Good day, everyone, and welcome to today's ACV Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Vice President of Investor Relations, Tim Fox. Please go ahead.

Good afternoon, and thank you for joining ACV's conference call to discuss our third quarter 2024 financial results. With me on the call are George Chamoun, Chief Executive Officer; and Bill Zerella, Chief Financial Officer. Before we get started, please note that today's comments include forward-looking statements, including statements regarding future financial guidance. These forward-looking statements are subject to risks and uncertainties and involve factors that could cause actual results to differ materially from those expressed or implied by such statements. A discussion of the risks and uncertainties related to our business can be found in our SEC filings and in today's press release, both of which can be found on our Investor Relations website. During this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is provided in today's earnings materials which can also be found on our Investor Relations website. And with that, let me turn the call over to George.

Thanks, Tim. Good afternoon, everyone, and thank you for joining us. We are very pleased with our third quarter performance. We delivered another quarter of record revenue and adjusted EBITDA both exceeding the high end of guidance. The ACV team drove strong market share gains in our core dealer wholesale business. along with record performance for ACV transport and capital. Our growing suite of dealer solutions continue to gain market traction, and we progress on our tech road map to address the commercial wholesale market. Based on our strong Q3 performance, we are raising full year guidance, reflecting our commitment to drive top line growth expand margins and deliver our first year of adjusted EBITDA profitability. 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 third quarter results on Slide 4. Revenue of $171 million grew 44% year-over-year. We sold 198,000 vehicles, a year-over-year increase of 32% and reflecting strong listings growth and conversion rates as well as solid execution across our remarketing centers. GMV increased 17% year-over-year, driven by strong unit growth. which more than offset a 12% decline in GMV per unit. Next on Slide 5. Today's discussion will focus on the three pillars of our strategy to maximize long-term shareholder value, growth, innovation and scale. I will begin with growth. Turning to Slide 7. I'll start with observations about the automotive market as context regular wholesale volumes. On the retail front, sales were fairly muted in Q3. New retail sales increased 1% year-over-year, while used retail sales were flat. Importantly, new vehicle inventories have recovered to historical levels and OEMs are increasing incentives which should support retail sales returning to more normalized levels in the near future. In terms of used vehicles, inventory…

Thanks, George, and thank you for joining us today. We are very pleased with our Q3 financial performance. Along with accelerated revenue growth, we delivered meaningful margin expansion and strong asset EBITDA growth, demonstrating the strength of our business model. On Slide 14, let's begin with a recap of our third quarter results. Revenue of $171 million was well above the high end of our guidance range. Approximately 10% of revenue in the quarter came from acquisitions, which was in line with our expectations. So the overperformance was driven by strong organic growth. Adjusted EBITDA of $11 million was $3 million or 38% above the high end of our guidance range, and adjusted EBITDA margin improved nearly 1,000 basis points versus Q3 '23. The upside was driven by strong high-margin auction and insurance revenues and by operating leverage. Finally, non-GAAP net income was also meaningfully above the high end of guidance, with margin increasing approximately 800 basis points year-over-year. Next on Slide 15, let's review additional revenue details. Auction and assurance revenue was 59% of total revenue and grew 52% year-over-year. This performance reflects 32% year-over-year unit growth and auction and assurance insurance ARPU of $506, which grew 15% year-over-year. Note that approximately 10% of third quarter units came from acquisitions. So we delivered strong organic unit growth, underscoring our share gains in a market that grew in the low single digits. Marketplace services revenue was 37% of total revenue included 39% year-over-year, reflecting record revenue for both ACV transport and capital. Our SaaS and data services products comprised 5% of total revenue with growth once again in positive territory. Next on Slide 16, I'll review costs in the quarter. Q3 cost of revenue as a percentage of revenue decreased approximately 400 basis points year-over-year. The improvement was driven by…

Thanks, Bill. Before we take your questions, I will summarize, we are very pleased with our strong execution in Q3. We are especially proud of our ACV teammates that delivered these results. We continue to gain market share by attracting new dealer and commercial partners to our marketplace while expanding our addressable market, which positions ACV for attractive growth as market conditions improve. We are delivering on an exciting product road map to further differentiate ACV and drive operating efficiencies. We are on track to achieve our 2024 adjusted EBITDA target and deliver 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 Instructions] And we will take our first question from Chris Pierce with Needham. Please go ahead.

Hi, good evening, guys. I had a question on the -- if I look at the metrics and Bill you sort of reiterated on the call, the $506 in auction and assurance ARPU. Over time, more of it seems to be coming from auction versus the assurance side on a per vehicle basis. I just want to know the right way to think about that, if that's something intentional or if that's not something we should read into? I just want to kind of better understand that.

Chris, it's Bill. So I wouldn't really read anything into that. Again, think of auction and assurance revenue combined, not segregated because again, the GAAP accounting can distort some of the trends.

Okay. Perfect. And then on the -- if we think about some of the larger players like the Carvana or other -- what does your business look like as someone that has their own wholesale side of the world, wholesale -- run your own wholesale auctions grows retail share, just thinking longer term here?

So Chris, can you repeat that question? George, here. I just want to understand what...

Yes. Like what happens if we talk about independent dealers and consolidation within dealers. What happens if larger players like the Carvana as they grow share, what happens -- because at that point, you have these larger players that run their own wholesale auctions. I just kind of want to think about what's the right way to think about your business is that kind of possibility plays out?

Yes, that's all right. So yes, I believe today, Carvana has around 1% market share, if I remember correctly. And when you think about the 16,500 franchise dealer rooftops in incredible locations across the country and then the 30,000-plus independent dealers across the country, all those dealers need to compete. And they need solutions. They need solutions to buy cars from consumers. They need appraisal solutions, they will all need machine learning and artificial intelligence to help them drive their businesses. So look at we are building the technology that empowers all these dealers to really compete against the Carvana and the other big box players. So I think that's the way to think about this. It's a really important category. And our dealers have some of the most incredible real estate and incredible brands, across the U.S., and we think they could be buying a lot more cars from consumers and selling more used cars, and we're going to help them get that inventory.

Okay, thank you.

Thank you. And we will take our next question from Nick Jones of Citizens JMP. Please go ahead.

Great. Thanks. Hi George. Hi Bill. Could you kind of remind us how you're thinking about just pricing broadly? I know there's some levers if depreciation picks up, you have some room to take price up. But as we kind of look at the industry and we can kind of see competitors seem to be taking price up each year, maybe a little bit ahead of inflation. Philosophically, how do you think about tracking that? Are you at a level that kind of makes sense for you around $500, give or take? Or how should we think about how you may kind of track competitors from a pricing perspective? And then I have a follow-up.

Yes, certainly. So First, we've made great progress on closing the gap on our buy fees, as you know, we were significantly under market. And we did that from -- without really any impact on our ability to continue to gain share. So very pleased with how we've done it a little of time each year. We are very careful on doing the right things for our dealer partners but really getting our pricing to more of a competitive level. So really ecstatic with the way our team prepared to make those changes. We probably have some more -- a little bit more room on that sort of headroom, but we'd rather keep you all thinking around that $5 -- I'm sorry, $500, $5 going the wrong way, $500 as we've set out for the midterm target. And just to remind you, our sell side, our dealers on the sell side do get price discounts with volume. So as we continue to grow volume, some of our sellers. And that's already part of our mix. But we'd like for you all to be thinking still in that $500 for now until we guide you all otherwise.

Got it. $5 would a vehicle a pretty good deal. If -- as we think about kind of the midterm targets, I guess could you speak to, I guess, kind of maybe some debate as to what's going to happen with interest rates post the election. I mean, any challenges in kind of getting to a more normalized market if rates stay higher? Do you think are kind of on a path to a normalized market kind of one way or the other over the next few years? Just any thoughts on kind of the industry post-election and maybe the debate on the rate environment?

Yes,. So we're -- obviously, what we've seen is we've seen new cars. We're starting to see incentives. We're starting to see interest rates playing to the way new car dealers are pricing their vehicles. And the more incentives on the new will help. I think we will consistently between now and the end of next year, see new cars have more and more incentives. So if we kind of look at that as one area that there's different folks who are thinking about next year from a new perspective. You've seen a few different folks report that new could be off a little bit next year. When you think about how that relates to dealer wholesale, really one way to think about next year is that the some of the industry folks like NAAA and Auctionet think that dealer wholesale could be sort of -- I would read into what they're saying is sort of flattish. And why do I say that is you're still going to have a lack of used cars. So if I had to -- at least from now, okay, when will we have a true tailwind I think a true tailwind maybe going into '26. But it feels like next year, I'm at least thinking about next year sort of flattish from a market perspective. But hopefully, with all the other things you just mentioned, lower interest rates, other things, we could all have a little bit more enthusiasm than that. More to come between now and when we talk more about next year.

Thanks, George.

Thank you. And we will take our next question from Bob Labick with CJS Securities. Please go ahead.

Good afternoon. Thanks for taking the questions. Great job on the quarter. Nice upside on the volume in particular. So as I look at it, it seems like -- and I know this is my rough math, but it seems like quarterly volume the organic growth accelerated versus the first half. And if that is true, what are the key drivers? What's the kind of the incremental organic growth from the quarter versus an already strong first half?

Bob, it's Bill. So, yes. So the upside was certainly driven by the organic growth of our business. Our remarketing centers were pretty much on track based on what we forecasted. And that was really driven by several factors. So number one, just continued share gains. Number two, we had better-than-expected conversion rates for the quarter. And we had really great performance in terms of our marketplace services offering. So those combined really drove the highest organic growth that we've seen, frankly, in several years. So we're really, really pleased with that performance. And we've seen that continue so far early into Q4. However, we're obviously baking in kind of seasonality for the rest of the quarter in our guidance.

Right. It makes sense for seasonality in Q4 versus Q3, if you just look back for every year. Great. And then just one other for me. obviously, we just talked about the accelerating organic, which is great. But you also have made these acquisitions to advance in commercial. What have you learned so far? I know you guys are kind of like do learn, observe, tweak it and then move on. So what have you learned so far? And how does it affect your future acquisitions into commercial or conditioning centers? How should we think about in 2025 and beyond.

Yes. Thanks, Bob. So we're -- so to your point, first, we're learning a lot. We've got some great locations for our commercial consignors where it's really enabling us to both work with the consignors, learn the technology they'd like to see in place. You'll see us talk more about how we're going to implement our inspection technologies at these locations early next year, hear us talk about that more. You'll hear us talk about how we're combining our -- some of our back-end office systems and other capabilities. And so when you really think about the technology that we're building to help these commercial consignors, it's going to help them make the right decisions. So when a car shows up, should they be reconditioning that vehicle or not? How much should they be spending on reconditioning. And I think we're really going to have some breakthroughs over the next year or two. Now having said that, we're still early stages, a little over 5% of our current volume right now is commercial. So I don't want to get ahead of ourselves just yet. Next year, we'll still be investing in that product in technology required. But when I think about this in out-years commercial could become a very meaningful part of our overall volume.

Okay, super. Thanks so much.

Thank you. And we will take our next question from Rajat Gupta with JPMorgan. Please go ahead.

Thanks, George, Bill. Congrats on a good quarter here. I just wanted to ask around the framework around incremental margins. We know you're going through the commercial initiative this year, some acquisitions are coming through. You have a lot of other product initiatives. How long would you expect to be in this kind of incremental EBITDA range 29%, 30%? I mean once you're through the integration phase, should we expect this to inflect next year? Are there more areas that are working on the pipeline that should depress that? Just curious if you could help us understand the near-term framework around that? And I have a quick follow-up.

Yes. Rajat,, it's Bill. Yes. So what we've talked about in the past is kind of a normalized organic target in terms of incremental EBITDA of 40%. So our guidance this year implies approximately 30% taking into account the investments that we're making as part of building out our platform to support commercial business. So right now, the thinking in terms of next year is we'll continue to make progress in terms of improving that incremental EBITDA margin. But we'll continue our planned platform expansion to support the commercial rollout similar to what we've done this year. While expanding our EBITDA margin. So we'll continue to move the ball forward, but we wouldn't expect that next year, we would get to fully hit the 40% incremental EBITDA on marginal revenue growth.

Rajat,, the only thing I'll add to that is we -- it's really this sort of ramp of making sure we're showing gains and progress in our EBITDA. Obviously, we're going to stay committed to that. But we'll also be committed, as Bill said, to execute on expanding our TAM, both in the commercial and helping dealers source more cars from consumers, which is the self-inspection capability. So we're very excited, the fact that next year, we believe we can do both, both improved year-over-year what we've done from an EBITDA perspective, but also invest not only in the core dealer wholesale but also in expanding our TAM.

Got it. That makes sense. And just as a follow-up. I mean if I heard you correctly, I think Bill, you mentioned that you're not expecting the same kind of market share acceleration that you saw in 3Q in the fourth quarter. Is that correct? And why would that be the case if you could just give us more color there? Thanks.

Yes, I don't think we said market share. I think what we said is there's typically in November and December. Conversion rates typically go down. That's at least what it's done almost every year. So when you look at the seasonality of this business, you heard Bob mention it earlier, every year, conversion rates in November and December to tend to come down.

Yes, I would also -- I didn't mention, by the way, Rajat, the other impact in the quarter that we discussed in our prepared remarks that we're estimating the impact from the hurricanes on our Southeastern regions. There's about $2 million in revenue and about $1 million in EBITDA. So we bake that into our guide for Q4 as well.

I think maybe like -- I think I meant to ask it in a different way. The 22% organic growth in the third quarter, it seems like it's 20 points, 22 points above what the market did. That's an acceleration from what you saw in 1Q, 2Q. Are you assuming that similar kind of market share delta in the fourth quarter as well? Or is that not the case? I think that is what I was trying to get at, but...

It's actually a good question. I'm going to -- I would say our thoughts on market share was pretty much continuation to Q3, although I will say we don't have that exact prepared answer that way. But I will say, we didn't really back it in based on market share. I don't see any difference in market share between Q3, Q4 at this point, we need the data in front of us. We are purely looking at that seasonality. Seasonality put a little bit of a hurricane stuff. But basically, when I look at listers, when I look at listings, I don't see any difference on market share gains right now for Q3 to Q4.

And again, Rajat, I mean we've seen a really strong start to the quarter, kind of a continuation of the same kind of growth rates we saw in Q3 through October. But we're always trying to be prudent in terms of our guidance and taking into account, again, the seasonality factors that George mentioned. So we'll see how things go, obviously, but that was the basis for us to guide what we did.

Understood. Great. Thanks for all the color and good luck.

Thank you.

Thank you. And we will take our next question from Michael Graham with Canaccord. Please go ahead.

Hi, thanks a lot. I don't think you mentioned this yet on the Q&A, if you did, I apologize. But just on the commercial wholesale market, you talked a little bit about your efforts there in the prepared remarks, but just was hoping to get another layer of depth around like how that's going and how quickly you think that can become a more significant part of your business?

Yes. Sure, Michael. Yes, one of the things we mentioned, and I'll tell a little bit deeper is our volume in commercial today is a little over 5% of our overall business. So going well, investing in some key areas. So the areas that will help us really differentiating this commercial business be no surprise you all will be inspections, right? That's an area where we've always innovated on the dealer side, bringing that to the commercial side. You'll hear us talk about that some more in Q1. So that will be one area of -- that I'm really pleased with the team is innovating around how we're going to really so to enhance the way we inspect these cars at the auctions, how we're leveraging AutoIMS, which is how we get the consignment, how we're then integrating with sort of the back office systems, not to get in the weeds here, but all going well so far. I mean we'll be making this investment throughout next year. But at the end of the day, we feel good that the experience we're building will be differentiated, will be both great for our commercial consignors the sellers and buyers. So I think without these repeating what I said earlier, there are more to come probably in Q1 on this topic, but happy with the build-out we've done so far.

And then just last quick one related to that, maybe a comment on the profitability of those units relative to dealer wholesale?

Yes. At the end of the day, if I look at this as EBITDA dollars per unit, EBITDA dollars per unit are basically the same. Slightly higher revenue per unit, slightly higher cost per unit. But if you kind of look at what matters, you basically get into the same EBITDA dollar per unit.

Perfect. Okay. Thank you. Thank you, George.

Thank you.

Thank you. And we will take our next question from Naved Khan with B. Riley Securities. Please go ahead.

Thank you. Thank you very much, guys. On the conversion rate, which you saw did pretty well in the third quarter. I'm curious if the improvement that you saw as a function of the macro in the market? Or are these results of the changes that you are making to the platform or just give us your thoughts there?

Yes. Great question. And it was definitely both. So the market conditions helped Q3, helped us definitely. There was definitely a lot of demand for used cars. So that was definitely a factor. But also very proud of the technology and product enhancements, we continue to add. We're -- we've gone through this. We showed you some of it in the slides here, some of the enhancements we've made on conversion. It's constant here, as you know. Our engineering team and product team are constantly making sure we're merchandising the cars the right way. So our sellers really get the full amount of money for these cars, buyers know what they're buying. We keep making a bunch of enhancements there. We're making enhancements on how and when to sell these cars, enhancements the car doesn't sell the first time around how it could be sold the second time around. So we're -- we keep investing in the area of conversion, and it's definitely helping. So the simple answer is both. Both some market benefit and also the enhancement we've made from a technology perspective.

Got it. And then on transportation, the margin improvement -- the revenue margin improved year-on-year. Was there any change in this on a sequential basis?

Naved, the transport team here is just -- they're making incredible strides on leveraging artificial intelligence on pricing lanes. So when you choose lane by lane how to price a vehicle, coupled with we're just starting to do some bundling. Bundling would mean there's already a car let's say, going from Long Island to Virginia. So let's get the same truck to take the same vehicle. So bundling will -- it's only a small portion of our cars today. That will also keep growing. So yes, we're very happy with how we're leveraging technology to make sure we're giving the right price for our dealers because that price is important to our dealer partners. But also you see the tech to help us make sure we're hitting our margin objectives.

Thanks guys.

Thank you. And we will take our next question from Steven McDermott with Bank of America. Please go ahead.

This is Steven McDermott on for Curtis Nagle. So just wanted to talk about kind of market share gains versus wallet share. How are you thinking about the mix in terms of the growth there? And then I have a follow-up as well. Thank you.

Yes. No, it's a great question. And look at this as more like it's a regional story. It's a local story and then there's like a national kind of overlay to the whole thing. But there's only a few markets in the country where we have 70, 80-plus percent wallet share from a lot of dealers in one territory, right? And we have a few of those, and we're happy about that. But there's many markets where we can still grow in multiple ways. There's national dealer groups that we study their wallet share consistently. And when I see 20% to 30% wallet share, I see a lot of great opportunity to help those dealers show them why our pricing is right, show them why our conversion on our marketplace keeps getting better. So it's both. We will continue to grow the business. And there are some markets where we're still relatively new, and we only have a few sellers, and we don't have a lot of all share yet. So we have a long ways to go. And I think that's the great thing about the ACV model is we're still in the early days here. We're very happy with the overall market share. We're ecstatic with all the hard work the team has done, but there's a lot of headroom here for us to keep growing.

Awesome. And then I know this is pretty early, but autonomous vehicles definitely dominated the discussion last quarter for some rideshare names and some OEMs. So still many years away, but just philosophically, what do AVs mean to you guys in the long term? And have you really put much thought behind the strategy there?

On EVs?

AVs, autonomous vehicles.

Autonomous vehicles. I think, one, the good thing about autonomous vehicles is that, they will become used to. They go from new to use. They will they will need to be purchased by someone else in the U.S. or someone else overseas or somewhere else somewhere. So I really -- I think the simple way to look at it is, whoever the initial user was, whether the user was Uber or the user was whoever, that asset will then get sold eventually. And I would look at Generation 1 of this is look at that as just a fleet category. In our world, almost like commercial. And okay, those vehicles, once that consignor believes they don't want to keep it on their balance sheet. It's a great car to go through an auction. And go to some, whether it be a franchise or independent dealer that will go in recondition it to what it needs. So quick answer would be it's probably no different than the rest of the commercial world.

Awesome. Appreciate the answer and great job this quarter.

Thank you.

Thank you. And we will take our next question from John Healy with Northcoast Research. Please go ahead.

I wanted to ask -- I guess I wanted to ask a little bit about the commercial side of the business. When I think about that business, I think about rental, I think about repo, and I think about off-lease. I was just wondering if you could give us some thoughts on like which of those buckets do you think the solution makes or out of the gates. And now that you have AutoIMS and maybe we're six months in to learning and practicing and system work, is there one of those buckets that you think might be kind of first to move and first to really embrace you guys? And would just love to hear your thoughts on that.

Yes, sure. Great question. We're definitely making from a volume perspective, most of the volume I mentioned on commercial today is from repos and rental. So those two are -- have been our -- the first area is we've been able to take some share, grow those relationships. A lot of them where we are doing business with one city and now we might be doing business in two or three cities. And we'll try to keep growing our relationships with each one of them. So wherever ACV is we could take -- we can become one of their sort of auction partners of choice. So definitely, those are the first two. off-lease, we're just getting started. Hopefully, I'll be to be able to talk a little bit more about that next year. So we're in discussions. We're working on some things, but not much to share just yet.

Got you. And then just kind of wanted to take a part kind of a phrase you just mentioned on the last question regarding AV, you talked about cars being used here or overseas, just let me get your thoughts just about international expansion. Now that you're kind of making money here and growth is -- we're talking about incremental margins that are sizable. Where are you at the solution globally.

Yes. I'll give you two perspectives on sort of the global front. So one, we're still early in our strategy creation. But we first and foremost, think about and I'll separate demand from sort of supply and demand. So as it relates to supply, we think about taking the ACV model very sort of technology-first mentality. Think self-inspection by the consumer, self-inspection by the dealer appraisal type solutions that then the vehicle then goes into a marketplace, and it's sold. And so the model we go globally will not necessarily be the same model we do here in the U.S. And it will be a very much asset-light model. It will be our technology helping OEMs who, let's say, OEMs are trying to sell a car -- a new car or a consumer will be that trade-in module and then the car will go into our marketplace. Or if it's a dealer, they'll go around, they'll use our artificial intelligence on their lot and they'll upload the car to our marketplace. That's the direction you'll hear us start to talk about over the next year. We're still in the very, very early stages of that model, but great question.

Thank you guys, and again congrats.

Thanks John.

Thank you. And we will take our next question from Glenn Shell with Raymond James. Please go ahead.

Thanks. First, on the first on the Manheim market report, showing 11% year-over-year new and used car sales growth in October. Have you seen any of those trends within your own data? I know you said that wholesale should be flattish, but getting some volumes in for that trade to wholesale mix. So then off of that, where is the trade to wholesale mix now and like a more specific number and then versus normalized levels? I know it's a bit later, and I can break that down again if you need.

I think, one, that Bill mentioned October got off to a good start, right? So I'm sure one of the reasons why a we're off to a good start was to your point, market was healthy. conversion rates were healthy. That probably that wholesale retail mix was likely help -- I haven't seen the reasons on that specific month. But I would generally say the quarter fourth quarter started out well. The only -- as we mentioned, when we thought about fourth quarter, we don't assume conversion rates will stay as high. We don't see some of this will stay as high over the next couple of months because it's typically tough, right? As you start to look at the price depreciation and the seller asking for one price, the higher willing to pay another, you typically see conversion rates start to come down. we mentioned that earlier. So I'm not sure if there's any other way to kind of back into your question just yet more than we've shared, but you want to try to ask the question another way, I'll try to answer it.

Yes. Well, that's super helpful. But then just on even just 3Q, do you have a more specific trade to wholesale mix number? And where is that versus normalized levels?

Yes. I mean -- I think we'll -- our trade to wholesale mix improved marginally in the quarter. We won't see trade to wholesale mix move up materially until that used car supply comes back. Just to remind you, most dealers have 25% less used cars on their lot today than they did in 2019. And I was recently out with a dealer group in Texas. And the dealer principal looked at me and all his leadership team in the room and said, we have less -- we have 30% less cars on our lots right now that we need and looked at us like a call of action like we need to go buy more cars from consumers. And so just to kind of get you in the mentality of the dealership, and I'm really pleased, obviously, with the ACV results. But it's going to take several more months here, for the market to kind of come back from the dealers having 25% less inventory. And so it will take some time. But having said that, the specific answer, we did see a marginal improvement. And it was nice to at least see a marginal improvement.

Perfect. Thank you.

Thank you. And we will take our next question from John Colantuoni with Jefferies. Please go ahead.

Hi, everyone. Thanks for taking my questions. Wanted to ask a question on market expansion. You've historically been strongest in the Northeast. But curious if you could update us on your progress expanding into new markets particularly those that you rolled out a few years ago. And as part of that, talk a little bit about how long it will take to start reaching a level of density in those newer markets where you'll start getting to the levels of scale where it will start showing through into better profitability across the company. And second part of that, right around the IPO, Canada, I think, was an aspiration for you. Where do those plans stand today? If you could just update us there? Thanks.

Yes, John. So Yes, we've -- to your point, we're very strong in the East Coast. We actually continue to gain more share in the East Coast, which has been great. I think I'll point over like towards Texas for a second. We're doing extremely well in Texas, where as an example of a market that's pretty far from Buffalo. And we've -- year-over-year gains, I think, was some of the highest in the country for us in Texas. So I think that's all I have from a prepared preparation to give you an example on the moment and maybe more to come on this topic. But I'm very pleased. The ACV brand is increasing. We're working with more and more dealer groups. As you're working with more dealer groups, the dealer groups, as you know, are in many cities that kind of pulls us into some markets. Our new products are helping us break into new markets, products like ClearCar, helping dealers buy more cars from consumers. So far, so good. That was your first question, trying to remember your second. Yes. I think when you put together these plans, I think you always assume the first international market you'd go in to be the one right next to you, like Canada. And that would have been my assumption or an IPO. The irony is you sometimes go where you're going to pull, and we've been pulled into some markets in Europe. So you'll probably hear us talk more about that next year. But I think very small early stages this is where OEMs and others are pulling us in. So yes, you will start to hear the ACV story beyond the U.S. It will be very small numbers for next year. it won't be 0. It will -- and we start to think about 2026 and beyond, hopefully become more material. But we are starting to take the model. And the way the model, as I mentioned earlier, the way we're doing the model is it's a self-inspection based model. So you're using artificial intelligence to have the consumer or the dealer walk around the car to the condition report. And then it goes into our marketplace. So we're in early stages of this very pleased with the team's progress. More to come when we can report a little bit more about this topic.

Thanks so much

Thank you. And it appears that we have no further questions at this time. I will now turn the program back to our presenters for any additional or closing remarks.

Thanks, Madison. I'd like to thank everybody for joining us on the call today. We look forward to seeing you on the conference circuit this quarter. And again, thank you for your interest in ACV. Have a great evening.

Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.