Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the ACV First Quarter 2021 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the call will be opened for questions. I'd now like to hand the conference over to, Tim Fox, ACV's Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining ACV's conference call to discuss our second quarter 2021 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 of all factors that could cause actual results to differ materially from those expressed or implied by such statements. The discussion of the risks and uncertainties related to our business is contained in our quarterly report on form 10-Q for the three months ended June 30, 2021 and will be filed with the sec following this earnings call. Also during this call, we may present both GAAP and non-GAAP financial measures. Reconciliations for the most direct comparable GAAP financial measures are available in our earnings release, which we issued a short time ago. The earnings release is available on the Investor Relations page of our website and is included as an exhibit in the Form 8-K furnished to the SEC. Finally, we will be referencing our earnings presentation today, which you can find posted on our IR website. And with that, let me turn the call over to George.

Thanks, Tim. Good afternoon, everyone, and thank you for joining us. Let me begin by thanking the ACV team for continuing to deliver superior value to our growing dealer network, which resulted in record second quarter results. I would also like to welcome our newest team members from Max Digital. We're excited to have you on board and look forward to working together as we deliver best in class data and digital technology to the dealer community. Turning to Slide three, I'll begin with highlights of our second quarter. Then share some perspectives on the automotive market. As you can see, our momentum continued in the second quarter where we transacted $2.1 billion of GMV and over 150,000 vehicles sold on our digital marketplace, both of which were records for ACV. In fact, we transacted more GMV in Q2 than we did during all of 2019 and we delivered very strong revenue of $97 million representing 117% year-over-year growth. Our strong topline performance can be attributed to three factors. First, we continue to execute on our proven playbook to grow market share by attracting new dealers into our ecosystem and by capturing additional wallet share within our existing dealership network. Second, historically high used vehicle values along with historically low retail inventories resulted in record quarterly GMV and ARPU, and also drove elevated conversion on our marketplace. And third adoption of our value-added services accelerated quarter-over-quarter, and was well above our expectations. Simply plus, strong execution by the ACV team, along with continued customer adoption of ACV suite of offerings and favorable market conditions yielded truly impressive financial results. Turning out to the broader market backdrop; we have clearly been operating in unchartered territory over the past year on both the demand side and supply side of the automotive market.…

Thanks, George and thank you everyone for joining us today. Q2 was a record quarter for ACV across many key financial metrics, and we made significant progress on our longterm strategic objectives. On Slide 16, I'll begin with the review of our second quarter results. We delivered very strong top and bottom line results with revenue of $97 million, which generated year-over-year growth of 117% and was well above the high end of our guidance range. Adjusted EBITDA loss of $4 million or 4% of revenue was nearly flat versus Q1 '20 and was also very favorable relative to our Q2 guidance. This performance was driven by our strong revenue results in the quarter and underscores the inherit operating leverage in our business model. As expected cost of revenue as a percentage of revenue increased year-over-year and was in line with our expectations. The year-over-year increase was driven primarily by the mix of ACV transport revenue, which grew 10 percentage points year-over-year and exceeded our expectations. Total operating costs, excluding cost of revenue as a percentage of revenue improved by approximately 1100 basis points. And we delivered this improvement despite growing total operating costs, excluding cost of revenue by 76% year-over-year, once again, highlighting the leverage in our business model. Turning to slide 17, I will cover some additional detail on revenue. We have a diverse mix of products and services. Our auction marketplace revenue comprises about half of our revenue today with our customer shorts offerings and our value-added services making up the other half of revenue. We had very strong broad-based performance across our portfolio in Q2, most notably within our services business, that has noted benefit from high transport attach rates and in our auction marketplace business, which grew 98% year-over-year, profitability remained strong. Moving to Slide…

Thanks Bill. Before we take your questions, let me summarize. We are extremely pleased with our execution in the second quarter, which illustrates the momentum we're seeing in the market for our leading digital platform. We continue to gain market share by attracting new dealers to our marketplace. And by growing wallet share within our existing customer base. We are executing on our territory expansion plans. We're launching exciting new offerings that further differentiate us in the market. And we strengthened our data services and digital platform with the acquisition of Max Digital. We have a proven business model that can deliver scalable growth with attractive unit economics and structural operating leverage that we believe will drive significant shareholder value. With that, I'll turn the call over to the operator to begin the Q&A.

[Operator instructions] Our first question comes from the line of Ali Faghri from Guggenheim. Your line is now open. Hi everyone.

Hi everyone. Thanks for taking my questions. So can you help me better understand the assumptions embedded in your second half outlook? In particular, I'm wondering about what type of volume growth in GMV per unit you're assuming in 3Q or 4Q?

Hey Ali. It's Bill. So, I guess a couple of thoughts first, right? Just kind of keep in mind first that full year guidance reflects about 60% revenue growth and that's substantially up from our initial modeling of the year at 40%. So, pretty big upward there. That said, similar to what other companies in the automotive space have signaled, right, we're seeing a contraction in conversion rates due to pricing normalization that's happening as the market adjusts and we've taken that into account in our guidance. Okay. So we're effectively leaning a bit more conservative on organic growth in the second half until we see the market reach equilibrium. I guess with that in mind, also a few other thoughts here. So keep in mind also that the second half of the year is seasonally weaker than the first half and Q2 is typically the strongest quarter, which of course was turbocharged as a result of the market dynamics in the quarter. That all said, right, we're going to continue to execute against the playbook we have in terms of adding sellers and buyers to the platform, expanding our footprint right on the go-to-market side, investing in tech with the thought that we're going to come out, the other end of this market adjustment, being that much stronger. So we did, assume obviously that the market's adjusting and it's going to drive, some of these metrics the other way in terms of conversion rates and ARPU.

Got it. That's helpful. And so I'm just digging in further, is the expectation that volumes can still grow quarter over quarter in the back half?

So, we don't, we don't really guide Ali to unit growth, right? I mean, there's always put and takes between units and ARPU, right? So, we try to focus everybody in terms of what the revenue output will be. So we don't get to that level of fidelity typically, right. And again, it's going to be very much driven by market conditions. At the end of the day, we keep gaining market share. I think Q2, kind of reflected that really strongly in terms of adding sellers to the platform and buyers. So at the end of the day, we're going to keep doing the same thing and then, however this plays out it's in part going to be dictated by how the market adjust this quarter.

Great, great. That's helpful Bill. And then just one more quickly on your comments about conversion, starting to normalize here as used car prices also start to normalize, shouldn't that also drive just more trade in supply making its way to auction. So, one thing we had heard about is with new car supply constraint, a lot of dealers were just keeping a lot of these trade-ins to sell at retail versus potentially wholesaling them. And so while used car prices, moderating could have a negative impact on conversion rates. Couldn't it help just the overall supply of cars that are being sent to wholesale auction?

Hey, Ali it's George. I hope you're well, thanks for that question. Right now we are being prudent and we're assuming that based on what we're hearing from dealers, that inventory is going to stay very short for Q3. We also, you mentioned this earlier in the call, we said, Q3 and Q4 could these for leveling out. And, I think so going into 2022, this will all be noise, right from our perspective and we'll -- I think right now we're assuming is dealers are going to still be in the same predicament and in summary, even assuming right now in Q3, it actually might be the toughest, I would say phase of this lack of inventory. So I think Ali that's really at least how we're thinking about the forecast right now and the lack of inventory. And to your point, does that mean dealers maybe keeping cars that they would have historically wholesaled? I think, yes. I think that's already happening. We have to assume that for now. Fast forward as these new cars come back as the factories start to correct whatever issues or the chips or other constraints, they have our new car dealers will have more cars, they'll go back to selling the cars that their brand is really aims to be selling. And they'll come back to be wholesaling, the types of vehicles that historically they also. Is that helpful just to give you a little more of that color?

It is very helpful. Thank you, George. And thanks Bill for taking my questions.

Thank you. Our next question comes from the line of Nat Schindler from Bank of America. Your line is now open.

Yes. Hi guys. Thank you for this. So one, is there any revenue associated in the second half with Max Digital?

Hey, it's Bill. So there is, but it's not material Nat, so, we haven't broken it out. It's a relatively small, but yeah, it's just not material enough for us to break out.

Totally understand. So and I get your answer from last question about being conservative on the change to what's going on in the market on the pricing side. Wouldn't that the problem in the market is a lack of supply, which is driving the price up because there was a demand as the equation for used cars. So wouldn't it, the pricing starts to normalize, we get more supply, are you taking any indication that supply is going to come back in which case is that overly conservative?

Hey well again, thank you. Overly conservative, I don't know. But when you look at the correction that's happening is the prices started to decline really sort of two thirds into the quarter, right? We, started to see used car values declined. So that's one trend happening. So that's something we're being conservative, right. It started to happen. So therefore GMV and other factors will also imply, lower GMV. Okay. So that is a fact. The other fact is dealers are getting to historical lows right now in inventory. How quickly that's going to change, you're seeing a lot of folks in the automotive market predict. We didn't want to predict really anything more than sort of we can control. So, we're predicting to your point as remodeling that our new car dealers, which is where the majority of our supply comes from are going to have a low amount of supply and therefore a low amount of trades. So, that is sort of what we're predicting that is sort of what we're hearing from our new car dealers. There are many factors going on. But yeah, so we are predicting both. Is that helpful or are you looking for the ability to…

Hey Nat, let me add one more piece of the puzzle here. Just to be clear. So when prices are declining, okay, there is basically lower conversion rates on the marketplace, right because buyers are more hesitant to commit, right? So these prices with the exposure that by the time they saw the car, the price might be even lower right and it takes time for sellers to adjust to the new reality in terms of what their inventory is worth right. So what it does, it kind of has the opposite effect of what's happened in Q2 or what happened in Q2 when prices go up right? Because there's a lot of very high conversion because buyers know they're going to flip that car and probably sell it for more than they even thought, because prices are going up. When prices are going down and you have the opposite effect, right and so you get to this normalization equilibrium where it's kind of a more of a normal marketplace. So while it's adjusting your conversion rates go down, but I think that's consistent with what you would hear from other players in the industry.

That makes perfect sense. But I was also wondering if on the other side, when the Manheim index was approaching two, or going north of two and pricing was going crazy, I would think that dealers would just simply not sell their car into the auction because the longer they keep the car on the lot, the more valuable it was.

Yeah. Nat, we had a great quarter. We're gaining a lot of sellers. We also mentioned that we had more net new sellers this year added this first half of the year than we did all of last year. So we're gaining interest on the platform. These other trends are important. I would say, we're all looking at these to quarter trends. We are just trying to as you know, our style, we're always prudent. Here, we do believe there is going to be, dealers are going to have a lack of inventory this quarter. And so how do we -- how do we forecast is obviously what you see.

Thank you. Our next question comes from the line of John Colantuoni from Jefferies. Your line is now open.

Hi, thanks for taking my questions. It's good to see the faster than expected progress in penetration rates for ACV transportation capital. Talk about if there was any benefit to adoption from the unique inventory environment that we saw, and if you'd consider the increased engagement to be sticky once the inventory cycle begins to normalize in the second half and I have a follow-up.

Okay. Let me go to transportation first? I think one of the reasons why transportation adoption increased is the -- we are getting better. So when you think about pricing, your lanes, just to kind of get, in one example, we're now at a point where 20% of the moves in transportation, we have a programmatically not needing, not needing our entrance our ACV transportation load board to have a price from a carrier and what does that mean? That means that because we've, starting to invest in technology for certain investor network, we're able to really optimize our lane pricing for transport, allows us to have predictability. And the more we invest both in our technology for transport and we invest in our network of carriers, it allows us to get stronger us, the price the lanes appropriately, and ultimately if we've got the right pricing, the right service for our dealer partners, they're going to choose ACV transportation. So I would say very proud of what we've done with ACV transportation. In addition, I would say there's also just more density, right? So density and scale obviously also helps in getting better pricing from our, from our carriers. And ACV capital, we did announce that we had some product mix additions recently. We are listening to our dealer partners. It's also the first time we're starting -- and it's just now starting to market our product in our app. So think this was an early product we mentioned during the IPO. We mentioned words in the IPO process. It was nascent at the time. We're just starting to market the product. We're just starting to add additional staff. But really with both initiatives, we're investing in technology, we're investing in great people who were absolutely excited about the progress and the progress is at our exceeding, in both cases, what we set out to do this year.

Great. That's helpful. And now that you've developed capabilities behind consumer sourcing, which you mentioned in the prepared remarks could you at some point start to leverage the connection you've now made between dealerships and consumers to become an online marketplace or platform for dealerships to begin selling retail ready cars to consumers. Thanks

As of right now, we're not yet planning or broadcasting to helping dealers sell cars to consumers beyond our tools. So for example the Max within the Max Digital products, we have the industry-leading way to merchandise car by car and some of the largest dealer groups in the country use this platform. And these are data tools. It helps, really market this one specific Ford 150, and exactly why this Ford 150 should be priced at $35,000 and has all this value. So we've got these unbelievable tools that now help dealers enrich their data, enrich their experience. As of right now on that, I would say, as it relates to e-commerce that's at least for today and all of our broadcasting and helping dealers where you are seeing us lean in and start to open up a little bit more on our strategy. Is dealers buying cars from consumers and dealers taking in trades and competing in this digital world, you're going to see us and we mentioned this in our IPO that this would be coming we're starting to lean in there. We do think peer-to-peer will shrink over the coming years. We think dealers are very well positioned to buy these cars from consumers and we're here to help dealers compete and then sort of in this digital world of helping them take more of these cars, whether they're going to take them as a trade or whether they're going to turn around and wholesale it, we're here to help dealers.

Thank you. Appreciate the questions.

Thank you. Our next question comes from the line of Ron Josey from JMP securities. Your line is now open.

Great. Thanks for taking the question and lots of unpack here. Another great quarter, but I wanted to maybe follow up on that call in that question just now on ACV capital and George, you mentioned capital's now available in the app and that drove awareness and probably getting the mid single digit attach rates. Can you talk a little bit more just about how you plan to ramp awareness besides just putting in the app talk about the drivers here to ramp awareness and really where you think this can get to over time from that. What did we say mid-single digit attach rates from low single digits prior? Do you think this gets to mid single digits? Talk to us a little more about the strategy with capital and I have a quick follow-up

Certainly. We are -- right now, currently doubling the size of the sales team. It's all in the model, right? We, now felt comfortable and ready. It was, time to increase that the specific sales team and think about when ACV starts to have these let's call them product sales teams, the product sales teams leverage the leads and relationship from the other account managers. So, we're already on the phone with, thousands and thousands of dealers a month, and these specialized teams, whether it be ACV Capital or Max Digital etcetera, these teams now are leveraging the fact that we have these relationships, but we are doubling the size of the ACV dedicated product sales team. We're really excited about that. Our expectations are in line with what we have for your second question, our expectations are in line with what we outlined in our, while we're on the road show Bill, you want to give a little bit more of our expectations where ACV capital should be in the next handful of years.

Yeah. Hey Ron. So yeah, if you remember on the road show, we talked about really getting to a 20% attach rate over five years, right? So I would say we're making really good progress this year. We'll most likely kind of update update you and investors on that kind of longer return path and whether or not we're getting there faster. We're certainly getting to our milestones a lot quicker on the transport side. But we're really happy with the progress that we're making in the capital. And by the way, we're also not just investing in sales. We're investing on a tech side as well. Right. So we're dedicating more resources. So, just to continue to make our offering more compelling and competitive in the marketplace. So yeah, I would just, I would just say at this point is we're making great progress. We're going to be looking at, most likely, when the owner of 4X prior year revenue from capital, granted it was small last year, but over the next few years it will certainly become more meaningful. And whether we'll get there faster than five years, I don't want to comment at this point. I would just say that we're making really great progress and obviously as you and the other professors know, this is a very high margin business for us. So it will be accretive to margins over time.

Perfect. That's super helpful. And then one quick follow-up. I think George, you mentioned you added more I think dealers on the network in the first half than all of last year, as we get to normalization in the market, whenever that is maybe in the first half of next year or the first quarter, just talk about if you think that it will be easier to add sellers then or is the environment going to be the same in terms of adding sellers? And I think you also said vehicle inspections -- inspectors are up 3X in the last three years. So you're seeing progress of feet on the streets. So just talk to us about adding more sellers as things normalize and whether it might get easier or not. Thank you.

Yeah, certainly. So, it seems, I would say between our branding, creasing, our networks, increasing, territory managers, getting out into the field, it could be also going public, in all these factors, right the ACV brand is out there. We're growing sellers and in a very successful way. So we're very excited. Maybe a way to answer your question instead of, will it grow even faster next year is, our mix is also changing. So we think about selection of assets on the ACV platform. You're also noticing our GMV has gone up and really some part of that is yes, vehicle costs right now are higher, but part of this is the mix and selection is increased. So think, we will get, we think a broader selection of vehicles as we grow. So that'd be part of the trend we think can happen going into next year. Our product mix is growing. So as we're adding on new dealers and we're successful, it's from growing sort of from one product from multiple products. You've heard me talk about in a prior call up of private marketplace, as an example. We've been adding this as an example about one dealer group a week coming on to private marketplace, which has been exciting. So think, yes, we'll keep adding more and more sellers. I don't want to predict that growing even faster at this point but really excited about what's going on here. And so far, the, the momentum and the scale is helping and I believe the product mix is also helping. So when you look at this sort of broad strategy, we've outlined to you a few months ago is we're both a marketplace and data story you're seeing that become true, right? We didn't say we're just a marketplace company. We had this vision, we're executing on this vision and you're going to see it's very focused and executing on both sides, marketplace, and data. And I think it's in that mix, we add tremendous value back to our dealer partners. And you add tremendous back to your dealer partners not only helps them retention, but helps us to grow more, what they're considering to do with ACV. Hopefully that's helpful.

It does. Thank you, George. Thank you, Bill.

Thank you. Our next question comes from the line of Bob Levine from CJS Securities. Your line is now open. Good

Afternoon. This is Stefanos crest calling in for Bob congrats on the quarter.

Thanks.

So you discussed your goal of expansion to 160 territories. Can you discuss the tight labor market and how, if at all, to impacting your ability to fill those

Sure. First I'll and the territory manager side, we are slightly ahead of schedule. So we are unplanned. We will, you know, come back over the next few quarters and I'm very confident to say we'll, we'll have reach sort of full, full coverage sort of coast to coast. So we have the territory managers out there in the field to, to reach out to all, all the franchise dealers from a supply perspective and these other products. The other part of, I would say maybe also related to your labor question is riding vehicle conditions, factors. We were just looking at some data earlier on this, in, in this, this was helpful to me. I'd love share is right now, our average time from posting a vehicle condition in sector teammate to and this is average, obviously some higher, some lower, but the average from posting a VCI teammate to selecting one is 16 days, that's average. And it's about a month from start date, meaning when they start being trained to be an inspector teammate. So that's pretty strong, right? Like, so when you, when you think about that, you know, there's a lot going on in this world right now. And I don't want to you know, underestimate or under signally at the asset would say labor challenges are a challenge, I think for all companies these days. But for, I would say those two roles out in the field right now we're executing our goals and, and, and it's, it's going well. That's great color. Thank you.

Thank you. Our next question comes from the line of Rajat Gupta from JPMorgan. Your line is now open

Good afternoon. Good evening. Thanks for taking the questions. You know, a lot of questions on that conversion now, the second half, but, you know, just have a bit of a longer-term question. Did the second quarter market dynamics accelerate, the value of your offering or, did it allow you to penetrate into more customers than you would have previously taught maybe at the time of the IPO? And if yes, that is the case. Do you expect those customers to be sticky and would that then imply that versus March, or was this today?

No, we're moving away from the near term dynamics on the market, like say 2022 or 2023.

Does that automatically imply, you know, more units just because you weren't able to accelerate your customer base in the second quarter? Just any color around that would be helpful.

Not sure if my question was super clear, but I can go over it again, thank you for the questions. And I'll, let me try to answer that. I think there's a few questions within, within that. So I would say we accomplish our goals for the first half. As you know, we've been at this now for a little over five years, we've got a model we go out there, we execute in our model. And you know, I would generally say bringing on sellers in the first half w we were very successful. I would say that the part that's different is most sellers have less inventory than in prior, let's say last year, let's say in 2019. Okay. So, part of what's been going on, and this is in, it's in the mix already. There might've been a dealer partner who had 220 cars. They wholesale with us. They might only have 100 5,060, whether they're keeping them or whether it's because they just don't have enough, or they cause they have less overall retail, whatever those reasons you're really seeing a signal. I would read into this less about, I would say keeping more about dealers have less cars. And, we hear this every day, dealers will reinforce, I'm giving you all my wholesale and more and more of them signaling that we're, we're getting a lot of their vehicles, but it is going to be, there are going to be some of these dynamics that are short term right now. We all read about it every single day. And that's really all, we're really broadcasting there as it relates to the supply. As we think dealers have less cars on their lots, but which also means less retail and likely less conversions to wholesale as it relates to stickiness, I don't have any data to really sort of give you on sickness or attention, but I will say that we, we believe our strategy is working extremely well. We believe this idea of not only it being a great marketplace, but having this end-to-end platform of services is going extremely well. We believe offering more and more capabilities, you know, investing in these partnerships, these dealer partners is going well, investing our team is going well. So I would say no really no change on our belief of how any of these market dynamics are going to change retention. I think the other part you made a third part of your question would be, could it accelerate our growth even more? And I don't know how to answer that. I don't know if you want to answer it, but I think at the end of the day, we're growing extremely well. And all these dynamics could, could, could mean accelerated growth, but obviously we can't speak to that.

Yeah. And then what I would add is that, look, we've been, as George said, we've been really successful in adding, you know, a lot of sellers on the platform. And obviously they've had a chance to see how we perform as a marketplace. Right and the mix has changed as well. So we're more, broad-based at least right now, you know, to the extent, we come out the other end of this, adjustment in the market. And those and those sellers you'll feel good about the value add from ACV, then we should benefit. Right. Whether it's, whether it's more accelerated than what had been prior it's kind of hard to say, all we can say is we feel really good about, you know, our, our penetration and market share gains.

Got it. Okay, great. That's that's helpful color. I'll jump back in queue. Thanks John.

Thank you. Our next question comes from the line of Alex Potter from Piper Sandler. Your line is now open.

Great. Thanks. Thanks for the question. Great quarter guys. So, I wanted to go back to a question that was asked earlier about how, I mean, obviously there's, there's limited supply and prices are high, so all else equal the dealers. If I can, should just sell the inventory, they have to retail and not go to wholesale. And your response was we just put up a great quarter, which is obviously I think indisputable at this point, but generally market wide, that dynamic is accurate, right? There's been a disincentive to push vehicles to wholesale, which implies that you guys are basically just running away with the market. And I don't think that's a secret anymore. So the question that I have is do you experience a change in the competitive response of some of these other platforms? You know, when you're out talking to dealers, trying to pitch yourself as you know, a partner, do you find yourself pitching yourself against digital platforms more often than you used to? That's my only question. Thanks.

Yeah. Thanks Alex. We're, if you remember, we had and I hate these names, but one of the large auction companies had a digital company, you know, right away. So when we started this journey, there was already, you know, digital competitor. So I would say this entire time there's been digital competitors and there's been physical competitors. If you look, in fairness when you look at the let's call it eight to 9 million cars that were sold at physical auction last year, and we're very proud of, you know, the number of cars you know, we sold we look at it from a percentage basis. We're, we're still small, we're growing. But I think the majority I think if you added up most of the digital compel, other digital competitors collectively they, I believe which still just be a fraction of our size. So I think the majority of the competition of where these vehicles are going is still a physical auction, cause I'm really trying to paint it. And, and yes, there are other digital companies but this whole category should grow up. And, again, we believe we're the leader and will reign the leader in the category. But still the majority of the cars have been going, through, let's say the physical auction lanes and we've, we've got some room to grow to grow this category. I think the broadening of our services of, and you're in, you're seeing now with broader mix, you know, different types of vehicles, we started the journey with just the lower priced vehicles, you know, that typical three to $5,000 car, the dealer the 120,000 miles on it that a dealer would never want to retail a franchise. So we never want to recap. We're still getting a lot of those units. We are seeing the type of inventory I'm ACV grow, which is fantastic because we're really becoming a broader marketplace. Sellers are becoming buyers, buyers are becoming sellers it's in that mix and then offer these other data services that we believe we can really, you know, not only become the dominant marketplace in time, but add more value to our dealer partners.

Very good. Thanks. Thanks a lot. Nice quarter. Thank you.

Thank you. Our next question comes from the line of Nick Bacchus from Raymond James. Your line is now open.

Hey guys, thanks for taking the question and congrats on a great quarter. Just on a cohort behavior, maybe you could just talk about any learnings or changes in dealer behavior in your newer cohorts newer territories in terms of number of vehicles, transacted per dealer, any other important metrics you look at versus past cohorts in the earlier stages?

Yeah, Nick, we really aren't sharing any cohort, but just so I can share something well, I'll share with you is Howard going into these new markets has, has starting to broaden where looking at you know, one of the themes we're looking at, because right now we're just getting into markets within the Northwest and we're just opening up some of the markets on the west coast. How we're going in, we're looking at, for example, there, there was dealers for the first time ever being introduced ACV through our private marketplace because they were part of a dealer group that would be different. We wouldn't have had that entry. We'd had to wait until we got that first seller or that first buyer, if that makes sense. So our broader product selection will be helpful. You know, the first time you're sort of hearing about ACV may not be, you know, the day we hire our territory manager, they go through training and we go into the market. So I would say that part will start to be different. That's a new theme. I was just say over the last 60 days or so. But that would be like the newest thing. I think there's something else bill we can share from a cohort basis because we've not really okay. Hopefully that's helpful.

Got it. Thanks very much. And then just real quick on the Promatic buying just maybe just, you know, a little bit more about this, this new offering and the launch in fourth quarter, do you view this as a meaningful kind of incremental driver or is it more of a complimentary type feature?

Sure. So there's two parts of our programmatic buying product strategy. The first part is, is live and we've got some dealers who are already integrated with ACV, the dealers who integrate with us for our buying API tend to be larger dealer type groups. They have a technology department and can and, and have what's called the internal technical resources to integrate with our API. So that product is live and we're starting to integrate with additional dealer groups. What that product allows is a large dealer who has the technical capacity will automatically putting bids on ACD without any human intervention and not only picking the types of vehicles, but in addition to types of vehicles, it's condition and other factors. So think basically what a human would do. In picking inventory, we're ingesting our condition report into the buying process so that their, their machines and our machines can help them at the end of the day, you know, buy the vehicle. So that's live and we're very excited to get that live. We were working on this part of our platform for, for awhile and we're, we're, we're so happy to get some dealer partners now using it. And the feedback has been tremendous. It's still early days, but we're actually seeing, for example, arbitration rates being lower than our averages for dealers buying, you know, without having any human intervention, which is just awesome. So that's product one, that's the buying API and I believe I'm not sure, I believe we're the first in the industry to do programmatic buying via an API. At least as far as I know the second is we've started to build a buying matrix approach where dealers can via interface, select the types of vehicles they'd like to buy…

Sounds exciting. Thanks for a central the time. Yeah. Thanks. Thanks.

Thank you. Our next question comes from the line of Daniel [indiscernible] from Stephens Inc. Your line is now open.

Good afternoon, guys. Thanks for your questions. And squeezing me in here at the end. Of course, just on the industry should change a supply to men normalizes that maybe first, so as conversion rates begin to take down and it takes longer to sell the vehicle. Does the capability of having land help you or hurt you when share? Obviously dealers right now have plenty of excess capacity, but as lots begin to fill up, or are you seeing more dealers ask you to start moving inventory off their law? And if so, bill, can you talk about your ability to flex your land capacity through their partnerships we're buying land to, to, to service that demand?

Yes, certainly. So we'll, I'll go through both of those phrase. So it doesn't seem like at least this year land will be much of a problem for franchise dealers. Now, if you've driven by any lately but there aren't many cars in these lines. So I would say digital, I believe this is my opinion is an advantage because at least you can try to sell it wholesale while it's still on your lot. And you can debate between wholesale retails. So I believe upstream in digital for this environment is beneficial. Not, not a detriment and I don't believe land if maybe historically let's say, 10% to 15% of dealers historically had a land challenge as it relates to wholesale, whatever the right percentages, you can guess 10%, 15% or 20% of dealers have land challenges, but right now it's, it's an even lesser percentage. The second part of your question is if we needed land there's a lot of land out there in this country. So we're not worried about if we ever need land. You know, there's, it's noise. We have a few, very few lots of loops going on in small parts of the country that we don't usually broadcast that if we really need it, we would just stand it up. Land is generally cheaper these days and it's really just not a problem if we need it, we can just go and rent it from somebody who we need it for. But right now it's by far not even in the top three things that are usually come up is like why they would go with us or not go with us. Land is not even in the top three at this point.

Great. That's helpful. And then one just following up, I think earlier you mentioned helping dealers, maybe stores directly from consumers. Can you talk a little bit more about that service, how differentiated it is maybe from some of your other peers offer and then longer term as you help dealers, source inventory, maybe outside the auction channel, how do you balance, that longer-term risk to them finding ways to buy outside of your digital auctions and maybe directly from consumers just how you balance that long term impact. Thanks.

Yeah, certainly. So our dealer partners right now look at it for our current products. One, our current products is called live appraisal. So what does that mean? That means our dealer markets to their consumers, that they will pay more for the cars than others than, you know, others who aren't using our live appraisal. Some might use a CVS brand in their marketing. Some may not use our brand. It's really up to them of whether or not they're going to use our brand, but the marketing would say something like this. Why, why have a local dealer or a national dealer, you know, give you a price in your car when you can have, and you can have one of the largest digital auction where having dealers across the country, but on your car, get transparency, know what your car is worth, things like that. So our dealers are marketing to consumers that they're going to pay more because they partnered with ACP. Basically, now that might be an event and the dealer's lot where there's like a tent and imagine like coffee. And like you go there and it's like an event, or it might be us going to consumer's driveway and actually doing a 20 minute inspection and a 20 minute auction. So that was sort of thing. That's our first product. And our dealers are enjoying this product because there's differentiation. They're not just, everyone's going to say, we're going to pay the most for your car, right? It's almost going to become noise. I'm going to pay the most of your car. You're going to pay the most of it back. It's going to be like, but why -- how, right. So at least they've got something to market and our dealer partners and that's expanded quite a bit this year, we mentioned earlier how much live appraisal has grown. In addition, you're seeing this build tech and data and pricing capabilities that will help our dealers sort of compete more and more. We're alluding to that. The Max products will help cause they're behind the scenes doing appraisals, even when it doesn't go to currently our, our, our marketplace there's additional products we're alluding to that will be coming. As part of our product roadmap that will help dealers compete for consumer cars. So we love the category. We think our dealer partners are very well positioned to buy more cars from consumers. And you could sort of think about ACVs roles. So the Shopify type of role for all these dealer partners, they need someone that has the scale, the nation's largest inspection network, the technology, the data, and, and that's what we provide for our dealer partners.

Thanks so much guys. Good luck.

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Tim Fox for closing remarks.

Great, thanks. Thank you everybody for joining the call today. So we're going to be on the road virtually participating in a couple of conferences coming up here. I'll be at the CanaccordGenuity conference tomorrow. All the details are on our websites. So we look forward to seeing you on the conference circuit in the coming months. And again, thank you for your interest in ACV. I hope you have a great evening.

This concludes today's conference call. Thank you for participating. You may now disconnect.