Online used car auction platform ACV Auctions (NYSE: ACVA) missed Wall Street’s revenue expectations in Q2 CY2026, but sales rose 10.4% year on year to $213.9 million. Next quarter’s revenue guidance of $222 million underwhelmed, coming in 0.9% below analysts’ estimates. Its GAAP loss of $0.05 per share was $0.02 above analysts’ consensus estimates.

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Company Overview

Founded in 2014, ACV Auctions (NYSE: ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, ACV Auctions’s sales grew at an impressive 21.5% compounded annual growth rate over the last three years. Its growth beat the average consumer internet company and shows its offerings resonate with customers.

This quarter, ACV Auctions’s revenue grew by 10.4% year on year to $213.9 million but fell short of Wall Street’s estimates. Company management is currently guiding for a 11.2% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 12.8% over the next 12 months, a deceleration versus the last three years. Still, this projection is above the sector average and suggests the market is baking in some success for its newer products and services.

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Cash Is King

Although EBITDA is undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

ACV Auctions has shown mediocre cash profitability relative to peers over the last two years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 4.7%, below what we’d expect for a consumer internet business.

Taking a step back, an encouraging sign is that ACV Auctions’s margin expanded by 2.7 percentage points over the last few years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality.

ACV Auctions burned through $28.96 million of cash in Q2, equivalent to a negative 13.5% margin. The company’s cash burn increased meaningfully year on year and is a deviation from its longer-term margin, indicating it is a seasonal business.

Key Takeaways from ACV Auctions’s Q2 Results

We were impressed by how significantly ACV Auctions blew past analysts’ EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance was in line with Wall Street’s estimates. On the other hand, its EBITDA guidance for next quarter missed and its revenue guidance for next quarter fell slightly short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 14.7% to $6.20 immediately after reporting.

The latest quarter from ACV Auctions’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).