Liquidity Services, Inc. Price & Performance (LQDT)

In our press release and filings with the SEC, each of which is posted on our website, You will find additional disclosures regarding these non GAAP measures including the reconciliations of these measures with their most comparable GAAP measures Management also uses certain supplemental operating data as a measure of certain components of operating performance. Which we also believe is useful for management and investors. This supplemental operating data includes gross merchandise volume, and should not be considered a substitute for or superior to GAAP results. At this time, I will turn the presentation over to our Chairman and CEO, Bill Angrick. Good morning. And welcome to our Q1 earnings call. I'll review our Q1 performance and the progress of our business segments And next, Jorge Salaiya will provide more details on the quarter. Our strong start to fiscal year 2025 was fueled by the continuing adoption of our services by customers and continued momentum across our businesses resulting in record quarterly GMV and double digit GMV growth in each of our segments. The strength of our performance across all of our segments is powered by our relentless drive to exceed the expectations of our sellers and buyers by continually enhancing our services and leveraging advanced technologies, we are attracting more sellers and buyers to our platform and enhancing our overall marketplace experiences.

Our marketplace platform, as we have now eclipsed a $1,500,000,000 annual GMV run rate and grew our auction participants by 13% year over year during the quarter, reflecting consistent strong demand for the value priced goods offered in our marketplace against a backdrop of persistent inflation strong buyer participation drove record quarterly GMV revenue and direct profit in our Retail Supply Chain Group segment for the second quarter in a row. Our rapid growth reflects our position as the most reliable, and trusted solution provider in the retail supply chain. We expect to continue our momentum by continuing to grow our buyer base and value added services Notably, we continue to expand our presence with consumer buyers for high value goods using our online auction marketplace and our distribution center network to facilitate low cost customer pickup of single items. Our GovDeals segment grew its GMV and revenues by 1129% year over year respectively driven by growth in both high value capital goods and non vehicle asset categories over a growing seller base. Notable new sellers for GovDeals during Q1 and New York City, Tulsa, Oklahoma, Humboldt County, California and Naval Air Station Jacksonville, Florida. We also set a new record for GovDeals sellers with over $1,000,000 of GMV transacted in a quarter, reflecting our ability to continue to penetrate our existing sellers through continuous improvement our service and results.

Our CAG segment 31% organically year over year driven by strength in its energy and heavy equipment verticals, As we continue to scale our recurring seller base, Our CAG auction participants more than doubled year over year reflecting the increased vibrancy of our CAG marketplace for sellers of industrial and heavy equipment. We have a strong pipeline heading into Q2 and are well positioned to continue this momentum. Finally, our Machinio segment and now has over 4,000 subscribers from over 100 countries on the platform. Machinio has continued to expand its [indiscernible] into the Asia Pacific region, represents a significant growth opportunity for our classifieds marketplace for used machinery. We expect continued steady growth in fiscal twenty twenty five for Machinio driven by continuous improvement to our marketplace traffic, enhanced features increased value to our subscriber base. As we look to the future, we continue to invest in growing our seller base buyer channels and value added services both organically and via acquisitions. Investors should expect acquisitions that are accretive and we expand our market share and capabilities. In that context, we're excited to announce the acquisition of Auction Software and Civil Auction Site. A private label auction marketplace and SaaS solutions provider.

This acquisition will enhance our software development capabilities and extend our market reach. Our leadership team continues to make progress towards our midterm goal of achieving $2,000,000,000 of annual GMV. To achieve this, objective, we will focus on increasing the sales volume transacted on our marketplace, expanding our buyer base and sales channels, to enhance recovery on the assets we sell modernizing our platform with new technologies to increase our operations efficiencies and improve the customer experience, and finally, executing complementary bolt on acquisitions. With our market leading solutions, our strong financial foundation and strategic focus, we are well positioned to capitalize on numerous emerging opportunities in the $100,000,000,000 circular economy. And drive long term growth and shareholder value. I'll now turn it over to Holtenhay for more details on the quarter. Good morning. We are pleased to report a strong start to our 2025 fiscal year. Our fiscal first quarter results finished slightly above our first quarter guidance range. We set a new quarterly consolidated GMV record as we have seen continued expanding market share, with double digit GMV growth across each of our segments. Our growth, diversification, and mix of business has led to four quarters of sequential operating leverage to adjusted EBITDA from our scalable solutions and resilient operational capabilities.

Our consolidated results for the fiscal first quarter of twenty twenty five included GMV of $386,100,000 up 26% from $305,900,000 in the same quarter last year. Revenue was $122,300,000 up 72% from $71,300,000 last year consistent with our previous fourth quarter of fiscal year twenty twenty four, Revenue has continued to grow faster than GMV mainly due to the expansion of lower touch purchase programs in our retail segment. Our GAAP earnings per share was $0.18 while $0.28 on a non GAAP adjusted basis. Our GAAP net income was $5,800,000 up 205% and our non GAAP adjusted EBITDA was $13,100,000 up 81% versus last year.

We ended the fiscal first quarter with $139,100,000 in cash, cash equivalents and short term investments.

We continue to have zero debt and we have $17,500,000 of available borrowing capacity under our credit facility. We also are not expecting any significant changes in the near term to our capital expenditures relative to our recent historical averages. Specifically comparing segment results, from this fiscal first quarter of twenty twenty five to the same quarter last year, Our retail segment was up 65% on GMV doubled its revenue growing 101% and was up 31% on segment direct profit. Setting new quarterly records for each of these metrics for the second consecutive quarter. Our capital assets group segment was up 31% on GNV 26% on revenue and up 27% on segment direct profit led by continued addition of recurring sellers of low touch heavy equipment sales. As a reminder, last year, the fiscal first quarter of twenty twenty four the CAG segment, experienced delays in selected international sales events. Many which subsequently took place during the fiscal second quarter last year. Our GovDeals segments GMV was up 11% revenue up 29% and direct profit of 25%. Driven by strong performance in vehicles, continued growth in new sellers and the service initiatives from Sierra Auctions expansion. Machinio's revenue and segment profit were each up 10%.

Our outlook for the fiscal second quarter of twenty twenty five, anticipates continuing our solid start to the fiscal year as a whole.

Guidance anticipates a strong first half of fiscal year twenty twenty five for growth and operating leverage.

Consistent with our fiscal first quarter results last year. The expanded purchase programs in our retail segment are expected to continue to grow revenue at a higher rate than GMV and therefore impacting the direct profit to revenue ratio. While our CAG heavy equipment and energy categories are expected to continue solid growth, The prior year comparable period for CAG was like the completion of several international sales events had previously been delayed from last year's fiscal first quarter. Our Gov deal, the Machinio segments, are expected to continue expansion of new clients grow with existing clients and grow expanded service offered. On a consolidated basis, consignment GMV is expected to continue to be approximately 80% of total GMV. Consolidated revenue as a percent of GMV is expected to remain in the low-30s percentage range. The total of our segment direct profits as a percent of consolidated revenue, is expected to be in the low 40s percentage rate. These ratios can vary based on our overall business mix of within each segment. Including asset categories in any given period. Management guidance for the second quarter of fiscal year twenty twenty five is as follows: We expect GMV to range from $360,000,000 to To $0.35 per share.

We estimate non GAAP adjusted EBITDA to range from $12,000,000 to $14,500,000 The GAAP and non GAAP earnings per share guidance assumes that our effective tax rate [indiscernible] for fiscal second quarter results follow our historical trend and be in the low to mid-20s. Our annual effective tax rate is still expected to be in the high 20s low thirds. We also expect that we will have approximately $32,500,000 to $32,500,000 of cash flow from operations that we will have approximately $32,000,000 to 32,500,000.0 fully diluted weighted average shares outstanding. Acquisition of Auction Software is not expected to materially impact our consolidated results for the quarter. Thank you. We will now take your questions. Certainly.

We will now begin our question and answer session. Our first question will be coming from George Sutton of Craig Hallum.

Thank you. Wonderful results. Congratulations. So I wondered, if we could address something you had in your prepared comments. You mentioned expanding market share, which is fairly obvious given the growth. I'm just curious if you could talk about how much is expanding market share versus just a better market condition as you see it? I think the market share comment relates to Customers providing access to more goods, more categories, more geographic regions, and that's across each of our segments. [indiscernible] have been fairly choppy depending upon where you sit different categories have different crosscurrents. I did note the persistent inflation which tends to bring buyers to a platform offering value priced goods. George. But think this is about just blocking and tackling, bringing the brand to more and more [indiscernible] and government organizations.

So you mentioned inflation and Just as a Note on that. We have a potential new tariff set of situations. I'm curious, historically, what have you seen when tariffs are put in place relative to your business?

Well, the scarcity value product in various categories already being in The U. S. And available tends to be a positive used equipment can be quite useful if you can't import it. And I think that's something that on balance is probably neutral positive for us. One last thing, I wondered if you could just walk through the Simple Auction acquisition and it looks like a relatively small but fast growing [indiscernible] It's fairly narrow as it's set up today on the memorabilia side. I'm wondering how broad could that offering ultimately become?

Sure. I think this is a great example for us of bringing our ecosystem to include the transactional marketplaces we serve and then the soft where we can provide resellers on our platform We are largely a B2B platform Our buyer base consists of many small entrepreneurial and midsized businesses who often resell what they acquire They are all looking to be on a digital platform to support their own individual small businesses. And both simple auction site and auction software the other part of this company we acquired. Provide the tools the auction platform, the resale platform and capabilities further serve our buyers who then are looking to grow the resale business. So this has a few aspects. One, it's an aqua hire, a lot of great talent. Developing modern scalable software. And two, a business that's operated in a software as a service business model for many years successfully, an area that we think has potential to grow I think three, puts us in a position to add value in some new categories. You mentioned a few I think there's a great opportunity just generally in retail goods. Think there's a very loyal group of auctioneers and resellers and nostalgia categories including collectibles and even estate sales and antiques, that leverage this online auction community.

And I think we can monetize our buyer base. I think we can extend the reach to more categories. And do so in a very asset light software. Enabled way. So it's a great fit for us.

Super, lastly, your Doge press release was frankly one of the better thought out press releases I've seen in a long time. Congratulations on that.

Well, thank you. We founded our business originally in Washington, D. C. We have a lot of experience working within the federal government. A lot of these principles we've been talking about for twenty five years And when you have some open mindedness to rethink how government functions. I think it's a great entry point for companies like Liquidity Services. Liquidity right now could unlock efficiency for federal agencies and we look forward to having future interaction and conversation with decision makers as they arrive at new policy.

Super.

Thank you.

Our next question will be coming from Gary Prestopino of Barrington. Your line is open.

Hey, good morning all.

Bill, a question on gov deals. Are you starting to see more of an increased flow of vehicles coming through to auction That was kind of constricted over the last couple of years due to what happened pandemic.

So how is that looking now? And Vehicle flow has been healthy. I wouldn't say it has been a a massive catalyst to support our results but it is not anemic which was an issue as you point out, Gary, when inputs were chipsets weren't available, So I think the supply chain has more normalized flows steady That isn't the primary catalyst for GovDeals' results, I think, as I mentioned, we've had good results in non vehicle categories and in other high value capital item categories which could include things like high value fire trucks helicopters, construction equipment, equipment to maintain roads and bridges, those are all performing well for us. We We, as you know, also have a real estate category that as we've seen through some of our results, and even some of our press releases, we're now getting a lot of government and real estate on the platform which tends to bring larger chunks of GMV. And just as a wonderful category for us to expand and it makes no sense for those sales to occur in an offline manner. So broad based flow of vehicles are a healthy contributor among many.

Okay. Ken, I don't know if this question was asked or you did mention it, but In terms of the GMV increase, you also mentioned that you've got new high volume sellers. I mean, much of that GMV increase came from new accounts recently signed over the last six to twelve months As you go through each of the categories, I think GovDeals and CAG benefited from continued growth in the in the seller community So we've invested in expanding sales business development capacity we're beginning to reap the benefits of that. Think retail is a combination of us penetrating existing relationships and adding new sellers adding new territories, and new categories So we know that there is a lot of room to grow sort of circular economy. Commerce in in the retail category, we're committed to that. It's a good mix Gary, of both new names and existing relationships. Driving that GMV growth.

Okay. That's helpful. And then with the auction software, [indiscernible] Are you saying it's a SaaS model I mean, is the revenue streams there generated just from selling the SaaS software on a rental basis Or does the platform allow you to take any percentage of the transaction as a fee as well?

It's a combination of both. [indiscernible] we see an opportunity to standardize and provide a a very reasonably priced SaaS e commerce platform and then unlock additional recovery for these call it subscribers by providing access to an aggregated buyer marketplace. And in terms of delivering value from those improved auction results and access to a larger buyer base, we would receive a percentage of that GMV But again, that would be well within affordability of small and midsized businesses. So it's a very asset light marketplace business model that does unlock additional value for these subscribers and would reap GMV related pricing for Liquidity services.

So as I looked at this website, obviously, it's kind of nichey at those collectibles. I saw wine auctions and things that nature. But does this give you the ability now if you have a potential client that wants to run their own auctions you would sell on the platform and they would be able to do that across all three of your segments?

Or are you is that kind of how you see this being leveraged across your portfolio of businesses?

Yes. There are a couple of areas that have application First, in the retail supply chain, there are a lot of individual resellers who who know that digital presence is important and these are largely companies that specialize in particular categories and they're reselling to consumers and they they want to have a good experience. And so we think we can bundle this this auction platform with those use cases and help many people who buy from us, someone who's buying a truckload might be reselling to consumers. So adjacency that we can serve within the retail [indiscernible] You'll also see that in the [indiscernible] you have something like $20,000,000,000 of used equipment looking for a home on Machinio's classifieds marketplace. Machining is not a transactional platform. And dealers often like to control their brand and their experience. And so a white label auction marketplace platform or sales platform would be a very good fit for those dealer customers. They get to control the brand They get to control the pricing. What we help them do Gary, is convert that traffic to their marketplace to e commerce sales and handle the payment. Handle the invoicing and billing, something we do very well.

So I think that's another area of application.

We have no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect. [indiscernible]