ACVA 10-K & 10-Q changes, risk factors and insider trading

Our operations and financial results are subject to various risks and uncertainties including those described below. You should consider carefully the risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the following risks or others not specified below materialize, our business, results of operations, and financial condition could be materially and adversely affected. In that case, the trading price of our Class A commonCommon stock could decline.

Our revenue was $637.2$759.6 million and $481.2$637.2 million for the years ended December 31, 20242025 and 2023,2024, respectively. You should not rely on the revenue growth of any prior period as an indication of our future performance. Even if our revenue continues to increase, it is possible that our revenue growth rate will decline in the future as a result of a variety of factors, including the maturation of our business, increased competition, adverse macroeconomic conditions, changes to technology, a decrease in the growth of our overall market or our failure, for any reason, to continue to take advantage of growth opportunities. Overall growth of our revenue depends on a number of additional factors, including our ability to:

Our business has grown as new and existing customers have begungrown totheir trust in and use of our digital marketplace and value-added products and services as a new way to buy and sell their vehicles to other dealers. However, our business is relatively new and has operated at substantial scale for only a limited period of time. Given this limited history, it is difficult to predict whether we will be able to maintain or grow our business. Our historical revenue or revenue growth should not be considered indicative of our future performance. We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly changing industries, including difficulties in our ability to achievegrow market acceptance of our platform, products and services and attract customers, as well as increasing competition and increasing expenses as we continue to grow our business. We also expect that our business will evolve in ways that may be difficult to predict. For example, over time our investments that are intended to drive new customer traffic to our marketplace platform may be less productive than expected. In the event of this or any other adverse developments, our continued success will depend on our ability to successfully adjust our strategy to meet changing market dynamics. If we are unable to do so, our business may be harmed.

Our recent growth has placed and may continue to place significant demands on our management and our operational and financial resources. We have experienced significant growth in the number of customers on our marketplace platform as well as the amount of data that we analyze. We have hired and expect to continue hiring additional personnel to support our growth. Our organizational structure is becoming more complex as we add staff, and we will need to continue to improve our operational, financial and management controls as well as our reporting systems and procedures. This will require capital expenditures and the allocation of valuable management resources to grow and adapt in these areas without undermining our corporate culture of teamwork. If we cannot manage our growth effectively to maintain the quality and efficiency of our customers’ experience, our business may be harmed.

•acquisitions or strategic investments, including on post-acquisition investment to develop acquiredacquisitions, companiesand to develop physical locations to support the expansion of commercial offerings;

Our efforts to grow our business may not be successful or may be costlier than we expect, or the rate of our growth in revenue may be slower than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses. We may incur significant losses in the future for a number of reasons, including the other risks described herein, unforeseen expenses, difficulties, complications or delays, and other unknown events. If we are unable to achieve and sustain profitability, the value of our business and Class A commonCommon stock may significantly decrease.

Any one of these or other factors discussed elsewhere herein or the cumulative effect of some of these factors may result in fluctuations in our revenue, results of operations, cash flows and financial condition, meaning that quarter-to-quarter comparisons of our revenue, results of operations, cash flows and financial condition may not necessarily be indicative of our future performance or financial condition. In addition, we release earnings guidance in our quarterly and annual earnings conference calls, quarterly and annual earnings releases, or otherwise, regarding our future performance and financial condition that represents our management’s estimates as of the date of release. Our actual business results may vary significantly from such guidance or analysts' or investors' expectations due to a number of factors, including many outside of our control, such as global economic uncertainty and market conditions, which could adversely affect our business and future results of operations or financial condition. Furthermore, we have in the past and may in the future make downward revisions of our previously announced guidance. If we withdraw our previously announced guidance, or if our publicly announced guidance of future operating results or financial condition fails to meet expectations of securities analysts, investors or other interested parties, the price of our Class A commonCommon stock could decline.

We may require additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including to develop new products or services or sustain and further improve existing products and services, expand our geographical footprint, enhance our operating infrastructure, increase our marketing and sales expenditures to improve our brand awareness, and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. However, additional funds may not be available when we need them, on terms that are acceptable to us, or at all. Moreover, any debt financing that we secure in the future could involve restrictive covenants, which may make it more difficult for us to operate our business, obtain additional capital and to pursue business opportunities. Volatility and other developments in the credit markets may also have an adverse effect on our ability to obtain debt financing. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our Class A commonCommon stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, we may be forced to obtain financing on undesirable terms or our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, results of operations and financial condition may be harmed.

In August 2021, we entered into a first lien revolving credit facility, or as amended, the 2021 Revolver, with JPMorgan Chase Bank, N.A, which provided a $160 million senior secured revolving credit facility with a maturity date of August 24, 2026.N.A. On June 1,25, 2023,2025, wethe Company entered into an Amendment onNo. 4 to the 2021 Revolver which modifiedmodifies the ratecredit at which interest payments are indexedagreement to increase the committed amount of the Company’s revolving credit facility thereunder from LIBOR$160 million to the$250 Securedmillion Overnightand Financing Rate (“SOFR”). Our obligations underextend the 2021maturity Revolverdate arethereof securedfrom byAugust substantially24, all2026 ofto ourJune assets.26, 2030.

Additionally, on June 20, 2024, weACV Capital Funding II LLC entered into a revolving credit and security agreement with CitiBank, N.A., providing for a revolving warehouse facility, or as amended, the Warehouse Facility,Facility. withOn aDecember maximum12, availability2025, the Company entered into an amendment to the Warehouse Facility. The amendment modified the credit agreement (i) to increase the committed amount of the revolving credit facility from $125.0 million principleto amount,$200.0 undermillion, whichand (ii) to extend the revolvingscheduled featurescommitment endstermination ondate from June 20, 2026.2026 to December 10, 2027.

We mainly compete with large, national physical vehicle auction companies, such as Manheim, a subsidiary of Cox Enterprises, Inc., Adesa, a subsidiary of Carvana, and OPENLANE. The physical vehicle auction market in North America is largely consolidated, with Manheim and Adesa serving as large players in the market. Manheim has expanded into online wholesale marketplaces and auctions, and OPENLANE is also competing in the online wholesale auction market. We also compete with smaller chains of auctions and independent auctions in the physical market, and with a number of smaller digital marketplace companies.

We face risks with respect to the condition of vehicles sold through our marketplace. We are engaged to inspect the majority of vehicles sold through our marketplace. We periodically receive complaints from buyers and sellers who believe our inspection reports are not consistent with the condition of the relevant vehicle sold through our marketplace. While our terms of service and arbitration policy provide that we make no representations or guarantees regarding any vehicles sold through our marketplace, if our inspection reports are found to be inaccurate or otherwise fail to disclose material defects with vehicles, we risk diminished customer confidence in and use of our services. We also commit in some circumstances to covering the cost of undisclosed cosmetic damage. If we fail to disclose cosmetic damages in our inspection reports for a large number of transactionstransactions, it could adversely affect our business, results of operations, and financial condition. In addition, buyers may be entitled in certain circumstances to cancellation of their purchase, which could reduce the amount of revenue we earn from the relevant sale.

We are subject to credit and fraud risk resulting from defaults on payments by our dealer borrowers on our floorplan loans.loans, as well as from fraud by dealer borrowers. A weak economic environment, fraud by dealer borrowers, borrowers' use of multiple lenders, degradations in the value of used vehicles or consumers' financing becoming more expensive could exert pressure on our dealer customers resulting in higher delinquencies, repossessions, collection efforts, customer bankruptcies, and losses for us. In particular, we recorded a loss of $18.7 million for the year ended December 31, 2025 related to the bankruptcy of Tricolor Holdings LLC and certain of its affiliates. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Tricolor Bankruptcy".” for more information. There can be no assurances that monitoring of our credit and fraud risk as it affects the collectability of loans and our efforts to mitigate credit exposure through underwriting policies and risk-mitigation strategies will be sufficient to prevent a negative impact on our business, results of operations and financial condition.

We have in the past and may in the future seek to acquire or invest in businesses, joint ventures, products and marketplace platform capabilities, or technologies that we believe could complement or expand our services and marketplace platform capabilities, enhance our technical capabilities, or otherwise offer growth opportunities. Any such acquisition or investment may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable opportunities, whether or not the transactions are completed, and may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products and marketplace platform capabilities, personnel or operations of any acquired companies, particularly if the key personnel of an acquired company choose not to work for us, their software is not easily adapted to work with our marketplace platform, or we have difficulty retaining the customers or vendors of any acquired business due to changes in ownership, managementmanagement, operations or otherwise. These transactions may also disrupt our business, divert our resources, and require significant management attention and financial investment that would otherwise be available for development of our existing business. Any such transactions that we are able to complete may not result in any synergies or other benefits we had expected to achieve, which could result in impairment charges that could be substantial. In addition, we may not be able to find and identify desirable acquisition targets or business opportunities or be successful in entering into an agreement with any particular strategic partner. These transactions could also result in dilutive issuances of equity securities or the incurrence of debt, operating expenses, or liability associated with pre-acquisition activities which could adversely affect our business, results of operations and financial condition. In addition, if the resulting business from such a transaction fails to meet our expectations, our business, results of operations and financial condition may be harmedharmed, or we may be exposed to unknown risks or liabilities.

Moreover, our acquisition strategy related to Remarketing Centers involves certain risks. InAt connectionthe withRemarketing any acquired business,Centers we will need to ensure the security of vehicles and safety of our employees and customers, negotiate favorable lease terms, obtain any necessary permits and licenses, hire, train and retain our personnel, and coordinate with our digital marketplace so as to minimize any internal competition. Live auctions at the Remarketing Centers may be delayed or canceled due to weather-related or other events. If any acquired businessRemarketing Center fails to achieve, or is unable to sustain, acceptable profitability levels, our business, results of operations and financial condition may be adversely affected.

In addition, we face risks with respect to fraudulent activities on our marketplace platform, including the sale of illegally-acquired vehicles through our auction marketplace, the unauthorized entry into and use of our marketplace platform by persons who do not meet our criteria and standards, andthe provision of fraudulent titles by selling dealers, participation of buyers in our marketplace platform who have no intention to pay.pay, and transportation-related fraud. For example, we have previously received complaints from a small number of buyers who purchased vehicles which were later determined to have been stolen. In addition, a lawsuit was previously brought against us alleging a conspiracy to set bids on our marketplace from transactions that originated from one seller. Allegations of fraudulent activity on our auction marketplace, even if untrue, may materially and adversely impact our business, results of operations, financial condition and reputation, as well as our ability to attract new customers and retain current customers.

Our business model is primarily based on our ability to enable customers to buy and sell used vehicles through our marketplace in a seamless, transparent and hassle-free transaction. If our customers fail to perceive us as a trusted brand with a strong reputation and high standards, or if an event occurs that damages our reputation or our brand, it could adversely affect customer demand and adversely affect our business, results of operations and financial condition. Even the perception of a decrease in the quality of our customer experience or brand could impact results. Our high rate ofcontinued growth makes maintaining the quality of our customer experience more difficult.

We rely on third-party carriers to transport vehicles sold through our marketplace platform to our customers. As a result, we are exposed to risks associated with the transportation industry such as weather, traffic patterns, local and federal regulations, vehicular crashes, gasoline prices, driver shortages, unauthorized subcontracting, and lack of reliability of many independent carriers. Our third-party carriers who deliver vehicles to our customers could adversely affect the customer experience if they do not perform to our standards of timeliness and care while handling the vehicles, or may not take financial responsibility for damage caused to vehicles while in their control which may harm our business.

Our marketing initiatives aim to drive brand awareness and engagement among dealers and commercial partners in order to position us as the trusted online wholesale marketplace. We acquire new dealers and commercial partners through a variety of marketing channels including digital, such as social media and search engine optimization, direct marketing, such as brand-oriented marketing campaigns, and outbound business development, and we have expanded our in-house marketing significantly in recent years.development. Future growth and profitability will depend in part on the cost and efficiency of our promotional advertising and marketing programs and related expenditures, including our ability to create greater awareness of our marketplace platform and brand name, to appropriately plan for future expenditures and to drive the promotion of our marketplace platform. If we are unable to recover our marketing costs through increases in customer traffic and incremental sales, or if our marketing campaigns are not successful or are terminated, our growth may suffer and our business may be harmed.

In addition, the market for used vehicles may be impacted by the significant, and likely accelerating, changes to the broader automotive industry, which may render our existing or future business model or our auction marketplace and value-added products and services less competitive, unmarketable or obsolete. For example, technology is currently being developed to produce automated, driverless vehicles that could reduce the demand for, or replace, traditional vehicles, including the used vehicles that are sold through our marketplace. Additionally, ride-hailing and ride-sharing services are becoming increasingly popular as a means of transportation and may decrease consumer demand for the used vehicles, particularly as urbanization increases. To the extent retail and rental car company demand for new and used vehicles decreases, negatively impacting our volumes, our business, results of operations and financial condition could be materially and adversely affected.

Our business is vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, acts of war, adverse weather events, global pandemics, geopolitical tensions, armed conflicts, acts of terrorism, human errors, infrastructure failures, cyber-attacks, energy crises and similar events. The third-party systems and operations on which we rely are subject to similar risks. For example, we rely on FedEx to ship and deliver titles in connection with vehicle sales through our marketplace, and the disruption to FedEx’s service as a result of a natural disaster could have an adverse effect on our business, results of operations and financial conditions. Geopolitical tensions, armed conflicts, or acts of terrorism could also cause disruptions in our businesses, consumer demand or the economy as a whole. We may not have sufficient protection or recovery plans in some circumstances, such as if a natural disaster affects main transportation routes for the delivery of vehicles. Any such disruptions could negatively affect our ability to run our business, which could have an adverse effect on our business, results of operations and financial condition.

Our business is dependent on our data-driven marketplace platform. Robust information technology systems, platforms and products are critical to our operating environment, digital online products and competitive position. Understanding technology innovation is necessary to retain our competitive advantage. We may not be successful in developing, acquiring or implementing new data-driven products, services, and technologies which are competitive and responsive to the needs of our customers. Such products, services, and technologies, which are rapidly evolving, include those that use artificial intelligence. We might lack sufficient resources to continue to make the significant investments or improvements in information technology,technology and data security, including artificial intelligence, to compete with our competitors. Certain information technology initiatives that management considers important to our long-term success will require capital investment, have significant risks associated with their execution, and could take several years to implement. We may not be able to develop or implement these initiatives in a cost-effective, timely manner or at all. There can be no assurance that others will not acquire similar or superior technologies sooner than we do or that we will acquire technologies on an exclusive basis or at a significant price advantage. If we do not accurately predict, prepare and respond to new kinds of technology innovations, market developments and changing customer needs, our business may be harmed.

Our brand, reputation and ability to attract customers depend on the reliable performance of our marketplace platform and the supporting systems, technology and infrastructure. We may experience significant interruptions to our systems in the future. Interruptions in these systems, whether due to system failures, programming or configuration errors, bugs, vulnerabilities, computer viruses, physical or electronic break-ins or similar events, could affect the availability of our inventory on our marketplace platform and prevent or inhibit the ability of customers to access our marketplace platform. ProblemsActual or perceived problems with the reliability or security of our systems could harm our reputation, result in a loss of customers and result in additional costs.

Problems faced by our third-party providers, including web-hosting providers,providers including Amazon Web Services and Google Cloud, could inhibit the functionality of our marketplace platform. For example, our third-party web-hosting providers could close their facilities without adequate notice or suffer interruptions in service caused by cyber-attacks, natural disasters or other phenomena. Disruption of their services could cause our website to be inoperable and could harm our business. Any financial difficulties, up to and including bankruptcy, faced by our third-party web-hosting providers or any of the service providers with whom they contract may have negative effects on our business, the nature and extent of which are difficult to predict. In addition, if our third-party web-hosting providers are unable to keep up with our growing capacity needs, our business may be harmed.

Our marketplace platform allows for the storage and transmission of our customers’ proprietary or confidential information, which may include personalpersonally information or otheridentifiable information. We may use third-party service providers and subprocessors to help us deliver services, including payment services, to our customers. These vendors may store or process confidential and personalpersonally identifiable information, payment card information, or other information on our behalf.

Security breaches, cyber-attacks and other similar incidents continue to increase, and marketplace platforms such as ours may be subject to such incidents. These threats, which are becoming increasingly difficult to detect, are perpetuated by a variety of sources, including traditional computer “hackers,” employees or contractors engaging in theft or misuse, newly-developed artificial intelligence technology, organized criminal threat actors, nation-states and nation-state-supported actors. We and our third-party service providers may be subject to a variety of these evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), viruses, denial-of-service attacks (such as credential stuffing), malware installation, ransomware attacks, supply-chain attacks, the malicious introduction of software bugs, or attempts to cause hardware failures. These threats are becoming increasingly prevalent and severe, especially as criminal threat actors leverage artificial intelligence-based technologies and services, and can lead to significant interruptions in our operations, loss of data, information and income, reputational harm, and diversion of funds. Similarly, supply chain-attacks have increased in frequency and severity and we cannot guarantee that third parties and infrastructure in our supply chain and our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our products/services) or the third-party information technology systems that support us and our services.

While we have security measures in place designed to protect customer information and prevent data loss, security breaches, cyber-attacks and other similar incidents, there can be no assurance that our security measures or those of our third-party service providers that store or otherwise process certain of our and our customers’ information on our behalf will be effective in protecting against unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our confidential information, marketplace platform or our customers’ information, including personalpersonally identifiable information, particularly given that our ability to monitor our third-party service providers’ information security practices is limited. The techniques used to sabotage or to obtain unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our marketplace platform, systems, networks or physical facilities in which our information or our customers' information is stored or through which information is transmitted change frequently and often are not identified until they are launched against a target, and we may be unable to implement adequate preventative measures or stop security breaches, cyber-attacks or other similar incidents while they are occurring. We must continuously plan, develop and monitor our information technology networks and infrastructure to identify, protect, detect, respond to and recover from the risk of unauthorized access, misuse, malware, encryption, data exfiltration, phishing and other events that could have a security impact. The security measures that we have integrated into our marketplace platform, systems, networks and physical facilities, which are designed to protect against, detect and minimize security breaches, cyber-attacks and other similar incidents, may not be adequate to prevent or detect service interruption, system failure or data loss. Our marketplace platform, systems, networks, and physical facilities could also be breached or information could be otherwise compromised due to employee, contractor or customer error, negligence or malfeasance, if, for example, third parties fraudulently induce our employees, contractors or our customers to disclose information or user names or passwords, or otherwise compromise the security of our marketplace platform, networks, systems and physical facilities. Third parties may also exploit vulnerabilities in, or obtain unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to, marketplace platforms, systems, networks or physical facilities. See the section titled “Cybersecurity” for additional information on certain aspects of our approach to cybersecurity risk management and strategy.

Our agreements with certain customers may require us to use industry-standard or reasonable measures to safeguard personal and sensitive information. A security breach, cyber-attack or other similar incident may cause us to breach our customer contracts. AAn actual or perceived security breach, cyber-attack or other similar incident could lead to claims by our customers or other relevant stakeholders that we have failed to comply with such obligations. As a result, we could be subject to legal action or our customers could end their relationships with us. Our contracts may not contain limitations of liability, and, even where they do, there can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages related to a security breach, cyber-attack or other similar incident.

Litigation resulting from actual or perceived security breaches, cyber-attacks or other similar incidents may adversely affect our business. Actual or alleged unauthorized access to our or our vendors’ platform, systems, networks, or physical facilities could result in litigation with our customers or other relevant stakeholders. These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business, or adversely affect our reputation. We could be required to fundamentally change our business activities and practices or modify our products and marketplace platform capabilities in response to such litigation, which could have an adverse effect on our business. If a security breach, cyber-attack or other similar incident were to occur, and the confidentiality, integrity or availability of personal information was disrupted, we could incur significant liability, or our marketplace platform, systems or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, regulations and rules, including data breach notification laws, personal information privacy laws, and consumer protection laws. For example, the Telephone Consumer Protection Act imposes specific requirements relating to marketing to individuals using technology such as phones, mobile devices, and text messages. As another example, the California Consumer Privacy Act, as modified by the California Privacy Rights Act (collectively, "CCPA") gives California residents expanded rights to among other things, request disclosure of personal information collected about them and whether the data has been sold to others, request deletion of personal information (subject to certain exceptions), opt out of certain personal information sharing and not be discriminated against for exercising these rights. The CCPA provides civil penalties for violations, as well as a private right of action for certain data breaches. A number ofVarious other U.S states have also enacted, or are considering enacting comprehensive data privacy laws that share similarities with the CCPA,CCPA. with at least four such laws (in Virginia, Colorado, Connecticut and Utah) having taken effect, or scheduled to take effect, in 2023. There isCongress also discussion in Congress of aconsiders new federal data privacy and security lawlaws from time to which.time, to which we may become subject if it is enacted. The effects of the CCPA, and other similar state or federal laws, are potentially significant and may require us to modify our information processing practices and policies, incur substantial compliance costs and subject us to increased potential liability. Additionally, the U.S. Federal Trade Commission (“FTC”) and states’ Attorneys General have brought enforcement actions and prosecuted certain data breach and other privacy-related cases as unfair and/or deceptive acts or practices under the FTC Act. Further, laws in all 50 U.S. states generally require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach. These laws are not consistent, and compliance in the event of a widespread data breach is difficult and may be costly.

UponWith our expansion into international markets, we and our third-party service providers may be subject to a new range of detailed and complex foreign laws regarding privacy and the processing of personal information and other data, most notably the General Data Protection Act Regulation (“GDPR”). The GDPR, together with national legislation, regulations and guidelines of the European Union member states governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, use, retain, protect, disclose, transfer and otherwise process personal data.

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business with respect to intellectual property. Some third parties may be able to sustain the costs of complex litigation more effectively than we can because they have substantially greater resources. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive the foregoing to be negative, it could have a material adverse effect on the price of our Class A commonCommon stock. Moreover, any uncertainties resulting from the initiation and continuation of any legal proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our operations. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

As a public company, we have incurred and will continue to incur significant finance, legal, accounting and other expenses, including director and officer liability insurance. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The NasdaqNew York Stock Market,Exchange, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations have and may continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.

We are obligated to maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A commonCommon stock.

We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting on an annual basis. This assessment requires disclosure of any material weaknesses identified by our management in our internal control over financial reporting. As a “large accelerated filer” under the Exchange Act, our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting on an annual basis. We have been engaged in the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404, and our continuedContinued compliance with Section 404 will require that we incur substantial expenses and expend significant management efforts.

Risks Related to Ownership of Our Class A Common Stock

We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors and consultants under our equity incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in companies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of our Class A commonCommon stock to decline.

Our stock price may be volatile, and the value of our Class A commonCommon stock may decline.

The market price of our Class A commonCommon stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including:

•future sales of our Class A commonCommon stock by us or our stockholders;

•the trading volume of our Class A commonCommon stock;

Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may also negatively impact the market price of our Class A commonCommon stock.

Sales of our Class A commonCommon stock in the public market could cause the market price of our Class A commonCommon stock to decline.

Sales of a substantial number of shares of our Class A commonCommon stock in the public market, or the perception that these sales might occur, could depress the market price of our Class A commonCommon stock and could impair our ability to raise capital through the sale of additional equity securities. ManySome of our stockholders who held our capital stock prior to the completion of our IPO have substantial unrecognized gains on the value of the equity they hold based upon the price at which shares were sold in our IPO,hold, and therefore they may take steps to sell their shares or otherwise secure the unrecognized gains on those shares. We are unable to predict the timing of or the effect that such sales may have on the prevailing market price of our Class A commonCommon stock.

During the fourth quarter of 2024, the number of outstanding shares of our Class B common stock declined such that the total number of outstanding shares of our Class B common stock represented less than 5% of the aggregate number of outstanding shares of our Class A common stock and our Class B common stock. Under the terms of our amended and restated certificate of incorporation, our Class B common stock automatically converted to Class A common stock effective as of December 31, 2024. This resulted in 3,550,142 shares of Class A common stock being issued on December 31, 2024 with the related shares of Class B common stock being cancelled. InWe addition,amended thereand wererestated 3,859,793our sharescertificate of incorporation in 2025 to reclassify our Class A common stock issuable upon the exercise of options as of December 31, 2024. There were also 7,868,735 shares of Class A common stock issuable upon the vesting of restricted stock units, or RSUs, outstanding as of December 31, 2024. We have registered all of the shares of Class A common stock issuable upon exercise or vesting of outstanding options or RSUs, respectively, or other equity incentives we may grant in the future, for public resale under the Securities Act. The shares of Class A common stock will become eligible for sale in the public market to theCommon extent such options are exercised, subject to compliance with applicable securities laws.stock.

If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the market price and trading volume of our Class A commonCommon stock could decline.

The market price and trading volume of our Class A commonCommon stock will be heavily influenced by the way analysts interpret our financial information and other disclosures. We do not have control over these analysts. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, our stock price could be negatively affected. If securities or industry analysts do not publish research or reports about our business, downgrade our Class A commonCommon stock, or publish negative reports about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A commonCommon stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our Class A commonCommon stock.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our Class A commonCommon stock.

•authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our Class A commonCommon stock;

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder. Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our Class A commonCommon stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that holders of our Class A commonCommon stock would receive a premium for their shares of our Class A commonCommon stock in an acquisition.

We do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. In addition, our ability to pay dividends on our capital stock is currently limited by the covenants of our credit facilities and may be further restricted by the terms of any future debt or preferred securities. Accordingly, holders of our Class A commonCommon stock may need to rely on sales of their holdings of Class A commonCommon stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

TheYou should read the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10- K. This discussion, particularly information with respect to our financial condition or results of operations, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K. You should review the disclosure under the heading “Item 1A. Risk Factors” in this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from thosethe anticipatedresults described in theseor implied by the forward-looking statements contained in the following discussion and analysis.

We provide a highly efficient and vibrant marketplace platform ("marketplace platform" or "marketplace") for wholesale vehicle transactions and data services that offer transparent and accurate vehicle information to our customers. Our marketplace platform leverages data insights and technology to power our digital marketplace and data services, enabling our dealers and commercial partners to buy, sell, and value vehicles with confidence and efficiency. We strive to solve the challenges that the used automotive industry has faced for generations and provide powerful technology-enabled capabilities to our dealers and commercial partners who fulfill a critical role in the automotive ecosystem. We help dealers source and manage inventory and accurately price their vehicles as well as process payments, transfer titles, manage arbitrations, and finance and transport vehicles. Our marketplace platform encompasses:

Marketplace Units is a key indicator of our potential for growth in Marketplace GMV and revenue. It demonstrates the overall engagement of our customers and our market share of wholesale transactions in the United States. We define Marketplace Units as the number of vehicles transacted within the applicable period. Marketplace Units transacted includes any vehicle that successfully reaches sold status, even if the auction is subsequently unwound, meaning the buyer or seller does not complete the transaction. These instances were immaterial in the periods presented. Marketplace Units exclude vehicles that were inspected by ACV, but not sold. Marketplace Units have generally increased as we have expanded our territory coverage, added new Marketplace Buyers and Marketplace Sellers and increased our share of wholesale transactions from existing customers. Because we only earn auction and ancillary fees in the case of a successful auction, Marketplace Units will remain a critical driver of our revenue growth.

Marketplace GMV is primarily driven by the volume and dollar value of Marketplace Units transactions. We believe that Marketplace GMV acts as an indicator of our success, signaling satisfaction of dealers and buyers, and the health, scale, and growth of our business. We define Marketplace GMV as the total dollar value of vehicles transacted within the applicable period, excluding any auction and ancillary fees. Because our definition of Marketplace Units does not include vehicles inspected but not sold, and because the value of the vehicle sold is not recognized as revenue, Marketplace GMV does not represent revenue earned by us. We expect that Marketplace GMV will continue to grow as Marketplace Units grow, though at a varying rate within a given applicable period, as Marketplace GMV is also impacted by the value of each vehicle transacted. In periods of declining used vehicle values, Marketplace GMV may decline even while Marketplace Units increase.

Our success depends in part on our ability to grow our share of wholesale transactions from existing customers, increasing their engagement and spend on our marketplace platform. We remain in the early stages of penetrating our Marketplace Buyers’ and Sellers’ total number of wholesale transactions. As we continue to invest in eliminating key risks of uncertainty related to the auction process through our trusted and efficient marketplace platform, we expect that we will capture an increasing share of transactions from our existing buyers and sellers. Our ability to increase share from existing customers will depend on a number of factors, including our customers’ satisfaction with our marketplace platform, competition, pricing and overall changes in our customers’ engagement levels.

•Deepen Relationships with Dealers and Commercial Partners. We have a team of VCIs that regularly interactinteracts with our customers, providing high-quality inspection services and developing strong customer relationships.

We continue to drive customer adoption of our existing value-added and data services and introduce new and complementary products. Our ability to drive higher attachment rates of existing value-added services, such as ACV TransportationTransportation, ACV Capital, and ACV Capital,MAX will help grow our revenue. In 2019 we launched our financing arm, ACV Capital. In 2021, we added ACV MAX (formerly doing business as MAX Digital) flagship inventory management system to our portfolio of data services offerings. We continue to drive customer adoption of our data services such as our inventory management system, which enables dealers to accurately price wholesale and retail inventory while maximizing profit by leveraging predictive analytics informed by artificial intelligence. These data services enable our customers to make more informed inventory management decisions both on and off our digital marketplace. In addition, we will continue to focus on developing new products and services that enhance our marketplace platform in areas including new data-powered products. Our ability to drive customer adoption of these products and services is dependent on the pricing of our products, the offerings of our competitors and the effectiveness of our marketing efforts.

Our success depends in part on sufficient demand for used vehicles. Our growth over the last several years has coincided with a rising consumer demand for used vehicles. Since early 2020 demand for cars has outpaced supply. During this periodperiod, we have seen new car supply have a significant impact on the supply of wholesale vehicles available within our marketplace. More recently, new vehicle supply has begun to increase, although still below 2019 levels. However, this increase in new vehicle supply has been coupled with an increase inhigher interest rates which has made both new and used vehicles more expensive for retail consumers utilizing financing. Used car demand will be in part dependent on the economic health of the retail consumer and their ability to afford a vehicle purchase.purchase, which may be impacted by macroeconomic and geopolitical conditions, including the impact of changes in trade policies.

We also generate revenue by providing our Go Green assurance to sellers on the condition of certain vehicles sold on the marketplace, which is considered a guarantee under GAAP. This assurance option is only available for Go Green sellers on qualifying vehicles for which we have prepared the vehicle condition report. Customer assurance revenue also includes revenue from other price guarantee products offered to sellers. Customer assurance revenue is measured based upon the fair value of the guarantees that we provide. We expect the fair value per vehicle assured to decrease over time as we continue to improve the quality of our inspection product, which in turn reduces the costs of satisfying such assurance.

Other income (expense) consists primarily of interest incomeexpense on our borrowings and interest earned on our marketable securities and cash and cash equivalents. Other income (expense) also includes interest expense on our borrowings.

The increase primarily consisted of higher costs related to generating auction marketplace and other marketplace revenue, partially offset by a decrease in data services cost of revenue. For the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024, total cost attributed to generating auction marketplace revenue increased to $54.4$68.3 million from $35.8$54.4 million. The increase in auction marketplace cost of revenue is primarily due to increased units sold through our marketplace and to a lesser extent, other costs of revenue associated with our acquiredprior remarketingyear centers' delivery of auction marketplace revenue.acquisitions. Other marketplace cost of revenue increased to $206.9 million for the year ended December 31, 2025, compared to $173.0 million for the year ended December 31, 2024, compared to $135.3 million for the year ended December 31, 2023, primarily due to an increase in the units transportedtransported. This was partially offset by a $7.6 million legal settlement benefit recognized in 2025, which reduced data services cost of revenue by a corresponding amount. For the year ended December 31, 2025, Data services cost of revenue was $12.9 million compared to buyers$20.8 frommillion sellers.in the comparable prior year period. Marketplace and service cost of revenue as a percentage of revenue decreased during the year ended December 31, 20242025 compared to the year ended December 31, 20232024 asdue we continuedprimarily to growthe revenuebenefit andfrom scalethe ourlegal business.settlement.

The increase primarily consisted of costs attributable to our Go Green assurance offerings and was primarily driven by an increase in the number of arbitration claims, due to increased volume of completed auctions where the customer elected the Go Green offering, and an increase in the arbitration cost per unit sold. For the year ended December 31, 2024,2025, Go Green assurance cost of revenue increased to $50.9$62.3 million from $46.5$50.9 million in the year ended December 31, 2023.2024. OtherFor the year ended December 31, 2025, other assurance cost of revenue increased to $5.3$11.0 million from $5.2$5.3 million duringin the year ended December 31, 2024 anddue primarily to a $4.5 million increase in costs incurred on the Company's price guarantee sales due to an increase in the current year endedin Decemberunits 31,sold 2023.through our price guarantee sales compared to the prior period. Customer assurance cost of revenues as a percentage of revenue decreasedincreased during the year ended December 31, 20242025 compared to the year ended December 31, 20232024 as we continueddue to managethe aforementioned increases in arbitration claim volume and arbitration costs andper growunit revenue.sold.

The increase is primarily consisteddue ofto higher personnelpersonnel-related expenses and related charges.costs. For the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024, personnel-related costs increased to $138.5$150.5 million from $118.8$138.5 million as a result of headcount increases from our prior year acquisitions and stock-based compensationinvestment in 2024.our internal product and technology capabilities to enable future growth initiatives. Software and technology expenses increased to $16.3$21.8 million from $15.2$16.3 million.million as a result of continued investment in our technology and infrastructure amid ongoing business growth. Other expenses increased to $7.9$10.4 million from $7.0$7.9 million in the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. Operations and technology expense as a percentage of revenue decreased during the year ended December 31, 20242025 compared to the year ended December 31, 20232024 as we continued our efforts to effectively manage costs while growing our revenue.

The increase primarily consisted of higher personnel-relatednon-personnel costs.costs For. Non-personnel costs in the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024 increased to $62.0 million from $38.9 million primarily due to the $18.7 million in Tricolor bankruptcy losses recorded in the year ended December 31, 2025 as described in the Recent Developments section above. Increased bad debt provision charges on our finance receivable portfolio unrelated to Tricolor during the year ended December 31, 2025 drove the remainder of the increase in non-personnel costs compared to the year ended December 31, 2024. For the year ended December 31, 2025 compared to the year ended December 31, 2024, personnel-related costs increaseddecreased to $178.6$173.0 million from $138.7$178.6 million, primarily as a result of headcount increases and increasedlower stock-based compensation in 2024. Non-personnel expenses increased to $38.9 million in the year ended December 31, 2024 from $27.8 million in the year ended December 31, 2023 as a result of increased facilities costs associated with our acquired remarketing centers and increased investment to support our future growth.compensation. Selling, general, and administrative expenses as a percentage of revenue decreased during the year ended December 31, 20242025 compared to the year ended December 31, 20232024 as we continued our efforts to effectively manage costs while growing our revenue.

The increase was primarily due to an increase of $11.4$7.7 million in amortization of internal-use software costs along with an increase of $6.2 million in amortization related to acquired intangible assets. The increase in depreciation and amortization as a percentage of revenue is primarily due to the placing of internal-use software projects into service and the subsequent recognition of amortization expenseexpense. Depreciation and amortization as wella aspercentage increasedof amortizationrevenue costsremained relatedflat during the year ended December 31, 2025 compared to intangiblethe assetsyear fromended recentDecember acquisitions.31, 2024.

The decrease was primarily driven by a lower average balance in our marketable securities portfolio as we used the proceeds from sales and maturities of marketable securities to support acquisition activity in the prior year. In addition, a lower average interest rate during the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024 Marketablecombined with our sales of marketable securities were sold during the yearfourth endedquarter Decemberof 31,2025 2024also andcontributed to the related proceeds were used to complete acquisitions.decrease.

The increase was primarily driven by anthe interest and fees related to the Warehouse facility which was entered into on June 20, 2024. The increase in borrowingsinterest andexpense debton issuancethe feesWarehouse facility during the year ended December 31, 20242025 aswas due to a higher average balance during 2025 compared to the year ended December 31, 2023.2024.

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not properly reflect capital commitments to be paid in the future; (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (iii) it does not consider the impact of stock-based compensation expense; (iv) it does not reflect other non-operating income and expenses, including interest income and expense; (v) it does not consider the impact of any contingent consideration liability valuation adjustments; (vi) it does not reflect tax payments that may represent a reduction in cash available to us; (vii) it does not include the amortization of acquired intangible assets but it does include the revenue that these acquired intangible assets contribute to the enterprise; and (viiviii) it does not reflect other one-time, non-recurring items, when applicable, such as acquisition-related and restructuring expenses. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net loss and other results stated in accordance with GAAP.

Non-GAAP Net income (loss) is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not consider the impact of stock-based compensation expense; (ii) although amortization is a non-cash charge, the underlying assets may need to be replaced and Non-GAAP Net income (loss) does not reflect these capital expenditures; (iii) it does not consider the impact of any contingent consideration liability valuation adjustments; (iv) it does not include the amortization of acquired intangible assets but it does include the revenue that these acquired intangible assets contribute to the enterprise; and (ivv) it does not consider the impact of other one-time charges, such as acquisition-related and restructuring expenses, which could be material to the results of our operations. In addition, our use of Non-GAAP Net income (loss) may not be comparable to similarly titled measures of other companies because they may not calculate Non-GAAP Net income (loss) in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Non-GAAP Net income (loss) alongside other financial measures, including our net loss and other results stated in accordance with GAAP.

As of December 31, 2024,2025, our principal sources of liquidity were cash and cash equivalents totaling $224.1 million, and investments in marketable securities totaling $46.0$271.5 million. We believe that our existing cash and cash equivalents, marketable securities,equivalents and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months and for the long-term. Our future capital requirements over the long-term will depend on many factors, including volume of sales with existing customers, expansion of sales and marketing activities to acquire new customers, timing and extent of spending to support development efforts and introduction of new and enhanced services. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations and financial condition.

We settle transactions among buyers and sellers using the marketplace, and as a result the value of the vehicles passes through our balance sheet. Because our receivables typically have been, on average, settled faster than our payables, our cash position at each balance sheet date has been bolstered by marketplace float. Changes in working capital vary from quarter-to-quarter as a result of Marketplace GMV and the timing of collections and disbursements of funds related to auctions completed near period end.

TheOn 2021August Revolver24, provides2021, forACV entered into a revolving linecredit facility (the “2021 Revolver”). The Revolver was established to provide general financing to us and is secured by substantially all of creditour inassets except for certain finance receivables. As of December 31, 2025, the aggregatemaximum principalborrowing amountcapacity ofunder up to $160.0 million. The 2021the Revolver alsois $250.0 million and includes a sub facility that provides for the issuance of letters of credit up to $20.0 million outstanding at any time. TheThrough 2021June Revolver26, is2025, guaranteed by substantially all of our material domestic subsidiaries and is secured by substantially all of our and such subsidiaries’ assets except for ACV Capital receivables. Thethe interest rate applicable toon the 2021 Revolver is,was, at our option, either (a) the Secured Overnight Financing Rate (“SOFR”) (or a replacement rate established in accordance with the terms of the credit agreement for the 2021 Revolver) (subject to a 0.00% SOFR floor),floor, plus a margin of 2.75% per annum plus an additional credit spread adjustment of 0.11% for daily and one-month terms, 0.26% for three-month terms and 0.43% for six-month terms or (b) the Alternate Base Rate plus a margin of 1.75% per annum. The Alternate Base Rate iswas defined as the highest of (a) the Wall Street Journal prime rate, (b) the NYFRB rate plus 0.5% and (c)(i) 1.00% plus (ii) the adjusted SOFR rate for a one-month interest period. The 2021 Revolver has a maturity date of August 24, 2026. The 2021 Revolver contains customary covenants that limit our ability to enter into indebtedness, make distributions and make investments, among other restrictions. The 2021 Revolver also contains financial covenants that require us to maintain a minimum liquidity level and achieve specified trailing four quarter revenue targets. As of December 31, 2024, $56.5 million was drawn under the 2021 Revolver, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.3 million.

On June 20, 2024, weACV Capital Funding II LLC entered into a revolving credit and security agreement with CitiBank, N.A., providing for a revolving warehouse facility (the "Warehouse Facility. As of December 31, 2025 the maximum borrowing capacity under the Warehouse Facility") withwas a maximum principal amount of $125.0$200.0 million. TheAs amended, the revolving feature on the facility ends on JuneDecember 20,10, 20262027 and the facility matures twelve months later, unless sooner terminated or extended in accordance with its terms. The revolvingWarehouse credit facilityFacility was established to provide liquidity to fund new originations of auto floorplan loans by ACV Capital. The facility is secured by all assets of ACV Funding,Capital Funding II LLC, including the auto floorplan loans owned by it.

Advances under the Warehouse Facility funded by asset-backed commercial paper conduit through the issuance of commercial paper notes will bear interest generally at a rate equivalent to the weighted average annual rate of all commercial paper notes issued by the commercial paper conduit to fund its advances, plus a margin of 3.00%.2.75%. Advances funded by lenders that are not commercial paper conduits, or by commercial paper conduits funded through means other than the issuance of commercial paper notes, will bear interest generally at a rate equal to (i) Term SOFR for a period of one-month (subject to a 0.00% floor), plus 0.11448% or, in certain circumstances, the Alternate Base Rate, plus (ii) a margin of 3.00%.2.75%. The Alternate Base Rate is the highest of (a) the prime rate quoted in the Wall Street Journal, (b) the NYFRB rate plus 0.50% and (c)(i) 1.00% plus (ii) the Term SOFR rate for a one-month interest period. The interest rate may be increased under certain circumstances, including upon the occurrence of an early amortization event or event of default under the warehouse documentation. ACV Capital Funding II LLC must also pay upfront any unused fees in connection with the facility. As of December 31, 2024 borrowings under the Warehouse Facility were $66.5 million.

In the years ended December 31, 2024,2025 and 2023,2024, net cash provided by (used in) operating activities was $65.4$78.2 million and $(17.9)$65.4 million, respectively. Net cash provided by operating activities during the year ended December 31, 20242025 consisted primarily of cash arisingearnings from the generation of revenue from customers, offset by normal operating expenses,and an increase in accounts payable to sellers andpartially aoffset decreaseby an increase in accounts receivable from buyers. In the year ended December 31, 20232024 net cash usedprovided inby operating activities consisted primarily of cash earnings, a decrease to accounts receivable from buyers offsetand byan a decreaseincrease in accounts payable to sellers. The increase in cash provided by operating activities during the year ended December 31, 20242025 relative to the year ended December 31, 20232024 is primarily due to increased revenues and the timing of collections and disbursements of funds related to auctions completed near period end.

In the years ended December 31, 2024,2025, and 2023,2024, net cash used in investing activities was $15.9$74.1 million and $111.0$15.9 million, respectively. Net cash used in investing activities during the year ended December 31, 2025 was primarily related to the increase in finance receivables and capitalized software development, partially offset by net proceeds from the sale and maturities of the marketable securities portfolio. Net cash used in investing activities during the year ended December 31, 2024 was primarily related to the acquisition of businesses, investments in capitalized software, and growth of the financing receivables portfolio, partially offset by net proceeds from the sale and maturity of certain marketable securities. Net cash used in investing activities during the year ended December 31, 2023 was primarily due to the growth of the financing receivables portfolio, investments in capitalized software and acquisitions of businesses.

The decreaseincrease in net cash used in investing activities during the year ended December 31, 20242025 relative to the year ended December 31, 20232024 was primarily driven by increasedan netincrease proceedsin fromour thefinancing salereceivables and maturity of certain marketable securities, offset by increased spending on acquisitions of businesses.portfolio.

In the years ended December 31, 2024,2025, and 2023,2024, net cash provided by (used in) financing activities was $(7.9)$43.0 million and $30.6$(7.9) million, respectively. Net cash provided by (financing activities during the year ended December 31, 2025 relates to proceeds, net of repayments, from long term debt partially offset by payments of RSU tax withholdings in exchange for common shares surrendered by RSU holders. Net cash used in) financing activities during the year ended December 31, 2024 relatesrelated to payments of RSU tax withholdingwithholdings netin ofexchange proceedsfor fromcommon othershares equitysurrendered planby activity,RSU holders partially offset by proceeds from long term debt, net of repayments of long term debt . Net cash provided by (used in) in financing activities during the year ended December 31, 2023 related to proceeds, net of repayments, on long term debt,debt partially offset by payments of RSU tax withholding net ofand proceeds from otherthe equityexercises planof activity.stock options.

The decreaseincrease in net cash provided in financing activities during the year ended December 31, 20242025 relative to the year ended December 31, 20232024 was primarily the result of lowerincreased proceedsnet fromborrowing of long term debt, netpartially ofoffset repaymentsby oflower longproceeds termfrom debtstock duringoption the period.exercises.

The volume of vehicles sold through our auctions generally fluctuates from quarter to quarter. This seasonality is caused by several factors, including holidays, weather, the seasonality of the retail market for used vehicles and the timing of federal tax returns, which affects the demand side of the auction industry. As a result, revenue and operating expenses related to volume will fluctuate accordingly on a quarterly basis. In the fourth quarter, we typically experience lower used vehicle auction volume as well as additional costs associated with the holidays. Seasonally depressed used vehicle auction volume typically continues during the winter months through the beginning of the first quarter. Typical seasonality trends may not be observed in periods where other external factors more significantly impact the industry.

Critical Accounting Policies and Estimates

We believe that the following accounting policies and estimates involve a high degree of judgment and complexity. Accordingly, these are the policies and estimates we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. See Note 1 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a description of our other significant accounting policies. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

We generate auction and other marketplace revenue from contracts with customers. Revenue is recognized when the services are completed and control of the promised services is transferred to customers in an amount that reflects the consideration that we expect to receive in exchange for those services. Determining whether performance obligations should be accounted for separately or combined may require judgment. For each performance obligation within a contract, we evaluate whether we act as the principal or as an agent. When we act as the principal, revenue is recognized in the gross amount of the consideration received from the customer recognized at the point in time the services are completed. When we act as the agent, revenue is recognized net of the consideration due to a third party at the point in time when the services are provided.

In contracts with multiple performance obligations, we allocate the transaction price to each distinct performance obligation proportionately based on the estimated stand-alone selling price,price or SSP,("SSP") of each performance obligation. We use an observable price to determine the SSP for each performance obligation. Where observable prices are not available, an expected cost-plus margin approach is used. We then determine how the services are transferred to the customer to determine the timing of revenue recognition.

General Guarantees

VehicleWe Conditionprovide certain guarantees to Sellers in the marketplace in the ordinary course of business, which are accounted for under ASC 460, Guarantees—We ("ASC 460") as a general guarantee. Included in our guarantees are vehicle condition guarantees whereby we offer guarantees to sellers in qualifying situations where we performed a vehicle inspection and prepared the vehicle condition report. TheIn situations where the sale of covered vehicles is unwound due to circumstances covered by the guarantee, the guarantee provides us with the right to retain proceeds from the subsequent liquidation of the vehicle covered under the guarantee. The fair value of vehicle condition guarantees issued is estimated based on historical results and other qualitative factors. The vehicleVehicle condition guarantee revenue is recognized on the earlier of the guarantee expiration date or the guarantee settlement date.

Comparison of the three months ended MarchJune 31,30, 2026 and 2025

The increase was primarily driven by an increase in other marketplace revenue which is earned from providing transportation and financing services. Auction marketplace revenue from our Marketplace Buyers and Marketplace Sellers increased as well. For the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, other marketplace revenue increased to $80.4$88.3 million from $67.7$75.4 million and auction marketplace revenue increased to $93.8$92.4 million from $90.0$92.3 million. The increase in other marketplace revenue was primarily related to an increase in the revenue earned from the transportation of vehicles due to an increase in transportation revenue per mile and an increase in the number of units transported. Increases in revenue per mile were driven by rising fuel costs being passed on to customers. The increase in auction marketplace revenue was primarilydriven by buy fee rate increases and volume driven.increases. The volume of Marketplace Units sold on the marketplace platform increased to 213,492211,472 for the three months ended MarchJune 31,30, 2026 from 208,025210,429 for the comparable prior year period which is an indicator of increased overall customer engagement. The wholesale automotive industry continues to transition to digital transactions, with an increasing amount of customers transacting digitally versus at physical auction houses. This industry transition, and our position as a leader in the area of digital wholesale automotive auctions, continues to drive more business to our marketplace platform. The average total revenue per Marketplace Unit increased for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 due to higher buyer rates and customers adding more optional ancillary services to the auction such as transportation services and financing services which resulted in increase to both auction marketplace and other marketplace revenue.

The increase was primarily driven by an increase in other customer assurance revenue due to an increase in units sold through our price guarantee sales.sales and an increase in the estimated fair value per unit sold through the guarantee sale. Other customer assurance revenue increased to $4.8$6.3 million for the three months ended MarchJune 31,30, 2026 from $1.8$1.5 million for the three months ended MarchJune 31,30, 2025 due to the aforementioned increase in units sold through the guarantee sales.2025. Go Green assurance revenue also increased, driven by an increase in units that elected the Go Green offering. For the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, Go Green assurance revenue increased to $17.2$18.4 million from $15.0$16.2 million.

The increase primarily consisted of higher costs related to generating other marketplace revenue. Other marketplace cost of revenues increased to $57.4$63.5 million for the three months ended MarchJune 31,30, 2026, compared to $47.7$52.3 million for the three months ended MarchJune 31,30, 2025, primarily due to an increase in the average cost per mile transported and an increase in units transported. Higher fuel costs drove the increase in the average cost per mile transported. For the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, total cost attributed to generating auction marketplace revenue increased to $17.8$17.0 million from $16.6 million. The increase in auction marketplace cost of revenue is due to increased units sold through our marketplace. For the three months ended MarchJune 31,30, 20262026, data services cost of revenue was $4.6$5.1 million, compared to $5.1$5.4 million in the comparable prior year period. Marketplace and service costs of revenues as a percentage of revenue increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 due to a decrease in units sold at our physical auction locations which resulted in lowerhigher marginscost of revenue as a percentage of revenue on these units. Higher fuel costs associated with transporting vehicles to customers also contributed to the increase.

The increase was primarily driven by an increase in other customer assurance cost of revenue due to an increase in units sold through our price guarantee sales.sales and an increase in the average cost per guarantee sale unit. Other customer assurance cost of revenue increased to $4.8$6.1 million for the three months ended MarchJune 31,30, 2026, compared to $1.3$2.2 million for the three months ended MarchJune 31,30, 2025 due primarily to an increase in costs incurred on the Company's price guarantee sales driven by an increase in units sold through our price guarantee sales and an increase in the average cost per guarantee sale unit in the current year compared to the prior period. Go Green assurance cost of revenue also increased, driven by an increase in the number of arbitration claims due to increased volume of completed auctions where the customer elected the Go Green offering. For the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, Go Green assurance cost of revenue increased to $14.1$15.6 million from $12.7$14.7 million. Customer assurance cost of revenue as a percentage of revenue increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 due to the higher proportion of units sold through our price guarantee sale during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.sale. Units sold through the guarantee sale are generally lowerhave margina higher cost of revenue as a percentage of revenue than units sold without a guarantee but we believe the guarantee sale units are still accretive to revenue and net income.

The increase was primarily due to higher software and technology costs as we continue to invest in our technology and infrastructure amidto ongoingenable businessfuture growth. Software and technology costs increased to $6.8$6.4 million from $4.9$5.1 million in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. For the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, personnel-related costs decreasedremained toflat $37.0at million from $37.6$37.8 million. Other expenses increaseddecreased to $2.7 million from $1.7$2.9 million in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. Operations and technology expense as a percentage of revenue decreased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 as we continued our efforts to effectively manage costs while growing revenue.

The decreaseincrease was primarily duedriven by higher non-personnel costs, largely attributable to personnelincreased bad debt expense. Non-personnel costs decreasingincreased into the$12.0 currentmillion period. Forfor the three months ended MarchJune 31,30, 2026 from $7.9 million for the three months ended June 30, 2025. This increase was partially offset by a decrease in personnel-related costs, including stock-based compensation and incentive-based compensation,to $41.9 million from $45.1 million for the same period. Selling, general, and administrative expenses as a percentage of revenue decreased during the three months ended June 30, 2026 compared to the three months ended MarchJune 31, 2025, personnel-related costs decreased to $41.9 million from $47.2 million, primarily as a result of lower stock-based compensation. Non-personnel expenses in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 increased to $14.2 million from $11.6 million primarily due to an increase in bad debt expense. Selling, general, and administrative expenses decreased as a percentage of revenue during the three months ended March 31, 2026 compared to the three months ended March 31,30, 2025 as we continued our efforts to effectively manage costs while growing revenue.

The increase was primarily due to an increase of $1.0 million in amortization of internal-use software costs due to the placing of internal-use software projects into service and the subsequent recognition of amortization expense. Depreciation and amortization as a percentage of revenue remained the same during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.

As of MarchJune 31,30, 2026, our principal sources of liquidity were cash and cash equivalents totaling $341.0$242.3 million. We believe that our existing cash and cash equivalents and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months and for the long-term. Our future capital requirements over the long-term will depend on many factors, including volume of sales with existing customers, expansion of sales and marketing activities to acquire new customers, timing and extent of spending to support development efforts and introduction of new and enhanced services. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations and financial condition.

As of MarchJune 31,30, 2026, our principal commitments primarily consist of long-term debt and leases for facilities. We have $5.4$5.5 million of lease obligations due within a year, and an additional $40.6$39.2 million of lease obligations due at various dates through 2039.

In order to compete successfully and sustain operations at current levels over the next 12 months, we will be required to devote a significant amount of operating cash flow to our human capital in the form of salaries and wages. Additionally, we enter into purchase commitments for goods and services made in the ordinary course of business. These purchase commitments include goods and services received and recorded as liabilities as of MarchJune 31,30, 2026 as well as goods and services which have not yet been delivered or performed and have, therefore, not been reflected in our unaudited Condensed Consolidated Balance Sheets and unaudited Condensed Consolidated Statements of Operations. These commitments typically become due after the delivery and completion of such goods or services.

As of MarchJune 31,30, 2026, $85.0$80.0 million was drawn under the 2021 Revolver with an interest rate of 8.50%,6.47%, and there were outstanding letters of credit issued under the 2021 Revolver in the amount of $3.1 million. As of MarchJune 31,30, 2026, we had unused borrowing capacity of $161.9$166.9 million under the 2021 revolver.

As of MarchJune 31,30, 2026 borrowings under the Warehouse Facility were $115.0$125.0 million with an interest rate of 6.53%.6.59%. As of MarchJune 31,30, 2026, we had unused borrowing capacity of $85.0$75.0 million under our Warehouse Facility.

We were in compliance with all such applicable covenants as of MarchJune 31,30, 2026, and believe we are in compliance as of the date of this Quarterly Report on Form 10-Q.

Our largest source of operating cash is cash collection from fees earned on our marketplace. Our primary uses of cash from operating activities are for costs of revenue, personnel expenses, sales and marketing expenses and overhead expenses.

In the threesix months ended MarchJune 31,30, 2026 and 2025, net cash provided by operating activities was $76.5$41.0 million and $66.6$80.3 million, respectively. Net cash provided by operating activities during the threesix months ended MarchJune 31,30, 2026 and 2025 consisted primarily of cash earnings and an increase in accounts payable to sellers partially offset by an increase in accounts receivable due from buyers. The increasedecrease in cash provided by operating activities during the threesix months ended MarchJune 31,30, 2026 relative to the threesix months ended MarchJune 31,30, 2025 is primarily due to increased revenues and the timing of collections and disbursements of funds related to auctions completed near period end.

In the threesix months ended MarchJune 31,30, 2026 and 2025, net cash used in investing activities was $14.8$33.9 million and $30.9$93.6 million, respectively. Net cash used in investing activities during the threesix months ended MarchJune 31,30, 2026 consisted of capitalized software development costs and an increase in finance receivables. Net cash used in investing activities during the threesix months ended MarchJune 31,30, 2025 was primarily related to the increase in finance receivables,receivables as well as capitalized software development and the net outflows from the purchases/maturities of marketable securities.development.

The decrease in net cash used in investing activities during the threesix months ended MarchJune 31,30, 2026 relative to the threesix months ended MarchJune 31,30, 2025 was primarily driven by a smaller increase in the finance receivables portfolio compared to the prior year.

In the threesix months ended MarchJune 31,30, 2026 net cash used in financing activities was $36.1 million and 2025,in the six months ended June 30, 2025 net cash provided by financing activities was $7.9$47.4 millionmillion. andNet $32.0cash million,used respectively.in financing activities during the six months ended June 30, 2026 relates to the repurchase of common stock offset by the proceeds, net of repayments, from long term debt. Net cash provided by financing activities during the threesix months ended MarchJune 31, 2026 and30, 2025 relaterelates to the proceeds, net of repayments, from long term debt, partially offset by payments of RSU tax withholding in exchange for common shares surrendered by RSU holders.

The decreaseincrease in net cash providedused byin financing activities during the threesix months ended MarchJune 31,30, 2026 relative to the threesix months ended MarchJune 31,30, 2025 was primarily the result of decreasedthe net borrowingsrepurchase of long-termcommon debtstock during the period and lower borrowings, net of repayments in the current period.

The volume of vehicles sold through our auctions generally fluctuates from quarter to quarter. This seasonality is caused by several factors, including holidays, weather, the seasonality of the retail market for used vehicles and the timing of federal tax returns, which affects the demand side of the auction industry. As a result, revenue and operating expenses related to volume will fluctuate accordingly on a quarterly basis. In the fourth quarter, we typically experience lower used vehicle auction volume as well as additional costs associated with the holidays. Seasonally depressed used vehicle auction volume typically continues during the winter months through the first quarter. Typical seasonality trends may not be observed in periods where other external factors more significantly impact the industry.