Good day, and welcome to the ACV Q1 2025 Earnings Conference Call. All participants will be in listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this event is being recorded. I would now like to turn the conference over to Tim Fox of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining ACV's conference call to discuss our first quarter 2025 financial results. With me on the call today are George Chamoun, Chief Executive Officer; and Bill Zerella, Chief Financial Officer. Before we get started, please note that today's comments include forward-looking statements, including statements regarding future financial guidance. These forward-looking statements are subject to risks and uncertainties and involve factors that could cause actual results to differ materially from those expressed or implied by such statements. A discussion of the risks and uncertainties related to our business can be found in our SEC filings and in today's press release, both of which can be found on our Investor Relations website. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's earnings materials, which can also be found on our Investor Relations website. And with that, let me turn the call over to George.

Thanks, Tim. Good afternoon, everyone, and thank you for joining us. We are very pleased with our first quarter performance, which again demonstrated strong execution by the ACV team. We delivered record revenue with strong margin expansion, resulting in adjusted EBITDA exceeding the high end of guidance. Our results were driven by three key factors: first, strong execution in our dealer wholesale business. We continue to gain market share and expand our dealer partner network with our highly differentiated marketplace experience; second, we had a record performance in ACV Transport and Capital with strong adoption of our value-added dealer solutions; and third, we continue to execute on an exciting product roadmap for our dealer and commercial partners, expanding our total addressable market and growing our competitive moat. While there are evolving cross currents in the broader macro environment, ACV remains focused on delivering strong top-line growth and meaningful increase in adjusted EBITDA while continuing to invest in our long-term growth objectives. We're confident that executing on this profitable growth strategy will create significant long-term shareholder value. With that, let's turn to a recap of our results on Slide 4. Q1 revenue was $183 million and grew 25% year-over-year. We sold 208,000 vehicles, which was 19% year-over-year growth. Despite very soft market conditions in February, unit growth was driven by continued market share gains and solid execution at our remarketing centers and a dealer wholesale market that grew in the low single-digits. Next, on Slide 5. Today's discussion will focus on the three pillars of our strategy to maximize long-term shareholder value: growth; innovation; and scale. I'll begin with growth. Turning to Slide 7. I'll frame our growth discussion around ACV's core product offerings: wholesale marketplace; marketplace services; and data services. Let's begin with our wholesale marketplace on Slide 8. At our March Analyst Day, we highlighted how ACV is leveraging AI across our entire suite of solutions. On our marketplace, AI is enabling us to provide our dealer partners highly accurate wholesale and retail pricing guidance. This guidance is based on condition-enhanced pricing, enabled by industry-leading inspection capabilities that is highly differentiated in the market. We are enhancing the seller experience by offering flexible auction durations and auction scheduling. We also launched our first seller in auction tool, allowing sellers to remove reserve prices mid-auction, driving buyer engagement and conversion. On the demand side, the buying experience is now tailored across buying personas from smaller independent dealers to large volume franchise dealers. We've improved discoverability and search refinement through advanced save searches and notifications. And we are taking friction out of the buying experience by making AI-enabled recommendations informed by dealer preferences and current market factors. Turning to Slide 9. Let's review our marketplace service offerings, beginning with ACV Transportation. The Transportation team continued its strong execution in Q1, setting records for both quarterly revenue and transports delivered. AI-optimized pricing is driving both strong growth and operating efficiency. Revenue margin expanded 460 basis points year-over-year in Q1 and was in line with our midterm targets in the low 20s. Lastly, our off-platform transportation service continues to gain early traction from our dealer partners. These new value-added services accelerate our transport network densities and create additional long-term growth factors. Turning to Slide 10. The ACV Capital team also delivered strong results with over 30% revenue growth in Q1. This was the second quarter in a row of accelerated growth, which supports our confidence that we can continue to accelerate ACV Capital growth while managing risk. The ACV Capital team is expanding its total addressable market by delivering new value-added offerings to our dealers, including off-platform transactions such as buying vehicles from consumers, creating additional growth levers for our business. Lastly, I'll wrap up the growth section on Slide 11 with data service highlights. Market traction for ClearCar remains strong with over 200 rooftops launched in Q1. We're also seeing growing interest in ClearCar service. This offering enables our dealer partners to acquire vehicles from consumers by leveraging their service lanes for instant appraisals and offers. The ACV MAX team delivered very strong results in Q1, reflecting the investments made in a host of new features and platform scalability. Bookings were at the highest level in five quarters, driven by a number of large dealer groups that would like ACV to displace the incumbent IMS providers. Our strategy to begin bundling data services with ACV wholesale is starting to pay dividends, and we believe this new strategy is another exciting long-term growth lever for ACV. Again, this quarter, we're excited to share feedback from one of our dealer partners. The Niello Company, a dealership group based in Sacramento, which is using ACV's full suite of offerings. We posted a video on our IR website featuring their team describing the significant value they're deriving from ACV solutions. It's another great opportunity to hear directly from a dealer partner. Next, on Slide 12, I'll address the second element of our strategy to drive long-term shareholder value, innovation. Turning to Slide 13. I'll go a bit deeper in how we're leveraging ACV AI across our products, services and operations. As we discussed at our Analyst Day, technologies like machine learning and large language models are advancing at a rapid pace, and ACV is uniquely positioned to transform how decisions are made in automotive. It all starts with consistent data capture, which is underpinned by our VCIs in the field, creating a large moat of curated data. We're now also putting our hardware, diagnostic tools and damage detection algorithms into the hands of our customers. And with ClearCar's AI-guided image capture, we're putting self-inspection into the hands of dealer customers. Using machine learning, we're taking data fusion and processing to the next level, providing pricing for every vehicle in real-time within ACV's pricing platform. We are consolidating data into structured AI-powered guidance to provide context-driven dealer decisions. Take, for example, ACV Guarantees, which is one of the fastest-growing channels in our marketplace. Guaranteed vehicles are launched in a no reserve auction format, which typically generates a fivefold increase in bidder engagement. Guarantees also remove market risk and pass the upside to our sellers with a 100% conversion rate. Finally, with Virtual Lift 2.0 and Project Viper, we are expanding our competitive edge in AI-driven products by putting the powerful combination of ACV's hardware and software technology into the operational workflow of every vehicle. Stay tuned for more details in coming quarters as we ramp our dealer pilots through 2025. On Slide 14, we highlight another growth lever powered by ACV AI. Our AI-backed platform is capable of processing trade-ins at scale with repeatable guaranteed pricing in under a second. We are taking the guaranteed capabilities from our marketplace and extending that same power for e-commerce partners and piloting these capabilities with OEMs looking for a scalable upstream trade-in platform. Wrapping up on innovation. I will touch on our commercial investments. It all starts with integrations that feed into our digital-first marketplace. We have established an extensible ingestion architecture that enables us to work with a host of service providers in a standardized way. The next major capability is damage estimation at the panel and part level, which is powered by observations from our inspection platform. This gives us a robust tool that can be used for recon estimates, which is a critical part of the commercial workflow. Finally, we are in the later stages of our commercial platform development, and we are slated to power our first greenfield remarketing center in the second half of 2025. The commercial platform will include capabilities from inspection to work order creation, repair estimation, consignor approval, reporting and more. We're excited to begin leveraging these technologies to address the large commercial total addressable market, providing another long-term growth lever for ACV. With that, let me hand it over to Bill to take you through our financial results and how we're driving growth at scale.

Thanks, George, and thank you for joining us today. We are very pleased with our Q1 financial performance. Along with strong revenue growth, we delivered meaningful margin expansion and adjusted EBITDA growth, demonstrating the strength of our business model. On Slide 17, let's begin with a recap of our first quarter results. Revenue of $183 million grew 25% year-over-year and was at the midpoint of our guidance despite very soft market conditions in February. Note that organic revenue growth was approximately 20% year-over-year. Adjusted EBITDA of $14 million exceeded the high end of guidance, with margin improving 500 basis points year-over-year. The upside was driven primarily by continued operating expense discipline. Finally, non-GAAP net income was also above the high end of guidance, with margin increasing approximately 300 basis points year-over-year. Next, on Slide 18, let's review additional revenue details. Auction and assurance revenue was 58% of total revenue and grew 28% year-over-year. This performance reflects 19% unit growth and auction and assurance average revenue per unit of $500, which grew 8%. Note that units grew approximately in the mid-teens organically. Marketplace services revenue was 37% of total revenue and grew 24% year-over-year, reflecting record revenue for ACV Transport and ACV Capital. Our SaaS and data services products comprised 5% of total revenue with growth of 5% year-over-year. Next, I'll review Q1 costs on Slide 19. Non-GAAP cost of revenue as a percentage of revenue decreased approximately 200 basis points year-over-year. The improvement was driven by auction and assurance results and by ACV Transport. Non-GAAP operating expense, excluding cost of revenue as a percentage of revenue decreased 400 basis points year-over-year. These results reflect our ongoing focus on expense discipline as we optimize and scale our business. Moving to Slide 20. I'll frame our investment strategy as we drive profitable growth. In 2025, we expect operating expense growth of approximately 18% to support our remarketing center strategy and commercial platform investments. Even with these growth investments, adjusted EBITDA margin is expected to increase by approximately 500 basis points year-over-year. Next, I will highlight our strong capital structure on Slide 21. We ended Q1 with $342 million in cash and cash equivalents and marketable securities and $167 million of debt. Note that our cash on balance includes $211 million of marketplace float. In the figure on the right, we highlight our strong operating cash flow, which reflects adjusted EBITDA growth and margin expansion. Now turning to guidance on Slide 22. For the second quarter, we are expecting revenue in the range of $193 million to $198 million, growth of 20% to 23% year-over-year. Adjusted EBITDA is expected to be in the range of $18 million to $20 million, reflecting growth of approximately 170% year-over-year. We are reiterating our full-year guidance, including revenue in the range of $765 million to $785 million, growth of 20% to 23% year-over-year. Adjusted EBITDA is expected to be in the range of $65 million to $75 million, reflecting growth of approximately 150% year-over-year at the midpoint of guidance. Our guidance continues to assume that dealer wholesale volumes will be approximately flat year-over-year for 2025. We expect conversion rates and wholesale price depreciation to follow normal seasonal patterns. We also continue to expect revenue growth to exceed non-GAAP operating expense growth, excluding cost of revenue and depreciation and amortization by approximately 500 basis points. And with that, let me turn it back to George.

Thanks, Bill. Before we take your questions, I will summarize. We are very pleased with our strong execution in Q1 and especially proud of our ACV teammates that delivered these results. We continue to gain market share by attracting new dealer and commercial partners to our marketplace while expanding our addressable market, which positions ACV for attractive growth as market conditions improve. We are delivering on an exciting product roadmap powered by ACV AI to further differentiate ACV and drive operating efficiencies. We are focused on achieving substantial adjusted EBITDA growth in 2025 and delivering on our midterm targets that we believe will drive significant shareholder value. We are committed to achieving these results while building a world-class team to deliver on our goals. With that, I'll turn the call over to the operator to begin the Q&A.

Thank you, sir. Ladies and gentlemen, we will now be conducting the question-and-answer session. Our first question comes from Rajat Gupta of JP Morgan. Please go ahead.

Great, thanks for taking the question. You had raised fees in early March. And during some past conversations, it seems like there was no real pushback from customers. But as wholesale prices have increased just due to pre-buy ahead of tariffs, are you seeing any signs of customer pushback or perhaps needing to incentivize more with ancillary services? Any color on that would be helpful. And I have a quick follow-up. Thanks.

Yes. Hey Rajat, we've been very fair in our pricing, as you know, with our dealer partners. And we've always historically balanced both our price increases and the interests of our customers. So we do make these price increases, they're very small, very incremental. And so to your point, it sounds like you've done some homework on this. We got very little pushback. So yes, our goals and objectives as it relates to pricing is we really lean in, and we've got, obviously, a great business model, great value-added proposition, really at the right price for our dealer partners. So I would say for your first question, really no pushback on our value proposition to our pricing. And then as it relates to the other macro things going on, I don't think any of that – I've heard – I don't think I've heard any comments from any of my teammates about any of the macro elements, whether it be tariffs, whether it be any of the stuff resulting in us having any pressure on pricing. So I think at the end of the day, we deliver a great service to our dealer partners and our pricing is fair.

Understood. That's helpful color. And then maybe could you outline different growth avenues that ACV or maybe just the broader wholesale industry might experience under a tariff backdrop. Obviously, there's uncertainty around manufacturer pricing, production, if supply does get hurt meaningfully. I mean, obviously, we're coming off a depressed base already. Back in 2021, 2022, obviously, ACV was a much younger company, but you have a lot more solutions right now. Could you help just detail for us, investors, what kind of levers you could pull as a company with your portfolio today if the industry were to take a step back in the next couple of years before starting to grow again? Thanks.

Yes, certainly, Rajat. So first and foremost, as you noted, we continue to grow. We're still in a really significant growth mode. We still continue to take share. And also to your point, we're growing in a broader way. Our value-added solutions like ClearCar, like ACV MAX and other upcoming solutions are helping us differentiate broader than just our initial value proposition with ACV auctions. That coupled with other value-added services like ACV Transport and ACV Capital are helping us have really tremendous demand on the ACV platform. So when you look at it both from a supply and the demand, we've got a great product mix. We continue to take share. And we – look at our results of Q1, we are really in line with our own expectations, obviously delivered better on the EBITDA side. And so when you look at with all these puts and takes from a macro perspective of what's happened, at least so far with tariffs and so far with a lack of generally used car supply that you've been hearing us talk about for a while. I mean we – you've noted this in some of your own research that used car supply, late-model used car supply will likely be a trough year. All of that was in our expectations. So we gave you all an expectation of, sort of, like a flat wholesale year. We knew there was going to be some ups and we knew there was going to be some downs. I feel really good about where we're at because we were able to just continue to execute. And I think we had the right expectations for the year.

Got it, great. Thanks for the color and good luck.

Our next question comes from Bob Labick of CJS Securities. Please go ahead.

Yes. Good afternoon. Thanks for taking our questions.

Thank you, Bob.

Sure. So a quick question and then a quick follow-up. And it's more kind of timely. Have dealers' needs or has their focus shifted any with the onset of the tariffs? Are they acting differently? Are they asking you for different things? Or what's been the feedback as you're talking to your dealer customers?

Yes. If I take a step back, I would say it's less related to the tariff situation as it is generally our franchise dealers wanting more and more inventory. So we're seeing tremendous interest in our new products. Products like ClearCar, like our updated ACV MAX, our other tools that are sort of coming soon. We've seen the interest continues to rise, but they need to buy more cars. They need additional used cars just really across the board, most of our franchise dealers don't have enough used cars on their lot today, especially later model, low mileage cars. It's truly still a gap. So I've seen more and more of a focus. I've seen more and more of a willingness to change. I'm seeing – I'm hearing dealers say AI more often, hey, how can we leverage AI to do things more seamlessly. I'm seeing some – really some openness. We work with some large dealer groups. I'm seeing them actually really up their game. Obviously, I don't say names here, but I'm thinking of a couple in particular right now that I'm really watching them get more and more efficient, put more and more offers on consumer cars. I'm seeing the service drive increase still low. I think the industry can still – there's a lot more opportunity out there for franchise dealers ahead. I think it's a great category. I think they could buy a lot more cars. So I'm seeing a little bit of momentum in the adoption of new tools and the willingness to adopt new processes, which will ultimately help them buy more cars. The more they buy, the more they'll retail and the more they will wholesale. So we're early on that mission, as you know, Bob, but I would say great traction thus far, and I love the conversations we're having with our dealer partners.

Okay, great. And you just named ClearCar and then the updated ACV MAX. And my follow-up was going to be about inventory. Obviously, dealers have been wanting it. They're embracing your tools, those two that you just named. You also mentioned in the prepared remarks, the price guarantee tool and Viper briefly. Can you give us a sense of kind of penetration and potential impact on the model of those other two that you only briefly mentioned before, the price guarantee tool, where are you in penetration and rollout and Viper, what's it take for that to get used out in the field?

Yes, certainly, Bob. So we're – our guarantee offering is growing. It's – the team is doing a great job of introducing why this is such a special product. It's got two significant points of interest. On the supply side, it allows our sellers to have access to a marketplace, where we are averaging 10 bidders per car. It's just incredible. So from a supply perspective, it's not just a guarantee. It's access to this exclusive link. Think about it as almost like a private club or like you're getting access to something that's really special. There's nowhere else, no other marketplace where you're going to average 10 bidders a car. So we've created this vibrant marketplace. So from the supply side, yes, there's a guarantee, but they get the upside. In the far majority of the time, there's upside. And then on the demand side, it's just as important. When you're watching these auctions, you know somebody is going to win. And so from a buyer's perspective, there's zero waste of time. So if you're willing to step up and pay for the car, you're going to win. So we're seeing great interest. We still have a lot of growth ahead of us. We're still in the early days. But it's fun that we're sniffing on the near double digits of our – around the double digits, I should say, of our overall marketplace. So really happy with where we are with that offering. On our pricing tools like ACV MAX and where these other tools are coming in place, the products that we've released recently in beta are getting tremendous interest. The interest is because we're not only predicting the wholesale value, we're also predicting a retail price of the car within the next 30 days of what it's going to sell for. And as far as I know, I don't think anyone else is close to us on being able to do this. So now a car comes through the service drive of a dealer, and we're going to be able to run it through our system. The consumer might be there just to change their oil or rotate their tires. And the dealer is going to be able to know, here's the wholesale value and here is the retail price. They have to figure out what the recon is going to be. Of course, we're working on that next. But anyways, so there's a retail price, there's a wholesale price, and we're making these predictions. Our predictions are within just – I think, I said on Analyst Day, we were within a few hundred bucks. We're even doing better than that. So we are just doing an incredible job of helping these dealers predict the value. Obviously, that's one of the most exciting things about AI is you can leverage this curated data. You can leverage these large language models to do things we really couldn't have done 12 months ago. And so it's really an exciting time, and we're really getting incredible feedback. And obviously, I can't name names on this, but we're in early days of both rolling some of these dealers out. And we've signed up some, I would call it, regional groups that I'm happy with, and we're – the team is doing a great job. And then Viper. I forgot about Viper. How can I forget about Viper? So thanks. Tim is in the room to remind me on the one I forgot. So not that you would have a favorite child. It's never a good thing to have a favorite child, especially my kids are listening right now. So the Viper, I've never ever in my entire career have had a product where we've had this much demand. So it's exciting and a little bit nerve-wracking right now because we're going to have to – we've got a lot to do here. But we are getting tremendous demand for Viper. And it's – as I mentioned at Analyst Day, this summer is our beta. So we're going just with a few dozen dealers this summer, where it's early stages. I never want to oversell where we're at. We would love to – we're hoping to come out of beta before Q4 is our objective right now. So we'll kind of go through the summer, we'll learn. And hopefully, we'll start getting into production by early next year, hopefully earlier, we'll see. But we're – so far, so good. The team is in line with what I said last – and I would say, if anything, the line is growing. We've got dealers literally getting in line right now asking for what unit number they're going to get of Project Viper. So yes, it's tremendous excitement. But having said that, we're very early, and we got to get through our beta and then actually manufacture these and get going. So thanks for asking.

Super. That sounds terrific, thank you very much.

Thank you, Bob.

Our next question comes from Naved Khan of B. Riley Securities. Please go ahead.

Hey, thanks a lot. Two questions from me. One on ACV Capital growing revenue more than 30%. Curious what kind of attach rates you're seeing here? And in terms of just expanding this offering, how do you plan to manage the risk as you make these capital commitments to partners? And the second question I have is just around the – maybe on the commercial side, is it possible given the prospects for price increases on vehicles due to tariffs, we could see a downdraft in wholesale listings from fleet owners where they might be wanting to get more miles out of their existing vehicles. Thanks.

Yes. Naved, it's Bill. I'll handle the first question, and then I'll toss it over to George. So first, on ACV Capital, so a few things to consider. Obviously, one of the many ways that we minimize risk is our VCIs across the country, call it, roughly 800 VCIs, visit dealer lots every month and can validate where the car is, right, since we get paid the sooner of the maturity of the loan or when the car is sold to a consumer. So that's number one. Number two, over the last year or so, we've significantly improved our risk management capabilities internally. And in fact, if we look at Q1 – so we grew revenue actually 33% year-on-year. Our bad debt expense actually was down 50% year-on-year. So we dramatically reduced our bad debt expense while really driving really strong growth. So kind of that's the model that we have in place. And now with some of the other enhancements we've made to that business in terms of implementing a loan management system and some of the new capabilities we have in terms of new offerings we can offer to our customers on the financing front, we kind of see this as a really nice growth engine that will accelerate through this year and beyond. So it's a great business model. I think the team is doing a phenomenal job. And obviously, as you know, it's very accretive to our EBITDA margins.

Yes. Could you – it's George. Could you go back and ask – repeat your question regarding commercial and pricing just again, just want to make sure I answer it appropriately.

Yes. So people kind of expect that tariffs will cause pricing to go up on average on new vehicles. And is it possible, therefore, that fleet owners who generally participate in the commercial wholesale may look to basically own their vehicles for longer, just getting more miles out of their existing cars versus buying new. So that could affect volumes. And curious to know how you're thinking about those kind of shifts.

Yes. Thanks for repeating that. That's helpful. Yes. So if you frame where we get our supply from today, as you and our other investors here all know, we're very early stage on commercial. We're very early stage on off-lease. We're in the early stages on – most of our supply still today comes from dealers. So when you think about your question as it relates to this year, while our supply mainly comes from dealers, it would be about – it would be really about the SAAR, new car sales, trade-ins and used car sales and how many of those customers, to your point, will go back to the dealership and yet buy another car. Those cars would not have necessarily been leases that would have been brought to ACV anyway. When you kind of look at the ecosystem, they would have first gone to that local dealer. If they buy it, they typically retail it. If they don't buy it, then it would go through the captives, private marketplace, et cetera. So if there is pressure on that category, that specific category you're alluding to, which is off-lease and consumers coming in a little bit slower, it could potentially impact new and used. But I think specifically with us, it would impact how our supply is coming in a little bit less so than probably others in the marketplace. If we had more exposure to off-lease, which I wish we did, it will come in time as we get bigger. But as of right now, we're still early on that segment. I would say more broadly on tariffs, if that's also where you kind of go with this. Look at it, as long as new cars and used cars are being sold, then we will still have trades. I think what we saw, generally speaking, in Q1 was new car volume was up, which was nice and used car volume wasn't – and used was not up as much. And we could see the inverse in one of the quarters this year. We could see where new car year-over-year compares look harder, but used car sales will be up higher. So look at – and why we feel pretty good about the year is whether we see new cars up a little bit or used cars up a little bit, we might see the inverse of the other. And that kind of from our perspective, keeps us pretty level, think down the middle. So we're feeling pretty good about the year.

And then maybe, Bill, just on the – going back to the capital question and thanks for your answer. But how should we be thinking about the attach rate for capital? Has that also gone up? Or are there other factors driving this growth?

The attach rate? Yes. No, the attach rate actually continued to rise. It's in the – it's well into the double digits now. So keep in mind, our target is based on our midterm model is 25% attach rates. And we're expecting to make a lot of progress this year in terms of moving closer to that target. So really good progress.

Yes. And just to also follow up on that is not only is the attach rate solid on the auctions platform, but the team – we're in the early stages of off-platform, which includes helping dealers buy cars from consumers. So we feel good about this midterm growth rate, and we're doing a really solid job about achieving our midterm objectives. We feel good because both will get this, as Bill mentioned, continued attach rate on our marketplace, and we're in the very early stages of the off-platform and helping dealers buy more. So yes, we feel generally good about our – the team has done a great job thus far, and we feel good about our medium-term goals that we've articulated.

Fantastic. Thank you, guys.

Our next question comes from Chris Pierce of Needham & Company. Please go ahead.

Hey, good afternoon, everyone. How's everyone doing?

Hi, Chris.

Sorry if these are repeats, but I missed a little of the call. Just two questions. Can you just kind of talk about competitive dynamics in the market? We've seen CarMax and Carvana with ADESA and Clear sort of upgrade their buyer-facing tech to play a little catch-up, and then we've seen physical option M&A as well. Like is anything shifting underneath the surface in terms of the market because of what you guys are doing or how the market is moving? And I'd just love to see if there's any feedback you're getting from dealers on options that are out there that are maybe better than they were, say, a year ago?

Yes, Chris, I would say no significant changes. We've had, as you know, since you got to know us, we've always had hundreds of competitors and regional competitors, national competitors. So there's been competition since day one of the business. And we continue to execute. We continue to take share. A couple of the companies you mentioned are also in the dealer wholesale space, but they're also retailers. And from our perspective, dealers should be very careful about wholesaling vehicles with them. And so we're out there spreading the word of, hey, we're – if you're a dealer, we're a neutral partner. And I think, listen, we should continue to win share. To your point, they've done well, but I think we're positioned to do better in the medium to long-term for all the reasons you've heard earlier in this call. We're not there just to help them with wholesale. We're here to help them buy more cars from consumers. That actually competes against those other guys you mentioned. We're helping them do better pricing. So look at it as our role is truly a long-term partner. I think when you do your homework about us, you're going to hear more and more dealer groups say that, which we're really proud of. I think some of the parties you mentioned are, I would say, near-term wholesale vendors. And that's really the positioning we're trying to be in the market.

Okay. And then just lastly, can you talk about data and data and volatility in the end market with prices going up, whether it's tariffs driving demand. But Manheim is out today and they're talking about April, and that data probably already has an element of staleness to it. Like what are the smartest dealers doing? And how are they leveraging the real-time data that you guys are able to provide them, whether it's out of the service lane or putting a bid on a car, when to cut bait at retail and move to wholesale? Like what are the best dealers doing now? And how are they leveraging data? And how is that an ACVA advantage?

Yes, it's a great question. So I'll illustrate some examples. I came back from a major dealer group last week, I think it was, yes, last week. And I really got to sit with their management team and how they're using our tools. It was really fascinating. I'll give you some examples. So one, to your point, they now – there's actually a percentage of cars they're buying from the service drive. I won't say what the percentage here is, but it's actually like a real number like, okay, we're starting to buy some cars from the service drive. It's starting to show up as a supply source, which really, really proud about that. Number two, how they're pricing, more and more automation of pricing. Historically, this is an industry where they always went to this sort of traditional competitors inventory management appraisal tool. Every single car, they had to sit there and look at and click all these boxes and blah-blah-blah-blah. Now you're just – more and more, we're leveraging AI to help them do some of this. So you're seeing streamlined, which means you're putting more offers. Now predicting the retail price also helps you predict should you retail or wholesale the car and gives you an expectation of how much room you have for reconditioning. Now we don't give them that number yet. We just show them this is what you're going to sell it for. They know what they can buy it for, and they kind of figure out at least for now, how much they want to put for recon. But even what we already have today in our current version of our tools, none of this is possible in sort of the legacy tools that are out there. So I think, okay, you could buy more cars, you could predict the retail price. Then when you think about – even though we're in a market where there's really solid demand for new and I think good demand for used, it depends on the price of these used cars. So if a car is sitting there for two weeks or four weeks or six weeks, we're starting to give updates for every single VIN, what they should do. The update could be raise the price by $243 because we're seeing a lot of demand or the update could be, we recommend you reduce the price by $350. So think it’s not just when they’re buying the cars. It’s this ongoing constant learning that’s going on. And we’re feeding – it’s not just coming from our pricing engine. It’s coming from what’s going on from their CRM. It’s coming from how much interest there is on the car, what’s happening generally on the Internet. So the team is doing a great job of seeing what’s happening from a national market perspective in addition to what’s going on at their store and their group. So hopefully, that’s what you’re looking for, but that’s what the great groups are doing, and I think you’ll see it in their numbers. Some of our dealer partners had a great quarter, I believe, and I’m happy to help.

Okay. And then just lastly from me. I know the end market can be sort of opaque sometimes. So on your first bullet around guidance where the dealer wholesale market is expected to be approximately flat year-over-year. Apologies if you gave this on the main call, but what has the dealer wholesale market done year-to-date in terms of up, down year-to-date?

Yes. I think right now, Chris, it was up low single-digits. So up – and I think the why would be was new was up, used was not up as much. So one report has used retail down a little bit was one report. And one report was for that list from one of the leading providers of data in the category, and one had used retail up a tiny, tiny bit. So all-in-all, I would say retail was solid for Q1 and also the compares were a little bit easier. So we had a better compare. When you look at the back half of the year, it's going to be a little bit tougher of a compare because new started to go up throughout the year. And also wholesale started to go up a little bit throughout the year. So Chris, all-in-all, again, we said flattish, inventing our own word because our reason for – I think Bill here should get a trademark or patent or whatever on this because the whole intention of flattish is you're going to see it up a little bit. You're going to see it down a little bit. We were trying to, in a way, get everyone to not be so scientific. So I'd say so far, so good. It's what we expected, and I feel good about the rest of the year.

Okay. That's all from me. Thanks for your time.

Thanks.

Our next question comes from Steven McDermott of Bank of America. Please go ahead.

Hi, thank you for taking the question. This one is more of a model related follow-up. But as we approach kind of tougher compares in 2Q and for the rest of the year for pricing, how should we think about that dynamic and I guess, price increases from here? Thank you.

So I think I just commented a minute ago that from a market perspective, the tougher compare would be on the fact that new was up a little bit, used was up a little bit last year. Wholesale was up a little bit. And so the expectations of a flat wholesale would be a little bit more on that’d be about market, not about us. On pricing, I don't think I really – I think at the end of the day, we're within our expectations. I think Bill in the call mentioned where we were with average revenue per unit. And it was...

Yes. So our auction and assurance average revenue per unit was $513 for the quarter in Q1, and that reflected a buy fee increase at the very beginning of March, right. So we'll see some improvement in average revenue per unit, all other things being equal through the rest of the year, although our guidance does assume that gross merchandise volume per unit dips a little bit in the second half, which would be more seasonal in nature. So we baked that in as well.

Is that helpful?

I appreciate it.

Okay. Just wanted to make sure...

No. That was helpful. In terms of the average revenue per unit and the pricing, that was definitely helpful. Thank you. And then this – on the call, you kept talking about how strong demand is, but unit pricing did decelerate quite a bit on stable comps from 27% to 19%. So I was just wondering, is there perhaps any other dynamic? I know you touched on competitors a little bit earlier – for a question, but I don't know, are you seeing anything more underlying? Or is it just – yes, take wherever you want.

Yes. I mean, listen, we're a bigger company. We continue to grow. Very – I think most investors would say these are very healthy growth numbers on big numbers. So no, I think there's really no comment there only because we were within our expectations. We delivered. And we did all that while exceeding our EBITDA number, which means we didn't give away the farm. Really easy to show a bunch of unit numbers if you give them all for free. You're not seeing us do that. So I think, if anything, continued strong execution, continuing to take share. I think what we're trying to – our brand, whether you want us to think about this as a golf analogy, I just want you guys to keep thinking like right down the middle. I'm not trying to win the longest drive competition on every single hole here. We are just – you're going to see us be right down the middle, keep executing, keep delivering. So really proud of the team. I don't really know how to answer that, but I'm really proud of the results.

Yes. I mean I would just add, look, our revenue growth rate was just over 25% for the quarter, and was just under 22% last year Q1, right? So all-in-all, I would say we feel pretty good. And again, as George mentioned, we had a really nice beat on EBITDA, which just continued financial discipline in terms of running the business. So the last thing I'll mention is our operating cash flow actually in Q1 was equivalent to our operating cash flow for all of last year. So – and obviously, cash is a pretty important element of our financial model as well. So we feel really good about the results.

Awesome, thank you. Yes, I'm looking at the free cash flow and it's ramping quite nicely. Thank you.

Thank you.

Ladies and gentlemen, that concludes today's Q&A. I will now hand over to Tim Fox for closing remarks.

Great. Thank you. I'd like to thank everybody for joining the call today. We look forward to seeing you on what's going to be a pretty busy conference circuit this quarter. Again, thank you for your interest in ACV, and I hope you all have a great evening. Thanks.

Thank you. Ladies and gentlemen, that concludes this evening's event. Thank you for attending, and you may now disconnect your lines.