The last month has been a busy one for ACV Auctions Inc., a Buffalo, New York, public company that operates an online auctions marketplace where used-car dealers view, bid on, and purchase used-car inventory.
The company said its sales nearly doubled year-over-year for the fourth quarter, and it acquired two businesses to add new digital technology to its marketplace technology platform.
On Feb. 28, ACV announced it acquired Monk SAS, an international artificial intelligence applications company that automates vehicle damage detection. In the week prior to that, ACV — which has raised more than in $400 million working capital since it debuted on the NASDAQ market in March 2021 — acquired Drivably, a Phoenix company that develops software applications to help dealers appraise and source consumer-owned vehicles more effectively. AI technology embedded within Drivably’s software enables users to take photos of a vehicle on their phone and, through machine learning, automatically identify scratches, dents, and damages, ACV says.
Both acquisitions enable ACV to offer dealers more value-added tools to research and purchase more used vehicles for their inventories, CEO George Chamoun told analysts on the company’s recent year-end earnings call.
“We are making significant investments in the technology and resources to scale ACV transportation, and ACV capital,” he said.
Based in Paris, Monk is a French insurance technology company that designs machine-learning algorithms for assessing vehicle damage and repair costs in real time. Monk says it designed its technology to detect and classify damages to a vehicle, analyze repairability, and assess the cost of damages to direct an auto claim. Terms of the deal were not disclosed, but at least one automotive industry trade publication reported the value of the acquisition of Monk by ACV was $19 million.
ACV is acquiring Monk and Drivably at a time when dealers are scrambling for more used vehicles to acquire and sell to consumers, Chamoun says.
“It is critical for dealers to improve their digital presence and solve for how they compete for consumer inventory,” he says. “Drivably’s products combined with ACV’s marketplace offerings enable dealers to successfully acquire consumer vehicles and fulfill their needs for both retail inventory and profitable wholesale transactions.”
ACV continues to make acquisitions to build long-term sales and profitably, the company says.
For the year ended Dec. 31, ACV reported total sales of $358.4 million, up 72% from $208.4 million in 2020. Marketplace and service revenue grew year over by 78.2% to $308.4 million from $173.1 million, while customer assurance revenue increased 43.2% to $50.1 million from $35.2 million..
Net loss in 2021 was $78.1 million, compared with a net loss of $41 million in 2020.
“The automotive industry continues to experience competing cross currents with increased vehicle values, while also resulting in less ecosystem supply,” Chamoun told analysts, based on a transcript from Seeking Alpha. “Despite these cross currents, we delivered over $350 million of revenue in over 70% growth, well above the targets we provided during our initial public offering (IPO) last March.”
For the fourth quarter, ACV reported total revenue of $86.7 million, up 97.9% from $43.8 million in Q4 2020. Net loss for the fourth quarter was $26.3 million compared with $12.1 million in Q4 2020.
For the first quarter, ACV is projecting revenue to range from $100 million to $102 million. For the full year, it projects revenue to range from $450 million to $460 million.
“Our market momentum continued in the fourth quarter, where we transacted $2.5 billion of gross merchandise volume (GMV) growth of nearly 170% year-over-year,” Chamoun said. “We sold 139,000 vehicles on our digital marketplace, a 35% increase year-over-year, and an increase of over 80% on a two-year basis.”
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