Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the ACV First Quarter Conference Call. [Operator Instructions]. I would now like to turn the call over to Tim Fox, ACV's Vice President of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining ACV's conference call to discuss our first quarter 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, 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. Thank you for joining us. ACV delivered solid top line results above our guidance range despite the persistent supply constraints weighing on the automotive industry and softening retail demand for used vehicles. We delivered EBITDA within our guidance range while continuing to invest in key growth expansion and technology initiatives. We continue to broaden and deepen our relationships with our dealer partners, who underpin our long-term growth opportunities. Automotive dealers faced the macro challenges I referenced earlier that they have proven to be resilient and are a critical part of the automotive ecosystem. Dealers have also embraced digital transformation, and ACV is increasingly well positioned to enable them to improve their ability to source, manage and sell vehicles with greater transparency and efficiency. With that, let me turn to the first quarter highlights on Slide 4. Our market momentum continued in the first quarter with revenue of $103 million; growth, 49% year-over-year. We transacted $2.4 billion of GMV, growth of 83% year-over-year. We sold 140,000 vehicles in our digital marketplace, a 9% increase year-over-year and an increase of 70% on a 2-year basis. Overall, we are very pleased with strong execution by the ACV team and continued customer adoption of our growing suite of services. Turning to Slide 5. To frame the rest of our discussion today, we will focus on the 3 pillars of our strategy to drive long-term shareholder value, growth, innovation and scale. I will begin with growth. Moving to Slide 7. Given the continued headwinds facing the automotive industry, we are providing context on the dealer wholesale market in relation to the broader automotive retail market. First, to understand the demand side of our market, we provided data on overall used car transactions and wholesale pricing trends. As you can see…

Thanks, George, and thank you, everyone, for joining us today. We are pleased with our Q1 financial performance. We delivered upside to our revenue guidance with adjusted EBITDA within our guidance range despite the challenging macro factors George outlined earlier on the call. Turning to Slide 19, I'll begin with a review of our first quarter results. Revenue of $103 million was above the high end of guidance and generated year-over-year growth of 49% versus strong results in Q1 '21. Adjusted EBITDA loss of $18 million or 17.5% of revenue was within our guidance range, but as I will detail later, was negatively impacted by the cost of revenue headwinds. Turning to Slide 20. I will cover some additional detail on revenue. Note that we are providing revenue by product line that aligns with our Analyst Day presentation as we believe this provides investors with more fidelity into our business trends. Total revenue of $103 million represented a 56% CAGR since Q1 '20. Auction and assurance revenue, which was 57% of total revenue, grew 31% year-over-year reflecting auction unit growth and strong auction and assurance ARPU. The year-over-year growth in ARPU of 36% was driven by higher GMV due to the strong mix of vehicles sold on our platform and the biasing increase we instituted last December. Marketplace services revenue, which was 35% of total revenue, had impressive growth of 87% year-over-year reflecting the strong adoption of transport and capital that George outlined earlier. Our SaaS and data services products comprised 8% of total revenue and had very strong growth of 72% year-over-year primarily reflecting revenue from the MAX Digital acquisition. Turning now to Slide 21. I will review costs in the quarter. Cost of revenue as a percentage of revenue increased approximately 300 basis points year-over-year and was above…

Thanks, Bill. Before we take your questions, let me summarize. We are very pleased with our continued strong execution while navigating through unprecedented times in our industry. We are especially proud of our ACV team that has delivered these results. We continue to gain market share by attracting new dealers to our marketplace and by gaining wallet share within our existing customer base, which positions ACV for strong growth. We are executing on our territory expansion plans. Our marketplace offerings are gaining traction in the market and see some very promising growth synergies emerging from our SaaS and data-enabled services. We are delivering an exciting product road map that further differentiate ACV and expand our addressable market. We are on track to generate over $1 billion in revenue with attractive margins through our proven business model that we believe will drive significant shareholder value. Lastly, we remain committed to continuing to build 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 Instructions]. Our first question comes from the line of Rajat Gupta with JPMorgan.

Just the first one on some of the recent developments in the industry. First, Carvana's acquisition of ADESA, we have seen many OEMs announce that they're looking to switch to other platforms. Some have already named Manheim. And including some of our own survey work suggested that many dealers are also looking for alternatives. So could you give a sense of what you're seeing on the ground? Have you already started to capture some of these customers? And did it impact the first quarter results or the second quarter guide? And I have a follow-up.

Rajat, good to hear from you. So we are -- we provided a bunch of data that suggests that the market obviously was smaller sort of year-over-year on a quarterly basis. But yes, our listings have grown tremendously. And so these -- our listings growth, our customer growth are coming from, obviously, competitors. So whether it be the one you mentioned or others, we're taking share. And we -- when you look at the backdrop of sort of the macro things going on in automotive, and the data we provided to you all in today's earnings call, we're providing it for a reason, right? It's basically demonstrating to our investors that amongst all these things going on, we're still out there taking share. So I'm sure the parties you mentioned are part of that -- part of the dealers we want are probably folks that were using ADESA, but also other auctions. And it all sort of contributes to part of our growth.

Got it. But did you see any change in the velocity of those interactions more recently? Or has it just been steady as you've seen in the past in terms of those increased customer engagement?

Yes, I don't think we're ready to speak specifically about where we're winning share from today. But I think more broadly, I think what we're trying to lean in and suggest is, yes, we're winning share from a number of competitors. I think as you all do your research, you'll see that we're -- it's not only them. There's also others in the industry where we're more than likely taking share from.

Got it. Great. And just maybe one follow-up in terms of your staffing levels, inspectors. Given what you're seeing in the overall auction industry in general, you're obviously gaining share, but there continues to remain a lot of choppiness in the market. Are you like pulling back a little bit versus what you maybe talked to earlier this year in terms of the staffing levels? Or are you just continuing to hire so as to position yourself for whenever the market recovers?

Rajat, we're -- from a go-to-market perspective, we're really dialed in every month, every territory across the country and the number of inspectors we're hiring. And in -- generally, we're trying to hire a couple of months in advance. It's not like you're hiring a year in advance or 2 years in advance. So things like how our internal processes work is the territory managers basically provides their forecast on the customers we're talking to, their growth rate, and then we open up the hires. We have something like over 100 inspector roles open right now that we're recruiting for, which suggests that we see growth, right? If anyone, you enter in our website, you'll see we're hiring. We're hiring and we're hiring for a reason. We're hiring because the feedback we're getting is that we believe we're going to need more inspectors, right, to take on these new listings, these new customers, but we're always managing this growth within our EBITDA guidance. And so we've been extremely disciplined -- and when you take a business like ours, an asset-like business where we can have great controls in place, you're investing in people, but you're investing it within specific metrics to help us make the right decisions. And none of this is new to us. We've been doing this for a number of years.

Our next question comes from line of Ali Faghri with Guggenheim.

So looking at the volume outlook into the second quarter, are you seeing any signs that the macro headwinds are normalizing? It seems like conversion is going to continue to be a sizable year-over-year headwind looking at the chart you provided. But are you seeing anything on the new car supply or used car demand side that should suggest your volumes will improve sequentially into the second quarter?

The word we're trying to use for today is more stabilized, if you would. We're not -- we really -- and Bill, you can lean in a little bit more on this as it relates to Q2. But the quarter and how we think from the quarter started, the quarter started stronger than Q1. But I would say there's macro reasons why, not just one, which is like new car sales. One theme is, dealers are going to be less willing to hang on to all their trades. So if you look at all the different themes, new car supplies is not yet back to where it was, obviously. But last year, new car dealers kept almost everything, right? They kept everything because there was so much consumer demand, but they kept things that they shouldn't have kept. There was even a new term in the industry called we're going to make a car out of this, which makes no sense, which means they're going to spend a ton of time on reconditioning in older car. So I think there's multiple factors going on, right? Yes, new car supply has not yet returned back to sort of prior levels. But with the current new car and used car total sales, and the trade-ins that come as part of those sales, dealers are going to be a little bit more careful. Dealers aren't going to keep all of the inventory like they were before. And they're going to be more conscientious that the macro environment has changed. So I think those are like a little bit of puts and takes sort of helps you think about the macro environment. Bill, I don't know if you want to add any more to that?

Yes. What I would add, Ali, is again, the backdrop here is some recent data published. The retail sales in April were down 13% quarter-on-quarter and 20% year-on-year. So there's this dynamic obviously out there in the macro environment that George is referring to. But yes, we did see a solid start to Q2. And recall that we had really strong listings growth in Q1, 37%. And that's continued into Q2. So even though the supply environment is still very, very tight, we're seeing really strong growth in our marketplace. And I think for us, you couple that with -- as we think about ARPU going forward and a reduction in some of the incentives that we passed through in Q1, we'll start to see some benefit there as well. So all those kind of combine to get us to our Q2 revenue guidance and the full year guide as well.

That's helpful color. I guess a good segue since you mentioned that the fee increases. It looks like you took price in December and then 2 of your main digital competitors have also implemented fee increases relatively recently. I know you're still priced below physical auction, but how are you relative to your digital competitors at this point following all of these fee changes? And do you see an opportunity to continue increasing your fees over time?

Yes, I think we're competitive right now. We're probably still lower than 1 or 2 of them. We might be higher than one of them. But in the bigger picture of things, I feel good about our pricing for this year. I think we're priced in an effective way to continue to take share for both sellers and buyers to feel like they're getting incredible value in ACV. And a number of you heard me talk about this over the years, it's like, to me, pricing is something where, especially in these growth years, price the product where we've got great unit economics, but price in a way, it's also going to help us just gain a lot more share in our marketplace. And I think we're doing an exceptional job in that way. And you will see folks constantly copy us, like that will be a norm. You're right. There's always sort of guys we sort of go upstream and as we sort of show confidence that we're providing value, you always see that, right, in every marketplace leader position.

Our next question comes from the line of Naved Khan with Truist Securities.

Curious about your consumer sourcing initiative? And what's your go-to-market approach there? What's the plan to drive consumer traffic? And then secondarily, on the -- just from the annual outlook, what are you baking in, in terms of territory expansions, was it the high end and the low end of your guide?

So I'll do my best to answer your questions. I just because I think I understood your question, but I'll just sort of -- I'll ask the question and answer it. So I think on the first one, on the consumer side of the equation, what is the resourcing and what is the go-to-market there? We mentioned sort of 2 parallel go-to-market efforts. One, we continue to leverage Live Appraisal, which is our dealers across the country who are doing events where they'll have, let's say, a Saturday event and consumers come in -- could come in and auction their car. We'll also be at our dealerships to help them with vehicles that the consumers would like to appraise. That really doesn't add more resourcing per se. It's just a part of how we're scheduling our inspectors throughout the week. It's just -- it's been part of the playbook from day 1. So I wouldn't really look at that as sort of like additional resourcing, look at it as like leveraging the resourcing in any one territory. I believe the second question was about more broadly how we're looking at our field expenses when it comes to our sales and inspection team. So we already have as part of the plan territory managers across the country. We look at the U.S. as around 160 territories. There's about 22 regional sales directors managing these folks. So that's all just already part of the current spending and plan. Below that, are the inspectors, which goes to what Rajat's question earlier was about the inspectors. In a more mature territory, we may have, let's say, 12 or 14 inspectors, and we might be selling over 1,000 cars a month. And the last mature territory, you might have 2 or 3 inspectors and we may only be signing dozens or 100 cars a month. So think about that maturity as we hire more inspectors in the less mature markets, as we're bringing on new dealers, which is just part of our model here, part of our go-to-market. And it's almost more like rinse repeat. If you look at other sort of analogy of other industries, we -- it's just what we do. We go in, we bring on a few sellers. We bring on some more sellers, we hire more inspectors. And all the cohort data we gave you when we went public and then recently at our Analyst Day, help you all kind of look at why hiring inspectors is a proven plan with strong unit economics.

Our next comes from the line of Eric Sheridan with Goldman Sachs.

A lot of the supply/demand side has already been asked, but I wanted to come back at the Analyst Day a couple of months ago, you really put on display a lot of the tech investments you're making and how that can improve efficiency and productivity on the platform over the medium to long term. Can you maybe reframe and revisit some of the investments you see as mission critical in '22 and '23? And how investors should be thinking about those investments broadly and tech on the platform as driving mixture of volume and efficiencies over the medium to long term?

Yes, thanks, Eric. I think that's really important. So when you look broadly, and I'll just start with the inspection side of the business, because obviously, our brand, the essence of ACV is transparency and trust. So no particular order, but I'll just start with our brand essence. We built the single inspection platform to allow us to -- whether it's a wholesale inspection and off-lease inspection and internal Private Marketplace type transaction between dealers, we built this sort of universal inspection platform that plugs into various applications. For example, we introduced -- many of us -- many folks in the industry already know about Virtual Lift and AMP as 2 of the great R&D items that are helping dealers get more transparency online, helping us reduce arbitration, et cetera. The next one is APEX. APEX is this IoT device that we are -- we will be more formally announcing throughout the year this year as we go to market. Now -- so we mentioned at Analyst Day that it was in -- we were just finishing up with that tech investment. It's now actually next week going into the field, where we're going to start getting our early data samples before we broadly save lives. We always go in this sort of measured approach. But we're going to be able to not only listen to the engine, but we're going to see vibration. We're going to be able to get to smell and understand whether or not a vehicle has any issues. We're -- the whole factor here on the inspection side is digital requires transparency and trust. As you see -- as you all see what happens, not only with us but with the initial look at some of our competitors, you've got to get this stuff right.…

Our next comes from the line of Chris Pierce with Needham.

Quick question. Bill, you said you have levers to pull to hit the 2022 revenue guidance even if the macro stays unfriendly. Just to confirm, we're talking about marketplace services and SaaS and data services and kind of increased penetration there?

Yes. Chris. No, it's actually less that, and it's more the dynamic between supply and used car prices, right? So the higher of the supply, the higher prices will remain. And we certainly saw that in Q1, even though prices came down a bit, they held up actually better than we previously expected. So -- but with tight supply comes potentially lower units at the top of the funnel, that's offset by higher ARPU, though. Conversely, as supply improves, potentially prices come down even further. So in that dynamic, you've got higher units than expected at a lower ARPU. So what we observed the last several quarters is that these tend to offset each other. So that's number one. Number two, since we increased our buy fees in December of last year, that's also kind of a mitigating factor in terms of any downdraft in GMV and the resulting reduction in ARPU. So -- but those are the 2 levers, and they're very much related to each other in terms of units and the resulting ARPU.

Okay. Perfect. And then are there levers you can pull to drive higher conversion that aren't dilutive to gross margin, is programmatic part of that? Because if I'm thinking about it right, it's more of a kind of set my bid and forget it type thing versus someone having a certain feeling around being for prices that's based on what they're feeling in the marketplace? Is that something that can kind of drive higher conversion?

Yes. Look, l will help you kind of look at the conversion is maybe 2 different areas. So one is on the demand side, where I think you were going with the question is, with products like SAM, right, Smart Acquisition Manager, it allows the dealer to be more engaged with ACV by putting these automated bids or just getting better alerts and getting more activity on a specific unit. So that's the demand side. There's more than that, but it's -- yes, we've got more and more we can do to help get infinite amount of demand in any one asset. But a big part of this conversion rate is really the expectation of the seller because we already have lots of others. And the demand -- the incremental demand will help. But the biggest tipping point is how we leverage our data to say to a seller, we had 8 dealers fighting over your car, okay? We had 8 dealers fighting over your car. The retail -- I understand that this vehicle appreciated last year, right? Used cars didn't historically appreciate, they depreciate, right? And basically, to say in a nice way, that honeymoon is over. You're no longer going to see vehicles appreciate. And our data helps, you ask it more and more demand, our products out, but then our data helps the seller understand, okay, you had a number of dealers fighting over this one asset, you've got the market price. If you really want to wholesale it, versus trying to retail it better now because it's just going to depreciate more next month. So think about our products and our data help both the supply side and the demand side to help on the execution of conversion.

Our next question comes from the line of John Colantuoni with Jefferies.

Wanted to start with conversion rates. It looks like they've gone back to pre-pandemic levels in the first quarter. Can you just talk about how conversion rates have trended in recent months and weeks? And how you -- how we should think about conversion rates for the cadence of the year? What are some guardrails that we should be thinking about?

So Bill, do you want to start here? Or do you want me to kind of kick off like how to -- because I want to make sure how we're talking really about from a guidance perspective. Why don't you kick off and I'll follow behind you?

Yes, sure, John. So look, I mean, conversion rates have been coming down. And they -- based on the charts that we showed in the deck, you can see how far down they've come kind of back closer to the historical norms, right? So we certainly saw that happen at the beginning of Q1. At the end of Q1, they actually bumped up a bit in March. And March is typically a strong month. You do get tax refunds. So we did see an increase in activity, and there certainly was higher sell-through. In Q2, we're assuming it starts to kind of move back down a bit, right, closer to historic norms although April was a pretty strong month for sell-through. But in our guidance and our modeling going forward. We're assuming it moderates down a bit through the rest of the quarter. And then for the rest of the year, we're assuming, again, for the most part, that it hovers around the historical norms, right? So we're kind of back in a tighter range versus the huge volatility that we saw last year, which drove just huge increases in conversion and huge growth in unit volume. So I would say this is starting to look a little more normalized based on the trends that we're seeing.

And maybe a little bit more color. Thanks, Bill, for starting. A little more color on that would be behind these like broad averages, you've got different ASP segments. So like lower-priced cars still have very high conversion, right? They just sell dealers were sort of like, I would say, just kind of getting rid of them. And lower segments had high conversion last year, have a little bit lower conversion now, but generally have very high conversion. And then these higher-priced assets, the ones that are deciding really retail or wholesale, those are sort of the areas where dealers from the -- think about from the seller's perspective, they're really just trying to decide what do I want to do with this asset? Do I want to sell it? Do I want to retail it? And that helps you kind of look at -- there's a deeper story behind conversion. Then you go, okay, what can we do about this, right? I mentioned earlier, our data can help inform the seller and price guidance. I mentioned earlier that on the demand side of things, our new products, whether it be SAM, whether our marketplace improvements, our other products that we have in product development right now to help guide valuation. Each of these helped guide the seller and the buyers to make the right decision. So they all really sort of work towards conversion, whether you're influencing sort of the supply or the demand side. Hopefully, that's helpful.

Yes. That's very helpful. And I wanted to ask the second one on guidance. This was playing around a little bit with revenue per unit for the cadence of the year. And the conclusion that I came to at least directionally, is that full year guidance and the second quarter guidance implies that units increased sequentially in each of the back 3 quarters. Could you just help at least give us a sense for whether that's directionally the way we should be thinking about it or if there's kind of any sort of -- kind of high-level guardrails you can give around the puts and takes on your guidance?

Sure, sure. Yes. So -- and as you know, we don't guide to units, but I'll try to give you as much color as I can. We are certainly assuming in our guidance for Q2 that units will grow quarter-on-quarter, right, which is what you would expect. I would tell you that directionally through the rest of the year, we are assuming, and we continue to assume that ARPU will come down, potentially not as much as we originally thought because used car prices seem to be staying elevated for potentially longer than what we expected since the supply chain issues appear to be such that they'll persist through the rest of the year. So we've kind of modulated our assumptions a bit there, but we are assuming that ARPU will come down over time. So you can use that as a basis to try to back into a unit assumption, understanding this is, again, not a precise science, as I said earlier, right, as we know, ARPU and units are correlated to each other. So to the extent one is higher, the other is lower vice versa. But again, I want to stop short of giving you specific guidance, certainly beyond Q2 other than to say that we are assuming ARPU comes down a bit as we go through the rest of the year.

Next question comes from the line of Robert Labick with CJS Securities.

It's John on for Bob. You've previously identified the off-lease market as an area of incremental opportunity. But it's looking like there really won't be many off-lease vehicles for a pretty long time to come. Does this change your expansion priorities maybe in international markets first and then go back to the off-lease markets later?

Yes. John, thanks for the question. So where we've prioritized first, I would call it, the commercial sectors, we've been leaning in and what rental car companies would like from a product. And rental car companies are an interesting category, as you study that TAM. They tend to sell vehicles directly to dealers as their primary objective, not they -- not all of them, but most of them first try to sell a car directly to a dealer. And then if they can't, then they use the physical auction. That would be the historical way. We've built out a product strategy that you'll hear us talk about maybe towards the end of this year. You'll hear us talk where we believe we have a great product strategy for rental car companies. And so we kept that going. We don't -- we're not like -- whereas I think about this as like a steady machine. Instead of just looking at all these cyclical things and changing your road map too much, pretty simple, right? You're inspecting a vehicle and providing data to the seller and helping them make informed decisions, whether they're going to sell it directly to a dealer, through our marketplace, leverage the data. And so it also helps us now go into a new market, let's say, for example, first rental, then it might be fleet after that as an example. And then after fleet, let's say, by then, next year from now, you'll see the other parts of the commercial market sort of come back. So instead of thinking like we stopped working on those efforts. We kept going on inspection. We kept going on data services in that area. We're actually about to launch some new capabilities over the next couple of months. I think we're actually one of them launching technically, I think, in the next 6 to 8 weeks. And that will go to a part of the commercial task, and we'll go get a few wins this year. And then we'll start to take those lessons learned, those capabilities. And when the broad TAM comes back in commercial, we'll be in a great spot. So hopefully, that helps, at least with your first question there.

It does. And then second, I was wondering if you could give us more color on the programmatic buying. Maybe how is it performing with the early adopters there? And what's the rate of sign-ups of new customers that you're seeing right now?

Yes, certainly. So I would say dealers are an interesting point. They -- you're seeing, let's say, last year and early this year, dealers were screaming for inventory and willing to buy anything because they were so hungry. I would say programmatic right now is still a big need in the industry. But you're going to see dealers a little bit more cautious, okay? Because some of the other things they may have tried, they might have gotten vehicles that weren't of the condition they were looking for, okay? And so you -- what we've tried to do is, as we've gone to market is stuck people into programmatic where, hey, for the first couple of weeks, let us give you a great alert on the platform. And then from there, you can sort of move towards programmatic, and it's working fantastic. So think about it as like a baby step, especially if they've tried others before trying ours. We really want to make sure you can trust our condition, you can trust what's going on here. So -- we're still in the early days, right? We're still in the early days. I think it's like a few hundred dealers a month or what's approximately? Yes, a couple of hundred dealers a month are sort of coming on to the platform. So I think still early days to be very happy. But I haven't even done an internal campaign to my own dealers yet. We didn't even have a brand name yet. The name programmatic is fun to talk about with investors, but not the right word to even say to a dealer. Like so we had a little work to do. I've mentioned on each of this call, we're still in the early days. In the next sort of month or 2 months, we'll launch our brand, which I always give you guys a little heads up of what we're up to. And then we'll launch SAM and how SAM is going to help you. And then I'm hoping to sort of leverage that tool even more so towards the end of this year going into next year. So that's pretty much all the transparence I can give you on SAM at this point.

Our next question is from the line of Daniel Imbro with Stephens.

Bill, I want to start on the balance sheet. Cash reserves still strong, a lot of cash to support growth. I think the last few years, you've done some deals in M&A kind of on that inspection space to George's point earlier, it's an important growth avenue. But Curious, are there any specific capabilities you guys would want to deploy capital towards on the M&A side? Or is there anything out there right now? And then as investors are risk assessing everything in this backdrop, just curious if the volume backdrop remains more challenged for longer than you think now? I mean how do you feel about when we reach cash flow breakeven and then those long-term targets you've given, Bill?

So maybe I'll take the second question first. And then George, you could respond to the first question in terms of M&A targets. So yes -- so I think the way investors should be thinking about this is we are very committed to managing towards exiting next year to EBITDA breakeven, if not slightly profitable. That goalpost is not changing as far as we are concerned. And we will manage our P&L to hit that. Again, keep in mind, if the supply environment continues to be very challenging, that implies that used car prices probably remain somewhat elevated. I would say the wildcard, obviously, is the macroeconomic conditions and consumer demand. But all of that being said, we still feel very confident we can get to our targets in terms of EBITDA breakeven by the end of next year. And there are other levers, obviously, in terms of OpEx growth and the like that we could potentially modify as we go along depending upon how things play out. So I wouldn't think of us necessarily backing off of that commitment.

Daniel. It's George, on your first question. So obviously, our balance sheet is strong. Our balance sheet is strong. We've got a great business here. We've got great unit economics. And to your question on M&A, we're always reviewing the market. And where you're seeing us be a great steward of this capital. We've brought in some great products. We're extending the value-added capabilities on how we go to market, where we have a dedicated team who's always looking at assets. But you'll also see us be being smart and not rush into anything, right? So obviously, I don't really know what else I can say from an M&A perspective, but we're always on this. We're always doing our diligence. We're always looking at various ways we can expand our product suite and our go-to-market. But I think that's all I can say at this time.

Got it. And then just one, George, on the growth strategy. I think at this point, we're in all the markets. So it's more of a wallet share game. Curious if you're just seeing any competitive changes? Some of your peers obviously are investing a lot in the digital space, both public and private. So curious if you're seeing any change in how they're going to market versus you guys? How the rooftop maturity or penetration is going? And then really from a sales level or kind of operational standpoint, when your salesperson is pitching themselves against your digital dealer-to-dealer peers, I mean, what are the points of differentiation you highlight to dealers on the ground?

Yes. Sure, Daniel. So we start our journey with different dealers in sort of different ways, okay? So we might start with the dealer, for example, where they start their journey using Live Appraisal. We don't yet replace, let's say, a physical auction or whoever their current sort of the incumbent auction company is. We might need start with that product. And then when we start with that product, we might only be getting, let's say, 3 or 4 or 5 cars a month being sold on ACV, and they might keep 3 or 4, but we started our journey. We've begun our partnership. We may start our journey with MAX Digital. We may start our journey with Drivably. We may start our journey with selling higher-end cars and not lower end cars. We may start our journey selling lower end cars, but not higher end cars. And so each one of these dealer relationships, whether they start out with a relationship with the used car manager or the dealer principal, or with a dealer group, for example, a large group, our relationship might start with a rooftop by the group going with ACV for private marketplace, and they're exchanging cars as a group. And then we're starting our journey by saying, hey, you're using us right now for a Private Marketplace. Let's look at how we can help either buy more cars or sell more cars. So we have different ways we start. Our differentiation is we believe we have the #1 condition report and inspection process with world-class technology, the best team in the industry, with data to help support how these dealers can make the right decision. So that's an area of differentiation that backs all of this. And then we've got at the end of the day, these different products that are customized on whether it's a dealer group, whether it's a single store that helps them achieve their goals.

Ladies and gentlemen, due to the interest of time, our final question comes from the line of Michael Graham with Canaccord.

Squeezing in here. Just two quick ones. One is on the -- could you just comment on how promotional you were with some of the selling dealers in your newer territories versus your older territories and just how you're thinking about that? And then I just wanted to ask you and it seems like the new car market coming back is definitely sort of like a precursor to some of these model normalization trends that you're anticipating. And I'm just wondering if that's true? And what do you see as sort of the lag, not necessarily when the used car market is going to come -- or the new car market is going to come back because that's hard to predict, but what's sort of the time lag between when that happens and when you start to see some of these other model dynamics unfolding?

So Michael, it's George. So we -- on the incentive side, we try many things, not like there's one thing going on here. So for example, we'll take a seller through sort of volume commitments as an example of a type of incentive we may do. But let's say, for example, we're only getting 10 cars a month and there might be 10 or 20 cars going to a competitor, our incentive might be, hey, do more cars with us, and we'll give you an incentive. That will be example of one type of incentive program, whether it be by the way, in a mature market or a less mature, those types of things have always kind of been at a high-level part of the model. Another type of incentive would be on a specific transaction basis, saying, okay, let's move this car. And if we move this car right now, we'll make a $5 or $10 whatever it is reduction and do something like that to help move a specific vehicle. So I think some of these are more, I would say, run as a program based on, again, our strong unit economics and position and some of these are more of, okay, we're trying to nudge a specific dealer along to help them with their decision making, like, hey, come on, we got you 7 buyers. We did all this, let's move this along and maybe give them a little other incentive on. So Michael, that was like -- I'm trying to frame -- it's a little less about just like the new markets for some mature markets. I would say it's a little bit more programmatic than that in our approach where we have a bunch of intelligence in the things we're doing and just part of the overall plan and all part of our EBITDA guidance. So as you can see, no matter what's going on, cars over here, cars over here. Bill runs a pretty tight ship around here. He basically gives the team, all right, here's where here's what you can do. And we've got that discipline. We've got that discipline to go out and grow, hit the numbers we're basically telling you all, but do it within an EBITDA range. And I'm really proud of that. And so yes, there's some of that going on behind the scenes, but it's -- those types of things aren't new. We've been doing that for years. It's sort of just part of our operating plan. Michael, the second question was -- remind me? Sorry, it's getting late.

I know. I was just wondering like when the new car market comes back, how long -- much time elapses do you think until the wholesale used market comes back and starts to have your model unfolding the way that you're talking about with units going up and pricing coming down and things like that? Like what's the time lag there?

So we're -- but I believe this is going to be a sort of iterative. I believe one of the things we shared with Tim, was -- I'm not sure if we shared it besides we had a 4% gain quarter-over-quarter in listings. So we shared that in the slide deck.

We didn't share it in the slides, but...

I just shared it, okay. So we had a 4% quarter-over-quarter, look at this as like a gain in sort of listing sort of on a per dealer basis, okay? And Michael, that to me is an example. That's not a huge number, right, 4%. But it all adds up. I just like the fact that it's more, not less, meaning we're starting to see a trend. And we're starting to see a trend of a dealer willing to wholesale a little bit more before all that supply is even come back. So Michael, how I'm picturing it is it's not like this uphill climb all at once like this 1 quarter. How I'm starting to look at this as dealers are going to be -- are going to take in trades, they're going to get smarter. They're going to know inventories coming. They're going to keep the ones they should retail, and they're going to wholesale the ones they should be wholesaling. And no different than what the largest used car marketplaces here. If you look at some of the largest used car marketplaces, they retail some, they wholesale some, right? So once they get enough supply, they make the right wholesale decision. So Michael, hopefully that helps, but I look at us more iterative throughout the year that as supply starts to change as consumer demand changes, franchise dealers will make the right decisions on what to retail, what to wholesale.

At this time, I would like to turn the call back over to Tim for closing remarks.

Great. Thank you, and thanks, everybody, for joining the call today. We will be on the road at a number of conferences over this next quarter. You can find all those details on our IR website. So we do look forward to seeing you, if we do on the road. And thank you again for your interest in ACV. Have a great evening.

Thanks so much.

Thanks, everybody.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.