Earnings Call Transcript - ACVA Q4 FY2025

Operator

Greetings and welcome to the ACV Q4 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tim Fox, Vice President of Investor Relations. Thank you. You may begin.

Timothy Fox, Head of Investor Relations

Good afternoon, and thank you for joining ACV's conference call to discuss our fourth quarter and full year 2025 financial results. With me on the call today are George Shimon, Chief Executive Officer, and Bill Zarella, 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.

George Chamoun, CEO

Thanks, Tim. Good afternoon, everyone. We are pleased with the ACV team's execution in Q4, delivering revenue at the high end of guidance and adjusted EBITDA above the high end. Our performance was driven by solid execution in our dealer wholesale business, despite challenging market conditions. As we continue to gain market share, expand our dealer partner network, and drive adoption of our value-added dealer solutions. And again, ACV Transport and Capital delivered strong revenue performance. We also executed on our product roadmap to further differentiate ACV's marketplace experience, support our commercial wholesale strategy, and expand our TAM. Turning to 2026, we are expecting revenue growth in the low double digits and adjusted EBITDA growth of approximately 28%, which includes additional growth investments to support our medium-term financial targets. We'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 four. Q4 Revenue was $184 million, growth of 15% year-over-year, and we sold 193,000 vehicles. For the full year, we delivered 19% revenue growth and grew units by over 86,000, or 12% year-over-year. And adjusted EBITDA grew by over 100%, demonstrating the scale in our model. Next on slide five, we'll again focus our discussion around the three pillars of our strategy to maximize long-term shareholder value, innovation and scale. I'll begin with growth. On slide seven, we highlight how ACV is leveraging AI to attract new buyers and sellers. increase penetration and wallet share, and gain traction with large dealer groups. Let's begin with our marketplace. Our highly accurate condition-adjusted pricing guidance enables sellers to set more informed reserve prices. Flexible auction durations and scheduling allow dealers to customize their marketplace experience. Given the challenging market conditions in Q4, dealers increasingly leaned into ACV's technology. For buyers in our marketplace, we tailor their experience across buyer personas and optimize the bidding process by providing AI-enabled recommendations informed by dealer preferences and current market factors. These investments and our leading marketplace experience were key to growing our dealer network in 2025. with 15,000 unique sellers and over 22,000 unique buyers transacting with ACV. Our franchise rooftop penetration achieved a new milestone, reaching 35% during the year. And our major account team delivered impressive results, with a 300 basis point increase in rooftop penetration. Next on slide eight, I'll provide some highlights on our data services. Market traction for ClearCar remains strong, especially for ClearCar service that enables dealers to seamlessly produce consumer appraisals and offers from their service lanes. ClearCar is also an effective lever to increase wholesale wallet share and attract new dealers to our marketplace. During 2025, existing dealers that launched ClearCar increased their wholesale volumes of the ACV by over 50% after going live. We're also seeing early momentum with our strategy to bundle ACV Max with wholesale. A recent cohort of new ACV Max dealers increased their wholesale vehicle sales on our marketplace by an average of 40% within one quarter of launching Max. Our strategy to offer a broader set of value-added solutions is creating another growth lever for ACV. Again, this quarter, we're excited to share feedback from one of our dealer partners, the Hendrick Automotive Group, which is using ACV's full suite of offerings. We posted a video on our IR website highlighting the significant value they're deriving from ACV solutions. Turning to slide nine, from a geographic perspective, we continue to drive strong growth within our more established regions, where network effects are driving significant market share. At the same time, our footprint has expanded across the country, as highlighted in these four regions, which delivered strong year-over-year unit growth in Q4. As we discussed in our Q3 call, there are certain emerging regions where we are increasing our territory manager and VCI footprint to drive accelerated growth. These efforts began in Q4 and will continue during 2026, and we are confident in the medium-term growth outlook for these markets. Turning to slide 10, let's review our marketplace service offerings, beginning with ACV transportation. The transport team had strong execution in Q4, with 20% revenue growth and 110,000 transports delivered. AI-optimized pricing continues to drive strong growth and operating efficiency. Revenue margin has already achieved our midterm target in the low 20s. And our off-platform transportation service continues to gain traction from our dealer partners, creating additional growth opportunities. Last, I will wrap up the growth section on slide 11 with ACV Capital highlights. ACB Capital delivered strong revenue performance with 48% year-over-year growth in Q4, despite actively lowering our exposure to higher-risk customer segments. The ACB Capital team implemented new growth strategies while driving process enhancements to mitigate portfolio risk. As such, we are confident that ACB Capital will remain an important value-added service for our dealers and a long-term growth opportunity. Next, on slide 12, I'll address the second element of our strategy to drive long-term shareholder value, innovation. Turning to slide 13, let's go deeper into how we are leveraging ACV AI to drive growth and to deliver value to our dealer and commercial partners. Using machine learning, we combine inspection data and dynamic market data to provide real-time pricing for every vehicle within ACV's pricing platform. For example, we are leveraging our pricing platform to offer ACV Guarantee to sellers and deliver no-reserve auction to buyers. This offering remains the fastest-growing channel in our marketplace. We are pleased to see ACV Guarantee mix increase to 19% in Q4. As a reminder, our Guarantee Sale is a highly differentiated offering that benefits buyers, sellers, and ACV. By accelerating bidder engagement, increasing buyer satisfaction, removing seller market risk, while delivering 100% conversion rate. We're confident our guarantee offering will be another key driver of market share gains. On slide 14, we highlight how we are further differentiating ACV in the market with AI-driven next-gen products like Viper and VirtualLift. We are extending our industry-leading inspection technology, vehicle data, and pricing capabilities to dealers looking to unlock consumer vehicle acquisition at scale in their service lane. At the recent NADA Industry Conference, we announced the next wave of availability for the Viper Early Access Program, and dealer reception was tremendous. We're excited to kick off the commercial launch of Viper with select dealer partners, providing them with unique and scalable consumer sourcing platform that will expand our TAM at a rooftop level by tapping into the large peer-to-peer segment. And by leveraging pricing models that bundle Viper with wholesale, we're creating a powerful new lever to drive wallet share expansion and unit growth. Wrapping up on innovation, let's turn to our commercial wholesale strategy on slide 15. We are pleased to see the initial range of capabilities developed over the past year powering our first Greenfield Remarketing Center in Houston. Our team has been in active conversations with commercial customers to deepen our understanding of the requirements for the next phase of our software build. We believe this new digital model and end-to-end experience will transform commercial vehicle remarketing, and we also look forward to launching an additional Greenfield location in Chicago this year. With that, I'll hand over to Bill to take you through our financial results and how we're driving growth at SCAL.

William Zerella, CFO

Thanks, George, and thank you for joining us today. We are pleased with our Q4 financial performance with revenue at the high end of our guidance range and adjusted EBITDA exceeding the range. On slide 17, let's begin with a brief recap of our fourth quarter results. Revenue of $184 million grew 15% year-over-year, compared to very strong results in Q424. Adjusted EBITDA of $8 million grew 36% year-over-year, reflecting strong expense discipline. Finally, non-GAAP net loss of $1 million was favorable relative to our guidance range. Next, on slide 18, let's review additional revenue details. Auction and Assurance revenue was 55% of total revenue and grew 11% year-over-year against a very tough comparison of 40% growth in Q424. This performance reflects 5% unit growth, which also faced a tough comparison of 27% growth in Q424. Auction and Assurance RPU of $528 grew 6% year-over-year and 4% quarter-over-quarter. Marketplace services revenue was 39% of total revenue and grew 23% year-over-year, reflecting continued strong performance for ACV transport and ACV capital. Lastly, our SaaS and data services products comprise 5% of total revenue, with year-over-year growth accelerating to 8%. Next, I'll review Q4 costs on slide 19. non-GAAP cost of revenue as a percentage of revenue increased approximately 400 basis points year over year. The increase was primarily driven by higher arbitration costs as expected within a specific cohort of customers. Recall that our Q4 guidance assumed arbitration costs would remain elevated in the quarter, but that trends would normalize in 2026 following mitigation steps we implemented. These steps are already showing positive returns in early 2026. Non-GAAP operating expense, excluding cost of revenue as a percentage of revenue, decreased approximately 400 basis points year over year, reflecting operating leverage in our model. Going to slide 20, I'll frame our investment strategy as we drive profitable growth. In 2026, we expect OPEX growth of approximately 9%, which is a decline from 12% in 2025. Note that 2026 OPEX includes approximately $11 million in additional go-to-market spending to support regional growth objectives. Even with these growth investments, adjusted EBITDA margin is expected to increase by approximately 100 basis points year over year. Next, I will highlight our strong capital structure on slide 21. We ended Q4 with $270 million in cash and cash equivalents and $190 million of debt. Note that our cash balance includes $171 million of marketplace flow. In the figure on the right, we highlight our solid operating cash flow, which reflects adjusted EBITDA growth and margin expansion. Now turning to guidance on slide 22. First quarter revenue is expected to be $200 to $204 million, growth of 9% to 12%. Adjusted EBITDA is expected to be $14 to $16 million, reflecting a 7% to 8% margin. 2026 revenue is expected to be $845 to $855 million, growth of 11% to 13%. Note that full-year revenue guidance assumes that our go-to-market investments will drive slightly higher growth in the second half of the year. 2026 adjusted EBITDA is expected to be 73 to 77 million, growth of approximately 28% year-over-year. We are expecting non-GAAP OPEX, excluding cost of revenue, to grow approximately 9% year-over-year. And with that, let me turn it back to George. Thanks, Bill.

George Chamoun, CEO

Before we take your questions, I will summarize. We are pleased with our Q4 execution while navigating through challenging market conditions. We continue addressing these market challenges by enhancing our technology and operating models, ultimately making us even more resilient. We are attracting new dealer and commercial partners to our marketplace and expanding our addressable market, which positions ACV 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 strong, adjusted EBITDA growth and delivering on our midterm targets that we believe will drive significant shareholder value. We are committed to achieving these results while building a world-class team to deliver on our goals. With that, I'll turn the call over to the operator to begin the Q&A.

Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Andrew Boone with Citizens Bank. Please proceed with your question.

Andrew M. Boone, Analyst — Citizens Bank)

Thanks so much for taking my questions. I would love to just double-click in terms of 4Q25 units sold. We've seen this deceleration. Can you just help us understand whether that's competitor of pressure, the market, macro, anything you want to call out in terms of highlighting 4Q results? And then I'd love to ask about MACs. it sounds like you guys are seeing real results in terms of better integrating with dealers to just drive more volume. Can you help us understand what's the roadmap to drive better max adoption

George Chamoun, CEO

more broadly? Thank you. Yeah, for the year, but what we're doing about, that's one area we're adding. We also talked to the regions where we're adding a differentiation with our product. Dealer wholesale, 70% there is half between our differentiator. On your second, we are connected more to wholesale we first put the guarantee on units guarantee and we're starting thank you

Operator

thank you our next question comes from the line of rajat gupta with jp morgan

Rajat Gupta, Analyst — JP Morgan

please proceed with your question uh great uh thanks for taking the question um here i had a question you know just just following following up on the previous one um it looks like you know your 2026 guidance uh it does not assume much of a change in overall market share growth versus what you saw in recent quarters, despite your incremental margins moving lower versus where you were last year. Now I'm curious, you know, why that would be the case. And if there are like any one-time investments, you know, maybe Viper and, you know, other initiatives around commercial that might be causing that incremental margin to slow down. I mean, just helping – it just seems a little counterintuitive, you know, to look at incremental margin dropping versus market share not accelerating. If you could clarify that, and then I have a quick follow-up.

George Chamoun, CEO

Yes, certainly, Rashad. Yeah, so the investments are additional – a few minutes ago. So that's one area of additional expense, and Bill could start to invest in the Viper role. We're making these investments throughout the year. we'll start to see um more of an impact towards that it takes a little time to to get these

William Zerella, CFO

things going but maybe you can chime in someone understood so so the market share essentially

Rajat Gupta, Analyst — JP Morgan

you're applying higher market share acceleration um in later in the year uh assuming these

William Zerella, CFO

investments bear some fruit right yeah there's there's a yeah we're assuming a slight understood

Rajat Gupta, Analyst — JP Morgan

uh just a quick follow-up a little more high-level question uh could you you know maybe you know comfort investors around, you know, just the risk of AI to the business? I mean, clearly there seems to be a lot of interpretations around. Anything you can help, you know, just provide more clarity around that? What differentiates ACV? What differentiates your business model? Is there risk? Is there benefit from AI? You know, maybe if you could just, you know, just dig a little deeper into that and just how you're thinking about that.

George Chamoun, CEO

yeah i mean the the irony uh is aiming to the company who's trying to and we should benefit

Rajat Gupta, Analyst — JP Morgan

from that i guess i guess interpretation is that there might be like a new startup or a young

Andrew M. Boone, Analyst — Citizens Bank)

company you know that could make they can that can do what you're doing in a much easier fashion

Rajat Gupta, Analyst — JP Morgan

uh in a much simpler fashion maybe providing the inspection capability to the dealers directly or the pricing capabilities uh is there anything is there anything you can do to protect your position or do you even see that as something realistic or practical? Thanks. Yeah, I think

George Chamoun, CEO

investors should do their homework. They should watch the video we posted regarding what we do for the largest private automotive company in the country, you know, posted on our Hendrick Automotive. Watch that video, see what we're doing. They should do the research we're doing. When you do your homework, you'll see, you know, we're not just predicting to the point where we can back them and guarantee them so yeah there could be startups that emerge in this category but I think they'd have to raise hundreds of millions of dollars which would be very difficult to do where we've we've inspected over a million cars a year that we know all these scratches all these dents we've now earned the credibility to part of the workflow for all these dealer groups so I could see why in other industries that they would be concerned but in this

Rajat Gupta, Analyst — JP Morgan

one. Rajat, we are that disruptor. Fair enough. Great. Thanks for all the color and good luck.

Operator

Thank you. Thank you. Our next question comes from the line of Ron Josie with Citi.

Ron Josey, Analyst — Citi

Please proceed with your question. Great. Thanks for taking the question. George, I wanted to ask about conversion rates and just wondering if they return back to normal seasonality in the quarter after, you know, some sort of ups and downs last year and then thoughts on conversion rates into 26 and and then maybe a bigger picture when we look at the unit growth improvements across the carolina south florida south carol california east texas um remind us what led to that outside

George Chamoun, CEO

growth here and and sort of what this means going forward thank you we did see a year-over-year improvement and we saw that i think the overall and by delivering a better we we did see uh you you know, executing well, and we actually do see our continue to grow. Chasing units, but making sure we're building the best experience, you know, what did we do differently? We, like we gave an example to Carolina, a former of ours, that was in the, that really knew the ACV model. We also, I believe, this region execution, that our right momentum, you know, our team down there, the ACV offering, whether it be the guaranteed sale, They're also one of the ones that are your teammates to go out and help on the buying activity and the demand into the field more. Both sellers sat with him last week, is doing more work to do over here.

Operator

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

Bob Labick, Analyst — CJS Securities

Thanks for taking our questions.

George Chamoun, CEO

Thank you, Bob.

Bob Labick, Analyst — CJS Securities

Yeah, I wanted to ask what Viper, you talked about, you know, rolling out this year. You talk about a lot of dealer interest in recent shows and stuff. Have you said, I guess, when will it be in the field? But more importantly, what are the keys you're watching for in your launch once you get it out there before you decide to do maybe a more widespread rollout?

George Chamoun, CEO

Are the dealers going to be able to leverage this? When you think about dealers, they can source more. Which cars should they be, you know, with wholesale? So these initial customers, ACV Max, is their goal is to get them to buy more cars. So think a dealer buying, you know, 70-plus is helping them buy more cars. Some of the dealers were talking with one of them last week. The general manager of that was a dealer who said he'd like to buy, you know, and those are the words of a site. So we're a site. The more they buy, and then they'll end up wholesale. And so think about it. It's TAM expansion. We'll now get per-run dealerships in the country are going to be dealers that. And if we could turn into one of the best-run dealerships in the country, Then there's even a bigger reason to be working with ACV and the ACV program.

Bob Labick, Analyst — CJS Securities

That's exciting, so I can't wait to watch that as it rolls out. You gave us a few stats on ACV price guarantee, 19% in the quarter, and ticking up already for no-reserve auctions and percent of volume. Is there a natural level or goal for that or a level that it can't go above, Or how do you think about, you know, the progression in the, you know, no reserve auctions and the percent of volume that could be?

George Chamoun, CEO

You know, if we could see, you know, the mid-20th percent range this year, I'd be maybe higher, right? If you look at some vehicles, front-line vehicle, you know, a dealer just running it for 24 hours on our platform, we're not saying every single car needs to run that way. But there is a halo on ACV's marketplace right now because the more cars that are running no reserve, buyers are showing up. We've got nine-point, tremendous, 20 or more bidders. When you think about the ultimate AI predictor, it's not just using third-party data out there. We can put a number on a car integration with the DMS where we know what dealers are retelling the cars for.

Andrew M. Boone, Analyst — Citizens Bank)

Super. Thanks very much.

Operator

Thank you. Our next question comes from the line of Chris Pierce with Needham & Company. Please proceed with your question.

Chris Pierce, Analyst — Needham & Company

Hey, good afternoon, everyone. Just two, I just want to understand, I may not have the math right, but if I look at just pure auction records revenue per unit, it's in line with Q3, and on the prior call, you talked about incentivizing sellers, power sellers, and people to try the price guarantee. Should we, and I know that incentivizing power sellers has sort of been a long-standing industry dynamic. Should we think about that for you guys as something that's not temporary and that's sort of going to be sort of like the new normal as industry competitive levels change or like

George Chamoun, CEO

am I reading into something? I just want to get your thoughts on that. Yeah, we think revenue, we did want to bring up two investors. We didn't want over the next year to give us that and then it bounced back forward and incorporated into our guidance is an assumption that that 528

William Zerella, CFO

Okay. And then just on competitive dynamics broadly, you know, I can't speak for all investors,

Chris Pierce, Analyst — Needham & Company

but I feel like there was a school of thought that, you know, if we look back two years ago, wholesale was going digital and it was going to be a winner take most market. Would you push back that on maybe investor sentiment changing or industry sentiment changing that wholesale is going to go digital, but it'll be a duopoly type market and that'll naturally be buffers for each other's growth and comps will play a role and things like that? Like, I guess when you look at the industry three to five years from now, do you have a different

George Chamoun, CEO

perspective than you did maybe 18 months ago? And when you think we're adding dealers operate their business better, folks are thinking about this, like the people we're working with saying is ACV's helping us run our business better. AI changing industries like automotive. I think investors should be worried that ai will change industries i think that is a legitimate worry we're doing that in this industry we're helping dealers uh execute better uh now is there still a ways to go where physical auctions are still the majority of the car sold yes it will continue to grow now it may not be a winner a couple winners in this case so i think we're going to be the leader because at the end of the day there's only one of the industry right now okay

Operator

thank you and good luck thank you thank you our next question comes from the line of eric

Eric Sheridan, Analyst — Goldman Sachs

sheridan with golden tax please proceed with your question if you made to expand through 2025 how should we be thinking about and bring that footprint reach in 2026 as a driver of growth and how that fits into your broader strategic priorities that'd be number one and any update on project viper i don't think i saw anything in the prepared remarks or or anything on the call so far. I just wanted to get a quick update on the technology side from Project Viper

George Chamoun, CEO

and how to think about that rollout as we get deep. We are hiring. We've got between this month and next month, I think we've got like 20 or 30 people in training right now. So we're hiring. We will hit, incorporates both our national footprint. So you will see us just continually executing, increase our opportunity of going on this national footprint the way I would like it to be, expecting more cars a day like my goal is to get most of this in place but by i would say by the end of q3 it's sort of my goal uh it's an aggressive goal but we're working like how to think about the the talent and and hiring and training because obviously not just not getting all the people in the right right question of viper we are uh these are the early dealers uh maybe as close as 200. we've got at least i don't think we'll get them all eyes that accomplishing objective objective number one, which is helping them buy more cars, objective number two, helping them have retail photos, helping them, dealers, for example, we're predicting tire, incredible team is saying 90% confidence on tire depth, so think about in the dealer canal, I wanted to, and so the thought, as many of you know, we do move fast, but we are pretty prudent over here, make sure everything's going, next year really start to, throughout the year

William Zerella, CFO

We'll also start taking a comment on the business model of future cars.

Operator

Our next question comes from the line of Navid Khan with B. Riley Securities. Please proceed with your question.

Navid Khan, Analyst — B. Riley Securities

Okay, great. Thank you very much. So, George, maybe just looking back at your commentary in November, I think when you're thinking about 2026 back then, you said it's prudent to probably assume the wholesale market stays flat in 2026. And now, you know, we are in February 2026, any thinking, anything that might have changed in terms of your thinking about the market for this year versus, you know, maybe like three months ago. So that's my first question. And then the second question is around arbitration expense and just wondering what are the kind of drivers here to get this thing down? Is it really more of a function of price volatility and as that comes down, you expect it to come down or you know you did do some cleanup so just trying to understand the drivers there and any

George Chamoun, CEO

and your first question uh being flat for the year but obviously a very good question uh in january according to naa a dealer wholesale was down by so you saw too early whole year um and and i in the industry uh between what what can happen there's going to be enough benefits on the used car side there's going to be supply benefits of off lease coming um and dealers are going to buy a lot we we are still thinking that it'll be a flattish year under second question creation a very good question uh we feel really good about where we're going into the year last year and we we started to really uh just govern the platform and that's really playing I think it's also the ACV brand starting to get out there, and I wish I would have just, as leaders, you just, you kind of, as you're growing these businesses, you sometimes are just chasing a little bit out of the team. We executed extremely well in Q4. We are going into the year. I'm seeing NPS. I'm seeing buyer satisfaction. I'm seeing more and more accountability, like using AI. We're starting to use AI to figure out what's going on with sellers and buyers and other types of things, so how the team's executing on arbitration.

William Zerella, CFO

And with all the incentives to be leveraged, that will kind of give us another validated client.

George Chamoun, CEO

Right now, it's not only us.

Navid Khan, Analyst — B. Riley Securities

Thank you. Thank you, George.

George Chamoun, CEO

Thank you.

Operator

Our next question comes from the line of Jeff Lick with Stevens. Please proceed with your question.

Jeff Lick, Analyst — Stephens

thanks for taking my question guys um i got a kind of a series of questions around you know helping dealers run their business better they're all kind of related um firstly could you really talk a little dig a little deeper on the um usage you know the early returns on using viper to boost uh service attachment and up sale in the service lane and then along with that if you guys do a scan you know do you own the data or does the dealer own the data or or do you guys both have access to it? And then I was wondering if you also elaborated, too. I know you guys are doing some kind of private label auctions or intra-dealer auctions with different groups using your data. I'm just kind of wondering if you could, you know, talk about those things.

George Chamoun, CEO

Yeah, we've – and now it's starting to leverage Viper as well. But we're – Jeff, we've got between unbelievable numbers. This could be, you already go from like dozens of rooftops. Where ACVs in place and where the dealer takes our numbers are, but we've got to get more rooftops doing it. And so clear car buy itself meant the dealers still have to go around. They've got to do the yes, no questions, which, by the way, only takes a few minutes. So I would like to see more and more of them using it. And we now, in parallel, for a few rooftops, stage, we'll actually put a guarantee on the cars. That's actually helpful because one of the negatives we're finding is even with all of our techs and the ones they really want to buy, it's good for them or us. So now that we have, and some pilots actually put a guarantee, now they don't feel like they're going up at ACV auctions. But once you could do it with dozens, you can do it with hundreds, you could do it with thousands. And I've seen that throughout my entire career. So that was your question one. the dealer's data, and then in an aggregated, we could use the data for doing the things we're talking about, like we're talking about today, pricing predictions, things like that. So we have a very senior team from a legal and data. We've been able to... Do you see eventually the ability

Jeff Lick, Analyst — Stephens

to charge kind of non-volume contingent recurring revenue, maybe charge more for helping the the dealer run their business better and not necessarily tying that to auction volume?

George Chamoun, CEO

It will be both. The model worked middle of this year. But at a really high level, the dealer will pay, you know, and then there will be a rebate. So if we don't get the wholesale volume that we'd like to get, then they'll just pay us. And by the way, that's still a win-win. And that's what they do. Let's just say that dealer happens to own a couple of dealers here across the country that own physical auctions. So we have a more significant subscription. Whether we get the – we think the – will be mentioned that could be 20%, 30%, maybe more than the typical rooftop. So we're pretty excited about it.

Jeff Lick, Analyst — Stephens

Thanks very much for taking the questions, and best of luck in 2026.

Operator

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

Gary Prestopino, Analyst — Barrington Research

Hi. Good afternoon, all. Hey, George, I had a couple – I got a question on guarantee, and I have a question on Viper. So with the guarantee, once it hits the reserve, do you start to see an influx of increased bidding? Does it kind of work like some of these classic car Mecham auctions where once the reserve comes off, the price goes up precipitously?

George Chamoun, CEO

Yes, Gary. That's exactly the way this world operates. Dealers, when they know a car and waste their time, and we believe the ACV, the rest of the ACV doesn't exist, is that the rest of the ACV, we believe we have the highest bid activity. And so, because they know, you know, the top bidders.

Gary Prestopino, Analyst — Barrington Research

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

George Chamoun, CEO

We need the end. When you, in a few months, was within $38. So that's not me just saying, hey, this should work someday. But what the car, even if it's within $100, even if it's within $200 unit here, and say, okay, go learn. We've been learning that you've already been learning. You've already been proving. It allows us we change their process. At least we're walking in to this with a lot of credit. Thank you, Garrett.

Timothy Fox, Head of Investor Relations

Well, I think we're at the end of the call. We hope to see you on the conference next quarter. And again, thank you for your interest in ACV.

Operator

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