Liquidity Services (NASDAQ:LQDT) Inc. reported better-than-expected earnings for Q4 2024, with earnings per share (EPS) surpassing forecasts and revenue more than doubling projections. The company’s stock reacted positively, rising significantly in pre-market trading.
Key Takeaways
- Liquidity Services’ Q4 EPS of $0.32 exceeded the forecast of $0.28.
- Revenue for the quarter reached $106.9 million, far surpassing the $50.88 million forecast.
- The stock price jumped 25.22% following the earnings release.
- The company reported annual GMV of $1.4 billion, a 14% increase year-over-year.
- Liquidity Services ended the quarter with $155.5 million in cash and no debt.
Company Performance
Liquidity Services demonstrated strong performance in Q4 2024, driven by significant growth in gross merchandise volume (GMV) and revenue. The company highlighted its leadership in the circular economy e-commerce space, with double-digit GMV growth across all segments. Compared to the previous year, annual revenue increased by 16%, reflecting robust demand in its core markets.
Financial Highlights
- Revenue: $106.9 million, up 34% YoY
- EPS: $0.32, compared to $0.28 forecast
- GAAP net income: $20 million, up 9% YoY
- Non-GAAP adjusted EBITDA: $48.5 million, up 6% YoY
- Operational cash flow: $22 million generated in Q4
Earnings vs. Forecast
Liquidity Services reported an EPS of $0.32, beating analyst expectations of $0.28 by 14.3%. Revenue reached $106.9 million, more than doubling the forecast of $50.88 million. This earnings surprise marks a significant achievement, as the company continues to outperform expectations in consecutive quarters.
Market Reaction
Following the earnings announcement, Liquidity Services’ stock surged 25.22%, reflecting investor optimism. The stock price reached $32.24, nearing its 52-week high of $32.57. This positive market reaction underscores confidence in the company’s growth trajectory and strategic initiatives.
Company Outlook
Looking ahead, Liquidity Services provided guidance for Q1 2025, projecting GMV between $350 million and $385 million and GAAP net income of $2.5 million to $5 million. The company aims to achieve a GMV of $2 billion within the next few years and targets $100 million in annual EBITDA, focusing on market share expansion and service enhancements.
Executive Commentary
CEO Bill Angrick expressed confidence in the company’s strategic direction, stating, "We have the market and the credibility and the capabilities to arrive at that $2,000,000,000 GMV destination certainly inside of 5 years." He emphasized Liquidity Services’ role as a market leader, noting, "We are really the consolidator of choice in the circular economy."
Q&A
During the earnings call, analysts inquired about the company’s buyer base expansion and growth drivers in the retail segment. Executives highlighted the potential in the public sector real estate market and reiterated their commitment to incremental technology investments to enhance customer solutions.
Risks and Challenges
- Supply chain disruptions could impact operational efficiency.
- Market saturation in key segments may limit growth opportunities.
- Macroeconomic pressures, such as inflation, could affect consumer spending.
- Competition from other e-commerce platforms poses a threat.
- Regulatory changes in e-commerce and environmental policies could impact operations.
Liquidity Services remains well-positioned to capitalize on the growing circular economy, despite these challenges.
Full transcript - Liquidity Services Inc (LQDT) Q4 2024:
Operator: Welcome to Liquidity Services Inc. 4th Quarter of Fiscal Year 2024 Financial Results Conference Call. My name is Lisa, and I will be your operator for today's call. Please note that this conference is being recorded. At this time, all participants are in a listen only mode.
Later, we will conduct a question and answer session. I will now turn the call over to Michael Patrick, Liquidity Service , Vice President and Controller. Please go ahead.
Michael Patrick, Vice President and Controller, Liquidity Services Inc.: Good morning. On the call today are Bill Angrick, our Chairman and Chief Executive Officer and Jorge Celaya, our Executive Vice President and Chief Financial Officer. They will be available for questions after their prepared remarks. The following discussion and responses to your questions reflect management's views as of today, December 12, 2024, and will include forward looking statements. Actual results may differ materially.
Additional information about factors that could potentially impact our financial results is included in today's press release and in filings with the SEC, including our most recent Annual Report on Form 10 ks. To listen to today's call, please have our press release in front of you, which includes our financial results as well as metrics and commentary on the quarter. During this call, management will discuss certain non GAAP financial measures. 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 as available. 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 Angrish.
Bill Angrick, Chairman and Chief Executive Officer, Liquidity Services Inc.: Good morning, and welcome to our Q4 earnings call. I'll review our Q4 performance and the progress of our business segments, and next Jorge Celaya will provide more details on the quarter. Our healthy 4th quarter results capped a successful year of market share expansion and consistent growth in fiscal year 2024, backed by our investments in innovation, service and strong operational execution for our customers. We achieved double digit consolidated GMV growth in each quarter throughout the year and each of our segments achieved double digit annual GMV growth culminating in record annual GMV of $1,400,000,000 Overall, we are seeing enhanced network effects in our 2 sided marketplace platform as we grew our auction participants and completed transactions by 22% 12% year over year respectively during the quarter. We converted this growth to over $22,000,000 in operating cash flow in the 4th quarter, highlighting the strength of our Asset Light business model.
In the 4th quarter, our RSCG segment set new quarterly records in GMV, revenue and segment direct profit as we drove expanded relationships with our seller clients by leveraging our decades of industry leading expertise and multi channel buyer liquidity. Our GovDeals segment delivered robust double digit growth through ongoing seller acquisition and service expansion. Additionally, our Machinio segment achieved another quarterly revenue record, further solidifying its position as a leading platform for connecting buyers and sellers of used equipment worldwide. We're also thrilled to celebrate a significant milestone, our 25th anniversary. Over the past quarter century, Liquidity Services has grown from a scrappy startup, I was there, into a leading global e commerce company, powering the circular economy and delivering unmatched value worldwide.
Our journey has been marked by remarkable growth, innovation and a steadfast commitment to promoting sustainability. This milestone allows us to reflect on our achievements and express our deepest gratitude to our dedicated team, our loyal clients and supportive stakeholders who have been instrumental in our success. As we look to the future, we remain committed to driving excellence and innovation in all that we do. Overall, our scalable marketplace technology, broad range of services, diversified client base, organic growth initiatives and pipeline of acquisition opportunities will propel us in continuing our track record of growth. Our leadership team has now set its sights on reaching the $2,000,000,000 annual GMV milestone, which is a key step combined with service and margin expansion towards attaining the $100,000,000 of annual EBITDA milestone.
To achieve these objectives, we will focus on the following areas: 1, increasing our market share and the sales volume transacted on our marketplace 2, expanding our buyer base and sales channels to enhance recovery on the assets we sell 3, infusing and modernizing our platform with new technologies, including AI tools to increase our operational efficiencies and improve the customer experience. And finally, 4, executing complementary bolt on acquisitions. We expect to realize these goals in the next few years, which in turn will deliver tremendous value for our customers and our shareholders. I'll now turn it over to Jorge for more details on
Jorge Celaya, Executive Vice President and Chief Financial Officer, Liquidity Services Inc.: the quarter. Good morning. We completed the 2024 fiscal year with a new annual record for GMV at $1,400,000,000 solid profitability and a strong cash position. These achievements coincide with the celebration of our 25th anniversary, a milestone that underscores our commitment to our customers, investors and continued industry leadership. Fiscal year 2024 saw GMV grow 14% to the $1,400,000,000 record level with each of our segments delivering double digit GMV growth year over year.
Our revenue grew 16% to $363,000,000 led by our retail and GovDeals segments. GAAP net income was $20,000,000 or up 9% on a non GAAP adjusted basis. And our non GAAP adjusted EBITDA was $48,500,000 for the year, up 6%. For our consolidated fiscal Q4, GMV was $361,000,000 also up 14% from $316,000,000 in the same quarter last year. Revenue was $106,900,000 up 34% and growing faster than GMV mainly due to growth in purchase programs in our retail segment, primarily from lower touch flows.
Our GAAP earnings per share was $0.20 of GAAP our non GAAP adjusted EPS was $0.32 up 23% and our non GAAP adjusted EBITDA was $14,500,000 up 13%. We generated $22,000,000 in cash flows from operations during the 4th quarter and ended the Q4 with $155,500,000 in cash, cash equivalents and short term investments. We continue to have 0 debt with $17,500,000 of available borrowing capacity under our credit facility. Specifically comparing segment results from this fiscal Q4 to the same quarter last year, our retail segment was up 28% on GMV, up 49% on revenue and up 5% on segment direct profit, driven by the growth in our purchase programs. Our GovDeals segments GMV was up 14%, revenue up 26% and direct profit up 23%, driven by service expansion from the Sierra auction acquisition and continued growth with new sellers.
Our CAG segment was down 2% on GMV, down 17% on revenue and down 12% on segment direct profit reflecting low purchase transactions during this past fiscal Q4. Machinio's revenue and segment profit were both up 13% as we continue to experience strong client retention and increases in new customers for our subscription services. As we look to our fiscal year 2025, we continue to see opportunities to expand our market share and our services to improve our seller and buyer experiences on our platform and to deliver year over year growth across our segments. Our fiscal Q1 2025 guidance reflects our continued optimism as key metrics showed solid improvement as we closed 2024. Much of our focus throughout fiscal year 2024 will drive results expected during 2025.
Our retail segment expanded its purchase programs, including additional lower touch flows and its buyer outreach. Machinio continued to expand and have strong retention and demand for its services and our CAG segment pipeline of projects continued solid across several sectors including heavy equipment, industrial and energy. These drivers are expected to increase their respective GMV and revenues as we go forward into fiscal year 2025 with revenue growing at a higher rate than GMV. GovDeals also expanded its footprint and provided a strong add on for continued growth from new services through the acquisition of Sierra Auctions. Our fiscal first quarter guidance when compared sequentially against this last fiscal 4th quarter reflects the downward seasonality effects in the fiscal Q1 across various of our segments despite some potentially higher top line results sequentially.
Comparing year over year, however, our fiscal Q1 guidance range reflects solid improvement in our results. With the expected GMV mix in our segments volumes, we expect the mix going forward to result in an overall consolidated consignment GMV to be at approximately 80% of total GMV. Our consolidated revenue as a percent of GMV to be up in the range of approximately 30% and the total of our segment direct profits as a percent of total revenue to be down to the low 40 percentage range. These ratios can vary based on our mix, including pricing models, volumes and asset categories in any given period. This mix shift includes the expansion of lower touch purchase programs in the retail segment.
Retail segment direct profit as a percent of revenue is expected to be tempered year over year and sequentially relative to the Q4 of fiscal year's 2024s direct margin percent. Our profitability is expected to be up year over year this coming fiscal Q1 and consistent with prior year trends. The expected increase in adjusted EBITDA is despite our operating expenses seasonally increasing during the fiscal Q1 with operating leverage typically expected to improve during the stronger second half of our fiscal year. Management guidance for the Q1 of fiscal year 2025 is as follows. We expect GMV to range from $350,000,000 to $385,000,000 GAAP net income is expected in the range of $2,500,000 to $5,000,000 with a corresponding GAAP diluted earnings per share ranging from $0.08 to $0.16 per share.
Non GAAP adjusted diluted earnings per share is estimated in the range of $0.18 to $0.26 per share. We estimate non GAAP adjusted EBITDA to range from $9,500,000 to $12,500,000 The GAAP and non GAAP EPS guidance assumes that we have approximately 31.5000000 to 32 1,000,000 fully diluted weighted average shares outstanding for the Q1 of fiscal year 2025. Thank you. We will now take your questions.
Operator: Thank you. And the first question for today will be coming from the line of Gary Prestopino of Barrington. Your line is open.
Gary Prestopino, Analyst, Barrington: Good morning, Bill and George. Couple of questions here. The growth in the participants this quarter has been pretty was pretty strong. And I guess as well as transactions, I want to get an idea of what segments you're seeing the highest growth in participants in or maybe asking it another way. Is the Sierra acquisition Sierra Auction acquisition really driving some of this growth in the participants?
Hello?
Bill Angrick, Chairman and Chief Executive Officer, Liquidity Services Inc.: And it's not a catalyst for that. I think we've seen broad based expansion of our buyer base led by our retail segment, followed by our gov deal segment as we've broadened the range of assets that we're selling in both of those areas. And I think just in general, there's been a nice appreciation for the value of our marketplace on behalf of both small business buyers and consumers. They shop liquidity services marketplaces because they're able to access used and return goods that have a long useful life, but at prices that are far lower than buying new. So I think those are the drivers.
Gary Prestopino, Analyst, Barrington: Okay. Thank you. And then, in terms of continuing investments for growth, at least in the last 2 years, we've had a situation where you've stepped up your investments for growth. And it seems like that is not going to really be the case in this quarter for fiscal 'twenty five. It seems like given your guidance at least for Q1 that your the investments you've made are sufficient here to drive growth at least for this year and maybe going into next year.
Can you comment on that?
Bill Angrick, Chairman and Chief Executive Officer, Liquidity Services Inc.: Yes, I would agree that our growth has leveraged investments made in prior years and that going forward, we're making incremental investment in continued modernization in areas that will help expand margins. For example, we have harnessed the value of certain machine driven and AI driven functionality to drive better descriptions of our assets, better matching of assets with buyers in a much more automated way, better merchandising of the assets that we sell through the marketplace, a better registration process to onboard buyers and retarget buyers with less effort and less friction and cost. And I think these incremental investments going forward will also continue to improve the mobile experience on our platform, which will ultimately increase continue to increase buyer participation and continue to increase recovery, which is a key lever for any market and one we're very excited about for Liquidity Services.
Gary Prestopino, Analyst, Barrington: Okay. Thank you. And then just 2 more. In terms of the numbers you threw out with $2,000,000,000 GMV, dollars 100,000,000 of EBITDA, what is the timeframe for that? Is that over you have a 5 year target, a 10 year target?
Can you give us some idea of how where you're looking to achieve that?
Bill Angrick, Chairman and Chief Executive Officer, Liquidity Services Inc.: Yes. Well, we've got it right in front of us, I think the market and the credibility and the capabilities to arrive at that $2,000,000,000 GMV destination certainly inside of 5 years and we'd say next few years, whether that's 2 years or 4 years or somewhere in between, the market will reveal itself. What we have great confidence in is that our solutions that our customers need and value that we have a market leading position to execute on that growth. And just by continuing to do what we're doing, we're on our way to that type of trajectory. And I think, first, you have to create the value for the client and we do that through self directed and fully managed solutions.
We do that by having the largest buyer base and liquidity, both in the B2B and direct to consumer channels for our clients. And then we have incredible data to value and provide expertise our clients on return. So if you have that, Gary, you have the opportunity to grow and hitting that $2,000,000,000 timeframe $2,000,000,000 milestone in a shorter timeframe certainly is our goal. But we're very comfortable with our competitive position and ability to do that. And I'd say, the margins that you derive from volume are also an exciting part of a marketplace business model.
We're growing both our GMV on the platform, but also our non GMV related services. We talked about the growth of Machinio. We have a lot of software enabled self directed flows on our marketplace. In our bid for assets business, we have fee for service to allow government entities, including counties and sheriffs to manage the entire foreclosure process online and some of that activity is not recorded in GMV. So a combination of getting to our $2,000,000,000 GMV threshold plus growth of non GMV value added services puts us well on our way towards that $100,000,000 annual EBITDA milestone.
It's not directly correlated to the point estimate of $2,000,000,000 of GMV, but certainly attainable in the next few years. And also, I'd like to point out that we are really the consolidator of choice in the circular economy. If we see these small niche businesses express a desire to become part of a market leading platform, we're getting that call. And a lot of these are founder led businesses. And so Sierra is one example of that.
We think there's a lot of opportunities in that inorganic growth category as we move forward.
Gary Prestopino, Analyst, Barrington: Thank you very much.
Operator: Thank you. And one moment for the next question. And our next question will be coming from the line of Logan Lejag of Craig Hallum. Your line is open.
Logan Lejag, Analyst, Craig Hallum: Hey, good morning guys. This is Logan on for George. Congrats on the nice quarter here. I think the big number that stands out is that retail GMV. And Bill, I'm just wondering if you can put a little finer point on that.
I kind of you guys have outlined the case as to why you're kind of the best player in the market. But I'm just wondering if you can speak a little bit to why now, why you think those retailers are expanding their relationship now? Is that something you guys are doing on your end, operational improvements or just gaining their trust and just kind of what drives that right now?
Bill Angrick, Chairman and Chief Executive Officer, Liquidity Services Inc.: Sure. Well, if you've looked at the history of the company, we have been working in the retail supply chain for over 20 years and have been in many ways the bearer of best practices in this marketplace. And I think what has helped continue to grow our share is our ability to provide the full range of solutions that a retail supply chain client, whether it's a brick and mortar omnichannel player, whether it's a born in the cloud e commerce online retailer or any hybrid, any one of those players has a set of solutions that they can lever in our portfolio from self directed solutions where our clients are listing directly on the platform with their own teams and their own facilities, whether they're using our distribution center platforms or locations to sell on our platform in more of a fully managed way. We're able to do business with our clients and meet them where their needs are. And we also provide different pricing models from consignment to purchase model alternatives.
So clients feel like they can tell us what their needs are and we can solve for those needs versus us dictating to them to only use a specific solution or a specific pricing model. So I think that's one of the keys to growth. And then scale, matters a lot. I mean, we have the largest buyer base able to buy new use salvage return, any type of product that is in the retail supply chain. So that large lot liquidity, that liquidity by individual SKU, the ability to do both B2B and direct to consumer transactions and also supplement that with expertise to protect these clients' brands, to be able to move that product into different geographic locations, including outside the United States.
All of those collectively are why retailers have increasingly turned to liquidity services. And I think the secular growth, which you're well aware of, online retail is continuing to capture more volume, capture more product categories. That inexorable March means that there's more returns to manage and sell, which is what we do. So those are the things that I think are driving the growth of the retail side too. As we said on the call, new quarterly records in GMV revenue and segment direct profit.
Logan Lejag, Analyst, Craig Hallum: Great. And then one thing I don't think we've talked about today is the real estate opportunity and bid for assets. I know you've talked in the past about making some progress, just trying to get some of those municipalities to adopt going through the online auction channel. I just love an update on how you think that's going and how immediate you think that opportunity is? I think you've talked about it being a $100,000,000 GMV opportunity.
Bill Angrick, Chairman and Chief Executive Officer, Liquidity Services Inc.: Sure. Public sector real estate is definitely part of the needs of our customer base to find efficiencies and more transparency in how either government owned or distressed real estate is brought to market. We highlighted in the quarter, we had a record real estate sale this quarter over an $8,000,000 asset sold in an online auction marketplace, our online auction marketplace gov deal. So that was an all time record, which is very exciting and just an illustrative example of how big the real estate opportunity can be over time. Our current result, frankly, hasn't been a large result of the real estate category.
Real estate is something that we think will expand and grow in the next few years. It's a natural add on to the work we've done on the personal property side and we're committed to growing the real estate category. We look at the public sector as the right place to focus on. We have over 15,000 government entities, including states, counties, cities, public universities. And if you look at some of the trends, there's going to be a need for some of these public entities to be more efficient and probably less asset heavy with some of the real estate assets.
So we're well positioned to help them sell online to realize the value and more competitive auction result in value and we provide a lot of the software and services pre and post sale to handle the buyer experience, the payments, the collections, the invoicing, the settlement. So that's an opportunity to grow. Now real estate doesn't have the same level of take rate. This is a single digit take rate. So we're really focused on growing the direct profit associated with online real estate sales.
And we have great capabilities there. So we expect real estate to play a role in our growth to the $2,000,000,000 milestone over the next few years. And I don't think we fully have capitalized on it yet. It's something that certainly in our growth priorities and we're well positioned to execute.
Logan Lejag, Analyst, Craig Hallum: Got it. Thanks for the detail.
Operator: Thank you. And that does conclude our Q and A session for today as well as the conference call. Thank you all for joining. You may all disconnect.
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