no longer subject to examination by foreign taxing authorities for years prior to December 31, 2021.