Market Share Expansion Drives Double Digit Organic GMV Growth and Record Transaction Volumes GAAP Net Income up 35%, Non-GAAP Adjusted EBITDA up 22% BETHESDA, Md., May 09, 2024 (GLOBE NEWSWIRE) -- Liquidity Services (NASDAQ:LQDT, www.liquidityservices.com)), a leading global commerce company powering the circular economy, today announced its financial results for the quarter ended March 31, 2024, as compared to the corresponding prior year quarter: Gross Merchandise Volume (GMV) of $319.4 million, up 13%, and Revenue of $91.5 million, up 12% GAAP Net Income of $5.7 million, up 35%, and GAAP Diluted Earnings Per Share (EPS) of $0.18, up 38% Non-GAAP Adjusted EBITDA of $12.1 million, up $2.2 million, and Non-GAAP Adjusted EPS of $0.27, up $0.07 Cash balances of $117.0 million1 with zero financial debt "Our marketplace platform and services continue to delight customers, fueling double digit organic revenue and GMV growth year-over-year. We are pleased that our balanced investments in sales, operations and platform automation are being rewarded across our diversified segments with market share expansion and record buyer participation on our platform. Our Retail Supply Chain Group (RSCG) segment set a new quarterly GMV record, powered in part by the rapidly accelerating growth of our AllSurplus Deals direct-to-consumer sales channel, which grew its GMV by over 60% sequentially. Our CAG segment continues to grow its recurring heavy equipment seller base and completed high value transactions in its automotive and energy categories. Our Machinio segment achieved record revenue and paying customer counts driven by improvements to its online classifieds marketplace which efficiently matches buyers and sellers of used equipment around the globe. We are also very excited to welcome Sierra Auction to Liquidity Services and we are now leveraging its market leading position in the southwest U.S. to cross-sell its offerings to our government and commercial clients. We remain enthusiastic about our strategy and the strength of our business model as we generated $34.8 million in operating cash flow during the quarter, which was used in part to fund our Sierra acquisition and share repurchase program. We have a robust business development pipeline and continue to pursue strategic opportunities in each segment of the circular economy to drive shareholder value and provide outstanding service to our customers across the global supply chain," said Bill Angrick, Liquidity Services, CEO. Second Quarter Financial Highlights GMV for the fiscal second quarter of 2024 was $319.4 million, a 13% increase from $282.7 million in the second fiscal quarter of 2023. GMV in our CAG segment increased 29%, driven by consignment sales in our industrial and heavy equipment categories, including completion of certain sales delayed from the prior quarter and large international spot purchase transactions. GMV in our GovDeals segment increased 11%, driven by increased availability of vehicles and a record number of sellers with active listings on the platform. GMV in our RSCG segment increased 9%, reflecting an increase in sell-in-place consignment solutions and purchase programs, partially offset by a lower value product mix in certain full-service consignment and purchase programs. Consignment sales represented 83% of consolidated GMV for the second fiscal quarter of 2024. Revenue for the fiscal second quarter of 2024 was $91.5 million, a 12% increase from $81.5 million in the second fiscal quarter of 2023. Revenue in our CAG segment increased 30%, consistent with its increase in GMV. Revenue in our GovDeals segment increased 22%, reflecting the increase in overall GMV, paired with a higher blended revenue take-rate due to an expansion of service offerings to new, higher-volume sellers. Revenue in our Machinio segment increased 21% due to increased subscriptions and pricing for its Machinio Advertising and Machinio System products. Revenue in our RSCG segment increased 6%, reflecting the increase in overall GMV partially offset by a lower value product mix in selected programs. The changes in our profitability metrics reflect our increased top-line performance and resulted in: GAAP Net Income was $5.7 million, or $0.18 per share, for the fiscal second quarter of 2024, an increase from $4.2 million, or $0.13 per share, for the same quarter last year. Non-GAAP Adjusted Net Income for the fiscal second quarter of 2024 was $8.4 million, or $0.27 per share, an increase from $6.4 million, or $0.20 per share for the same quarter last year. Non-GAAP Adjusted EBITDA for the fiscal second quarter of 2024 was $12.1 million, a $2.2 million increase from $9.9 million in the same quarter last year. 1 Includes $108.6 million of Cash and cash equivalents and $8.4 million of Short-term investments. Second Quarter Segment Financial Results We present operating results for our four reportable segments: GovDeals, RSCG, CAG and Machinio. For further information on our reportable segments, including Corporate and elimination adjustments, see Note 14, Segment Information, to our quarterly report on Form 10-Q for the period ended March 31, 2024. Segment direct profit is calculated as total revenue less cost of goods sold (excluding depreciation and amortization). Our Q2-FY24 segment results are as follows (unaudited, dollars in thousands):   Three Months Ended March 31,     Six Months Ended March 31,     2024     2023     2024     2023   GovDeals:                       GMV $ 186,226     $ 167,851     $ 376,634     $ 328,973   Total revenue $ 18,374     $ 15,079     $ 34,274     $ 28,686   Segment direct profit $ 17,209     $ 14,291     $ 32,266     $ 27,183   % of Total revenue   94  %     95  %     94  %     95  %                         RSCG:                       GMV $ 79,634     $ 73,338     $ 146,196     $ 138,235   Total revenue $ 56,813     $ 53,672     $ 100,535     $ 99,687   Segment direct profit $ 17,001     $ 16,675     $ 31,113     $ 32,686   % of Total revenue   30 %     31 %     31 %     33 %                         CAG:                       GMV $ 53,511     $ 41,534     $ 102,406     $ 86,290   Total revenue $ 12,280     $ 9,418     $ 20,114     $ 18,810   Segment direct profit $ 9,238     $ 7,026     $ 16,180     $ 15,528   % of Total revenue   75 %     75 %     80 %     83 %                         Machinio:                       Total revenue $ 4,002     $ 3,301     $ 7,888     $ 6,584   Segment direct profit $ 3,800     $ 3,110     $ 7,504     $ 6,230   % of Total revenue   95 %     94 %     95 %     95 %                         Consolidated:                       GMV $ 319,371     $ 282,723     $ 625,236     $ 553,498   Total revenue $ 91,453     $ 81,453     $ 162,778     $ 153,736                                   Second Quarter Operational Metrics Registered Buyers — At the end of Q2-FY24, registered buyers, defined as the aggregate number of persons or entities who have registered on one of our marketplaces, totaled approximately 5.3 million, representing a 6% increase over the approximately 5.0 million registered buyers at the end of Q2-FY23. Auction Participants — Auction participants, defined as registered buyers who have bid in an auction during the period (a registered buyer who bids in more than one auction is counted as an auction participant in each auction in which he or she bids), was approximately 1,139,000 in Q2-FY24, a 43% increase from the approximately 797,000 auction participants in Q2-FY23. Completed Transactions — Completed transactions, defined as the number of auctions in a given period, were approximately 300,000 in Q2-FY24, a 44% increase from the approximately 209,000 completed transactions in Q2-FY23.         Third Quarter Business Outlook We continue to expect double digit consolidated GMV growth at the mid-point of our guidance range, led by CAG's energy and industrial categories and the continued growth of CAG's recurring heavy equipment sellers. Our fiscal third quarter 2024 outlook reflects the seasonally high activity at GovDeals, with year-over-year GMV growth expected to continue despite the potential for softer used vehicle market prices than last year. GovDeals revenue is expected to grow at a faster year-over-year rate than GMV due to expansion of more full-service consignment offerings since the acquisition of Sierra Auction in January 2024. Our Machinio subscription-based business is also anticipated to continue to grow revenue by double digits. Our RSCG segment expects to sustain similar volumes to this past fiscal second quarter's record RSCG GMV. AllSurplus Deals, our Retail consumer curbside pick-up marketplace, is expected to sustain strong year-over-year growth this coming quarter. Our Retail segment continues to experience an inflow of lower value product mix that has dampened direct margins compared to last year and is expected to result in fiscal third quarter margins similar to this past fiscal second quarter. Operating expenses year-over-year will be up similar to this past fiscal second quarter that included the effect of the Sierra Auction acquisition, continued investment in the expansion of AllSurplus Deals, sales and technology in support of marketplace enhancements and market share gains for longer-term growth. We are anticipating our consolidated revenue as a percentage of GMV to reflect our growing consignment mix and remain in the low-to-mid twenty percentage range. We currently expect our segment direct profits as a percent of total revenue to be in the low-to-mid fifty percent range. Both ratios can vary based on our mix, including asset categories in any given period. Our Q3-FY24 guidance is as follows: GMV - We expect GMV to range from $350 million to $385 million. GAAP Net Income - We expect GAAP Net Income to range from $3.5 million to $6.5 million. GAAP Diluted EPS - We expect GAAP Diluted EPS to range from $0.11 to $0.21. Non-GAAP Adjusted EBITDA -We expect Non-GAAP Adjusted EBITDA to range from $10.5 million to $13.5 million. Non-GAAP Adjusted Diluted EPS - We expect Non-GAAP Adjusted EPS to range from $0.20 to $0.28. Our Business Outlook includes forward-looking statements which reflect the following trends and assumptions for Q3-FY24 as compared to the prior year's period: Potential Impacts to GMV, Revenue, Segment Direct Profits, and ratios calculated using these metrics a longer-term trend of continued mix shift to the consignment model, which may lower revenue as a percent of GMV but could improve segment direct profit as a percentage of revenue; variability in the inventory product mix handled by our RSCG segment, which can cause a change in revenues and/or segment direct profit as a percentage of revenue; real estate transactions in our GovDeals segment can be subject to significant variability due to changes that include postponements or cancellations of scheduled or expected auction events and the value of properties to be included in the auction event; continued variability in project size and timing within our CAG segment; continued growth and expansion resulting from the continuing acceleration of broader market adoption of the digital economy, particularly in our GovDeals and RSCG seller accounts and programs, including the execution by RSCG on its business plans for AllSurplus Deals and its expanded direct-to-consumer marketplace; continued growth in our Machinio advertising subscription service and acceptance of other Machinio service offerings; Potential Impacts to Operating Expenses continued R&D spending to support omni-channel behavioral marketing, analytics, and buyer/seller payment optimization; spending in business development activities to capture market opportunities, targeting efficient payback periods; Potential Impacts to GAAP Net Income and EPS and Non-GAAP Adjusted Net Income and Adjusted EPS our Q3-FY24 effective tax rate (ETR) is expected to range from approximately 25% to 31% and our full fiscal year FY24 ETR is expected to range from 26% to 32%. This range excludes any potential impacts from legislative changes to U.S. corporate tax rates that may be enacted; and potential impacts from items that have limited visibility and can be highly variable, including effects of stock compensation due to participant exercise activity and changes in our stock price. We are expecting an increase in cash paid for income taxes in the second half of FY24 as our remaining net operating loss carryforward position is used; and our diluted weighted average number of shares outstanding is expected to be approximately 31.5 to 32.0 million. As of March 31, 2024, we have $8.0 million in remaining authorization to repurchase shares of our common stock. Reconciliation of GAAP to Non-GAAP Measures Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA. Non-GAAP EBITDA is a supplemental non-GAAP financial measure and is equal to Net Income plus interest and other income, net; provision for income taxes; and depreciation and amortization. Our definition of Non-GAAP Adjusted EBITDA differs from Non-GAAP EBITDA because we further adjust Non-GAAP EBITDA for stock compensation expense, acquisition costs such as transaction expenses and changes in earn-out estimates, business realignment expenses, and goodwill, long-lived and other non-current asset impairment. A reconciliation of Net Income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA is as follows:   Three Months Ended March 31,     Six Months Ended March 31,     2024     2023     2024     2023   Net income $ 5,709     $ 4,245     $ 7,617     $ 8,211   Interest and other income, net1   (771 )     (634 )     (1,912 )     (937 ) Provision for income taxes   1,487       1,573       2,369       2,723   Depreciation and amortization   3,195       2,803       6,098       5,567   Non-GAAP EBITDA $ 9,620     $ 7,987     $ 14,172     $ 15,564   Stock compensation expense