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What changed in LIQUIDITY SERVICES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of LIQUIDITY SERVICES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+315 added−321 removedSource: 10-K (2024-12-12) vs 10-K (2023-12-07)

Top changes in LIQUIDITY SERVICES INC's 2024 10-K

315 paragraphs added · 321 removed · 257 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+13 added−21 removed79 unchanged
Biggest changeWe have simplified and streamlined our operations and consolidated business processes and systems, which has improved scalability. 8 We have a unified marketing organization to improve our seller and buyer marketing productivity by increasing the number of sellers using our platform and by driving increased volumes of highly targeted buyers to our marketplaces. 9 Our Marketplaces Our network of marketplace brands serves buyers and sellers in numerous industries across hundreds of product categories. 10 Our e-commerce marketplaces are efficient and convenient methods for the sale of surplus consumer goods and capital assets in over 600 product categories including consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware, real estate, energy equipment, industrial capital assets, heavy equipment, fleet, and transportation equipment and specialty equipment.
Biggest changeKey marketing support activities are embedded directly at the business unit level to support the successful execution of asset sales at each of our marketplaces. 9 Our Marketplaces Our network of marketplace brands serves buyers and sellers in numerous industries across hundreds of product categories. 10 Our e-commerce marketplaces, designed to address the particular requirements and needs of buyers and sellers, are efficient and convenient methods for the sale of surplus consumer goods and capital assets in over 750 product categories including, but not limited to: consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware, real estate, energy equipment, industrial capital assets, heavy equipment, fleet, and transportation equipment and specialty equipment.
We provide our sellers access to a network of liquid marketplaces with over 5 million buyers and a suite of services including consultative surplus asset management, valuation, sales solutions, logistics capabilities, and self-directed service tools to efficiently manage our sellers' reverse supply chain and maximize total supply chain value.
We provide our sellers access to a network of liquid marketplaces with over 5.5 million buyers and a suite of services including consultative surplus asset management, valuation, sales solutions, logistics capabilities, and self-directed service tools to efficiently manage our sellers' reverse supply chain and maximize total supply chain value.
Our buyer services include intelligent alerts, search tools, dynamic pricing, shipping and delivery where available, secure payment, live buyer support, and dispute resolution to enable effective methods to source assets for their businesses. Flexible and aligned transaction model We offer two primary transaction models to our sellers: the purchase transaction model and the consignment transaction model.
Our buyer services include intelligent alerts, search tools, dynamic pricing, shipping and delivery where available, secure payment, live buyer support, and dispute resolution to enable effective methods to source assets for their businesses. Flexible and aligned transaction model We offer two primary transaction models to our sellers: the consignment transaction model and the purchase transaction model.
We provide logistics services designed to support the receipt, handling, transportation, and tracking of merchandise offered through our marketplaces, including the following: o Network of warehouses - we provide sellers with the flexibility of either having us manage the sales process at their location or delivering merchandise to one of our warehouses. o Inventory management - sellers benefit from our management and inventory tracking system designed so merchandise is received, processed, and delivered promptly. o Cataloguing merchandise - we catalogue all merchandise, which enables us to provide useful product information to buyers and sellers. o Inspection and grading - In certain circumstances, we inspect the merchandise and provide condition descriptions to improve quality and the financial recovery to the seller. o Testing, data wiping, de-labeling, and refurbishment - we test products, wipe electronic data, refurbish and remove labels and product markings from merchandise prior to sale to add value to the asset and protect sellers' brand equity and distribution relationships. o Return to vendor or product disposition to non-sales channels - we manage the end-to-end processes for our sellers ensuring that returned merchandise is disposed of in compliance with a variety of disposition requirements.
We provide logistics services designed to support the receipt, handling, transportation, and tracking of merchandise offered through our marketplaces, including the following: o Network of warehouses - we provide sellers with the flexibility of either having us manage the sales process at their location or delivering merchandise to one of our warehouses. o Inventory management - sellers benefit from our management and inventory tracking system designed so merchandise is received, processed, and delivered promptly. o Cataloguing merchandise - we catalogue all merchandise, which enables us to provide useful product information to buyers and sellers. 11 o Inspection and grading - in certain circumstances, we inspect the merchandise and provide condition descriptions to improve quality and the financial recovery to the seller. o Testing, data wiping, de-labeling, and refurbishment - we test products, wipe electronic data, refurbish and remove labels and product markings from merchandise prior to sale to add value to the asset and protect sellers' brand equity and distribution relationships. o Return to vendor or product disposition to non-sales channels - we manage the end-to-end processes for our sellers ensuring that returned merchandise is disposed of in compliance with a variety of disposition requirements.
Our efforts encompass the services necessary to prepare retail merchandise for a successful auction and include the following: o Channel optimization - we determine the marketplace and channel sales strategy that we believe will create the most value for the individual asset using our real-time transaction systems and proprietary data to support ongoing optimization. o Marketing and promotion we use a variety of both online and traditional marketing methods to promote our sellers' merchandise and generate interest in each asset. 11 o Asset lotting and merchandising - we leverage our industry experience to organize the merchandise we receive into size and product combinations that meet buyer preferences within each marketplace and channel. o Product information enhancement - we provide digital images of the merchandise to be sold and combine the images with relevant information.
Our efforts encompass the services necessary to prepare retail merchandise for a successful auction and include the following: o Channel optimization - we determine the marketplace and channel sales strategy that we believe will create the most value for the individual asset using our real-time transaction systems and proprietary data to support ongoing optimization. o Marketing and promotion - we use a variety of both online and traditional marketing methods to promote our sellers' merchandise and generate interest in each asset. o Asset lotting and merchandising - we leverage our industry experience to organize the merchandise we receive into size and product combinations that meet buyer preferences within each marketplace and channel. o Product information enhancement - we provide digital images of the merchandise to be sold and combine the images with relevant information.
These activities include unloading, manifesting and reporting discrepancies for all received assets and sales preparation of offered assets, including merchandising and organizing offered assets, writing product descriptions, capturing digital images and/or video and providing additional optional value-added services such as returns management (RM) services, return to vendor (RTV) services and product delabelling, data cleaning/wiping, testing, refurbishment and repackaging.
These activities include unloading, manifesting and reporting discrepancies for 15 all received assets and sales preparation of offered assets, including merchandising and organizing offered assets, writing product descriptions, capturing digital images and/or video and providing additional optional value-added services such as returns management (RM) services, return to vendor (RTV) services and product delabelling, data cleaning/wiping, testing, refurbishment and repackaging.
All marketing activities are evaluated based on the level of auction participation in our marketplaces, the cost to acquire new participants, and the cost effectiveness of each action. Technology and IT Infrastructure As digital transformation accelerates globally, sellers are searching for partner solutions that enable them to move faster and generate maximum recovery with minimal investment.
All marketing activities are evaluated based on the level of auction participation in our marketplaces, the cost to acquire new participants, and the cost effectiveness of each action. 13 Technology and IT Infrastructure As digital transformation accelerates globally, sellers are searching for partner solutions that enable them to move faster and generate maximum recovery with minimal investment.
Available Information Our proxy statement, annual, quarterly, and current reports, as well as amendments to those reports and other information, are provided free of charge on our website at www.investors.liquidityservices.com, as soon as reasonably practicable after we electronically file these materials with or furnish them to, the Securities and Exchange Commission (the SEC).
Available Information Our proxy statement, annual, quarterly, and current reports, as well as amendments to those reports and other information, are provided free of charge on our website at www.investors.liquidityservices.com, as soon as reasonably practicable after we electronically file these 18 materials with or furnish them to, the Securities and Exchange Commission (the SEC).
Many of the services we provide to sellers also benefit buyers by providing them with the information to make a more informed bid and by delivering the goods they purchased. Our buyer-focused services include: • Intelligent alerts and recommendations - we notify buyers of upcoming auctions based on their registered preferences and prior transaction history.
Many of the services we provide to sellers also benefit buyers by providing them with the information to make a more informed bid and by delivering the goods they purchased. Our buyer-focused services include: o Intelligent alerts and recommendations - we notify buyers of upcoming auctions based on their registered preferences and prior transaction history.
This approach allows us to more completely penetrate the total addressable market by better meeting the needs of small and mid-sized organizations, equipment dealers, and organizations with lower volume needs. We also anticipate increasing volume by placing a greater focus on certain categories, including real estate, construction, and heavy equipment.
This approach allows us to more completely penetrate the total addressable market by better meeting the needs of small and mid-sized organizations, equipment dealers, and organizations with lower volumes. We also anticipate increasing volume by placing a greater focus on certain categories, including heavy equipment, construction, and real estate.
Professional buyers seek surplus assets to sustain their operations and meet demands of end-customers. They include online and offline retailers, convenience and discount stores, value-added resellers such as refurbishers and scrap recyclers, import and export firms, and small businesses.
Professional buyers seek surplus assets to sustain their operations and meet the demands of end-customers. They include online and offline retailers, convenience and discount stores, value-added resellers such as refurbishers and scrap recyclers, import and export firms, and small businesses.
CAG benefits from a global base of buyers and sellers enabling the sale and redeployment of assets wherever they’re most likely to generate the best value and highest use across the world. This segment primarily uses the AllSurplus and GovDeals marketplaces. 3 • Machinio .
CAG benefits from a global base of buyers and sellers enabling the sale and redeployment of assets wherever they’re most likely to generate the best value and highest use across the world. This segment primarily uses the AllSurplus and GovDeals marketplaces. • Machinio .
Under the purchase transaction model, we purchase inventory from a seller that we resell in our marketplaces. Sometimes our inventory purchase price is variable, as we may share the gross or net proceeds of such resales with the seller. Sellers that elect the purchase transaction model are considered vendors.
Under the purchase transaction model, we purchase inventory from a seller that we resell 6 in our marketplaces. Sometimes our inventory purchase price is variable, as we may share the gross or net proceeds of such resales with the seller. Sellers that elect the purchase transaction model are considered vendors.
We will alert our buyers based on their preferences when auctions are initially launched or nearing conclusion and based on various other parameters to enable our buyers to see relevant products. 12 • Search and navigation tools - buyers can search our marketplaces for products based on a variety of criteria and personalized settings, including product category, keyword, lot size, product condition, product geographic location, and auction ending date. • Dynamic pricing tools, product information, and shipping quotes - we offer multiple dynamic pricing tools including outbid notification, automated bid agent, and automatic auction extension.
We will alert our buyers based on their preferences when auctions are initially launched or nearing conclusion and based on various other parameters to enable our buyers to see relevant products. o Search and navigation tools - buyers can search our marketplaces for products based on a variety of criteria and personalized settings, including product category, keyword, lot size, product condition, product geographic location, and auction ending date. o Dynamic pricing tools, product information, and shipping quotes - we offer multiple dynamic pricing tools including outbid notification, automated bid agent, and automatic auction extension.
Our warehouse network and field service operations group personnel also arrange the outbound shipping or pick-up of purchased assets for our buyers. Competition The online services market for auctioning or liquidating surplus assets is competitive and growing rapidly.
Our warehouse network and field service operations personnel also arrange the outbound shipping or pick-up of purchased assets for our buyers. Competition The online services market for auctioning or liquidating surplus assets is competitive and growing rapidly.
Machinio also offers the Machinio System service that provides equipment sellers with a suite of online marketing tools that includes website hosting, email marketing, and inventory management, to support and enable equipment sellers’ online business.
Machinio also offers the Machinio System service that provides equipment sellers with a suite of software tools that includes website hosting, email marketing, and inventory management, to support and enable equipment sellers’ online business.
The information in any such publication, report, survey, or article is not incorporated by reference in this Annual Report on Form 10-K. 19
The information in any such publication, report, survey, or article is not incorporated by reference in this Annual Report on Form 10-K.
Buyers can find products in over 600 categories in lot sizes ranging from full truckloads to pallets, packages, and individual items. Our solution combines leading e-commerce marketplaces with integrated sales, marketing, merchandising, fulfillment, payment collection, customer support, dispute mediation and logistics services.
Buyers can find products in over 750 categories in lot sizes ranging from full truckloads to pallets, packages, and individual items. Our solution combines leading e-commerce marketplaces with integrated sales, marketing, merchandising, fulfillment, payment collection, customer support, dispute mediation and logistics services.
By coupling our click-stream data and bid activity with our campaign activity, the marketing organization leverages a feedback loop that increases campaign effectiveness and optimizes spend. 7 Our Strategy The focus of our growth strategy is to build the world’s leading marketplace for surplus assets to benefit buyers, sellers, and the planet.
By coupling our click-stream data and bid activity with our campaign activity, the marketing organization leverages a feedback loop that increases campaign effectiveness and optimizes spending. 7 Our Strategy The focus of our growth strategy is to build the world’s leading marketplace for surplus assets to benefit buyers, sellers, and the planet.
In addition, our shipping coordinators monitor the performance and service level of our network of carriers to help ensure speed and quality of service. Warehouse network and field service operations Our warehouse network and field service operations group perform selected pre-sale and post-sale value-added services across our network of warehouses and at seller locations globally.
In addition, our shipping coordinators monitor the performance and service level of our network of carriers to help ensure speed and quality of service. Warehouse network and field service operations Our warehouse network and field service operations groups perform selected pre-sale and post-sale value-added services across our network of warehouses and at seller locations globally.
Our value-added services simplify the sales and supply chain processes for our sellers and improve the utility of our marketplaces for our buyers. For corporate and certain government sellers, we provide sales, marketing, logistics, and seller support services that are fully integrated with our marketplaces, creating operational and system efficiencies.
Our value-added services simplify the sales and supply chain processes for our sellers and improve the utility of our marketplaces for our buyers. For commercial and certain government sellers, we provide sales, marketing, logistics, and seller support services that are fully integrated with our marketplaces, creating operational and system efficiencies.
The result of this cycle is a continuous flow of goods that becomes increasingly valuable as more participants join the platforms, thereby creating positive network effects that benefit sellers, buyers, and shareholders. During the past three fiscal years, we have conducted over 2.6 million online transactions generating $3.2 billion in gross merchandise volume or GMV.
The result of this cycle is a continuous flow of goods that becomes increasingly valuable as more participants join the platforms, thereby creating positive network effects that benefit sellers, buyers, and shareholders. During the past three fiscal years, we have conducted over 2.9 million online transactions generating $3.7 billion in gross merchandise volume or GMV.
The GovDeals reportable segment provides solutions that enable government entities including city, county, state and federal agencies located in the United States and Canada and related commercial businesses to sell surplus property and real estate assets through our GovDeals and Bid4Assets marketplaces (see Note 3 - Bid4Assets Acquisition ). • RSCG .
The GovDeals reportable segment provides solutions that enable government entities including city, county, state and federal agencies located in the United States and Canada and related commercial businesses to sell surplus property and real estate assets through our GovDeals, Bid4Assets and Sierra marketplaces; see Note 3 - Bid4Assets Acquisition and Note 4 - Sierra Acquisition , respectively. • RSCG .
Additionally, we believe these services improve compliance with the policies, regulations, and sale restrictions of our corporate and government sellers while supporting, or greatly enhancing, many corporate or government environmental initiatives. Seller services.
Additionally, we believe these services improve compliance with the policies, regulations, and sale restrictions of our commercial and government sellers while supporting, or greatly enhancing, many commercial or government environmental initiatives. Seller services.
As corporate and governmental entities are increasingly pressured to enhance efficiencies while also using fewer resources, they are looking to the liquidation of surplus capital assets as a source of funds. 4 The management and remarketing of surplus assets traditionally has been an inefficient process.
As commercial and governmental entities are increasingly pressured to enhance efficiencies while also using fewer resources, they are looking to the liquidation of surplus capital assets as a source of funds. The management and remarketing of surplus assets traditionally has been an inefficient process.
Our technology systems and committed teams enable us to automate and streamline many of the manual processes associated with finding, evaluating, bidding on, paying for, and shipping surplus assets, retail returns and overstocks, and government owned real-estate.
Our technology systems and committed teams enable us to automate and streamline many of the manual processes associated with finding, evaluating, bidding on, paying for, and shipping surplus assets, retail returns and overstocks, and foreclosed real-estate.
We base our approach on our experience in understanding and serving the unique needs of each type of seller: • Full-service sellers. These sellers require a customized approach, using a combination of our industry-focused sales team and our value-added services to create a comprehensive solution tailored to their needs. • Self-directed sellers.
We base our approach on our experience in understanding and serving the unique needs of each type of seller: • Full-service sellers. These sellers require an end-to-end solution, using a combination of our industry-focused sales team and our value-added services to create a comprehensive, scalable solution tailored to their needs. • Self-directed sellers.
Shipping logistics Our shipping logistics group manages and coordinates inbound and outbound shipping of merchandise for sellers and buyers of our Retail services. We offer, as part of our value-added services, integrated shipping services using our own fleet or multiple vetted and pre-qualified carrier partners.
Shipping logistics Our shipping logistics group manages and coordinates inbound and outbound shipping of merchandise for sellers and buyers of our Retail services. We offer, as part of our value-added services, integrated shipping services using multiple vetted and pre-qualified carrier partners.
While purchase-model transactions account for less than 20% of our total GMV, the cost of inventory for purchase model transactions is the most significant component of our consolidated Costs of goods sold. $5.8 million and $8.1 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Inventory balances on our Consolidated Balance Sheets as of September 30, 2023, and 2022, respectively.
While purchase-model transactions account for less than 20% of our total GMV, the cost of inventory for purchase model transactions is the most significant component of our consolidated Costs of goods sold. $12.2 million and $5.8 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Inventory balances on our Consolidated Balance Sheets as of September 30, 2024 and 2023, respectively.
An increasingly stringent regulatory environment necessitates verifiable recycling and remarketing of surplus assets that would otherwise be disposed of as waste. • Changing budgetary trends in corporate and governmental entities.
An increasingly stringent regulatory environment necessitates verifiable recycling and remarketing of surplus assets that would otherwise be disposed of as waste. 4 • Changing budgetary trends in commercial and governmental entities.
Our learning and development programs include tuition support for employees and a global training and development program that focuses on leadership development, as well as training in various topics including diversity, anti-harassment, ethics, and regulatory compliance. Culture and Community The Company's culture is rooted in our core values and aligned to the Company’s strategic framework.
Our learning and development programs include tuition support for employees and a global training and development program that focuses on building technical skills and leadership development, as well as training in various topics including cybersecurity, anti-harassment, ethics, and regulatory compliance. Culture and Community The Company's culture is rooted in our core values and aligned to the Company’s strategic framework.
In addition, we provide buyers with the information they need to make informed decisions, including product data, seller performance, and online shipping quotes to help understand their landed cost. • Broad and flexible range of shipping/pick-up options - we can provide packaging and shipping services for many transactions, whether it is a small item or container loads for export, including buyer pick-up at our premises, supporting buyer-arranged transportation through our preferred shippers network, or providing customer pick-up appointments at our AllSurplus Deals warehouse locations. • Secure settlement and buyer support - besides qualifying sellers, providing several electronic payment options and serving as a trusted market intermediary, we verify transaction completion, and ensure the buyers funds are secure throughout the transaction process, all of which enhances buyer confidence. • Buyer Support - we provide full reliable buyer support and dispute resolution through phone, email, and chat throughout the transaction process.
In addition, we provide buyers with the information they need to make informed decisions, including product data, seller performance, and online shipping quotes to help understand their landed cost. o Broad and flexible range of shipping/pick-up options - we can provide packaging and shipping services for many transactions, whether it is a small item or container loads for export, including buyer pick-up at our premises, supporting buyer-arranged transportation through our preferred shippers network, or providing customer pick-up appointments for both Liquidation.com and AllSurplus Deals transactions at specific warehouse locations. o Secure settlement and buyer support - besides qualifying sellers, providing several electronic payment options and serving as a trusted market intermediary, we verify transaction completion, and ensure the buyers funds are secure throughout the transaction process, all of which enhances buyer confidence. o Buyer support - we provide full reliable buyer support and dispute resolution through phone, email, and chat throughout the transaction process. 12 Sales and Marketing We use sales and marketing activities to acquire and manage our seller and buyer accounts.
We are committed to allowing flexibility in our workplace to promote high performance, retention, diversity, equity, and inclusion while also continuing to meet customer and business needs. 18 Sustainability Efforts At our core, Liquidity Services strives to benefit businesses, communities, and the environment through our marketplaces which enable the continued use of surplus assets that may otherwise wind up in landfills.
We are committed to allowing flexibility in our workplace to promote high performance and retention while also continuing to meet customer and business needs. Sustainability Efforts At our core, Liquidity Services strives to benefit businesses, communities, and the environment through our marketplaces which enable the continued use of surplus assets that may otherwise end up in landfills.
Sellers benefit from a liquid, transparent market and the active participation of our large base of professional buyers, which enhances their returns in comparison to less efficient models. Buyers benefit from our relationships with high-volume, corporate and government sellers, which provides them with continuous access to a comprehensive selection of surplus assets.
Sellers benefit from a liquid, transparent market and the active participation of our large base of professional buyers, which enhances sellers' returns in comparison to less efficient models. Buyers benefit from our relationships with high-volume, commercial and government sellers, which provides buyers with continuous access to a comprehensive selection of surplus assets.
The Machinio reportable segment operates a global search engine platform for listing used equipment for sale in the construction, machine tool, transportation, printing and agriculture sectors.
The Machinio reportable segment operates a global search engine platform for listing equipment for sale in the construction, machine tool, processing, transportation, printing, agriculture, and laboratory/medical sectors.
Under the consignment transaction model, we do not purchase inventory from a seller; instead, we enable a seller to sell its goods in our marketplaces and we earn commission revenue based on the proceeds received from the sale.
Under the consignment transaction model, we do not purchase inventory from a seller; instead, we enable a seller to sell its goods in our marketplaces and we earn commission revenue based on the proceeds received from the sale. Sellers that elect the consignment transaction model are considered consignors.
Sellers that elect the consignment transaction model are considered consignors. 6 Faster transaction cycle times for our sellers and buyers We believe our marketplace solutions allow our sellers to complete the entire sales process more rapidly than through other liquidation methods by reducing the complexities in the reverse supply chain and utilizing our multi-channel strategies to optimize recovery and velocity.
Faster transaction cycle times for our sellers and buyers We believe our marketplace solutions allow our sellers to complete the entire sales process more rapidly than through other liquidation methods by reducing the complexities in the reverse supply chain and utilizing our multi-channel strategies to optimize recovery and velocity.
Our infrastructure provides: • Efficient channels to sell online through a variety of pricing mechanisms (standard auction, sealed bid, make an offer, fixed price, and a combination of fixed price and auction); • A scalable back office that enables buyers and sellers to efficiently manage transactions among remote business users by utilizing account management tools, including payment collection, invoicing management, shipping, and transaction settlement; and • An input/output agnostic platform, including Application Programming Interface or other conduits that enable us to scale and integrate seamlessly with partners of all sizes, from single asset sellers to Fortune 500 enterprises. 14 We have designed our websites and supporting infrastructure to leverage the full power of the leading cloud providers.
Our infrastructure provides: • Efficient channels to sell online through a variety of pricing mechanisms (standard auction, sealed bid, make an offer, fixed price, and a combination of fixed price and auction); • A scalable back office that enables buyers and sellers to efficiently manage transactions among remote business users by utilizing account management tools, including payment collection, invoicing management, shipping, and transaction settlement; and • An input/output agnostic platform, including Application Programming Interfaces or other conduits that enable us to scale and integrate seamlessly with partners of all sizes, from single asset sellers to Fortune 500 enterprises.
The supply of surplus and idle assets in the reverse supply chain results from a number of factors, including: • Increasing focus by corporate and government agencies to seek green solutions for surplus assets.
The supply of surplus and idle assets in the reverse supply chain results from several factors, including: • Increasing focus by commercial and government agencies to seek green solutions for surplus assets.
Our sales personnel receive salary and performance-based commissions. 13 Marketing We use a variety of online and traditional marketing strategies to attract and activate buyers to maximize the number of bidders participating in our e-commerce marketplaces as well as to support our sales team: • Buyer acquisition.
Marketing We use a variety of online and traditional marketing strategies to attract and activate buyers to maximize the number of bidders participating in our e-commerce marketplaces as well as to support our sales team: • Buyer acquisition.
The retail industry, as per an Appriss Retail and National Retail Federation Q4 2022 returns survey ( 2022 Consumer Returns in the Retail Industry ), estimates that approximately $816 billion of merchandise is returned on an annual basis, representing almost 18% of total sales.
The retail industry, as per an Appriss Retail and National Retail Federation Q4 2022 returns survey ( 2023 Consumer Returns in the Retail Industry ), estimates that approximately $743 billion of merchandise is returned on an annual basis, representing over 14% of total sales.
Aggregating this level of buyer demand and market data enables us to generate a continuous flow of goods from corporate and government sellers, which in turn attracts an increasing number of buyers. During the year ended September 30, 2023, we had approximately 3.3 million auction participants in our online auctions.
Aggregating this level of buyer demand and market data enables us to generate a continuous flow of goods from commercial and government sellers, which in turn attracts an increasing number of buyers. During the year ended September 30, 2024, we had more than 4.0 million auction participants in our online auctions.
These sellers are offered a turn-key solution enabling them to self-direct the sale of their assets on our marketplaces by accessing tools and resources to optimize their net recovery.
These sellers are offered a turn-key solution enabling them to self-direct the sale of their assets on our marketplaces by accessing tools and resources to optimize their net recovery. Our sales personnel receive salary and performance-based commissions.
During fiscal 2023, we grew our registered buyer base by 4.8% or 234,000. As buyers continue to discover and use our e-commerce marketplaces as an effective method to source assets, we believe our solutions become an increasingly attractive sales channel for corporate and government agency sellers.
During fiscal 2024, we grew our registered buyer base by 7.2% or 371,000 registered buyers. As buyers continue to discover and use our e-commerce marketplaces as an effective method to source assets, we believe our solutions become an increasingly attractive sales channel for commercial and government agency sellers.
Our core back-office infrastructure is flexible by design. We are a remote-first work organization. The cloud-based, flexible infrastructure has enabled our operations to continue, uninterrupted, in a variety of working models, including fully remote, on-site, and hybrid. This flexibility affords us the ability to recruit and retain outstanding talent and to service our customers’ needs regardless of location.
The cloud-based, flexible infrastructure has enabled our operations to continue, uninterrupted, in a variety of working models, including fully remote, on-site, and 14 hybrid. This flexibility affords us the ability to recruit and retain outstanding talent and to service our customers’ needs regardless of location.
In October 2023, we successfully migrated the GovDeals.com marketplace to our latest state-of-the-art modernized platform, giving our buyers the best buying experience. This new user experience leverages the knowledge we gained developing AllSurplus.com with the 20+ years of operating GovDeals.com.
We have experienced no financially material service interruptions on our e-commerce marketplaces. In October 2023, we successfully migrated the GovDeals.com marketplace to our latest state-of-the-art modernized platform, giving our buyers the best buying experience. This new user experience leverages the knowledge we gained developing AllSurplus.com with the 20+ years of operating GovDeals.com.
See Note 3 - Bid4Assets Acquisition for more information regarding this transaction. Operating Segments The Company has four reportable segments under which we conduct business: GovDeals, Capital Assets Group (CAG), Retail Supply Chain Group (RSCG), and Machinio. Further information and operating results of our reportable segments can be found in Note 16 - Segment Information . • GovDeals .
Reportable Segments The Company has four operating and reportable segments under which we conduct business: GovDeals, Retail Supply Chain Group (RSCG), Capital Assets Group (CAG), and Machinio. Further information and operating results of our reportable segments can be found in Note 17 - Segment Information . • GovDeals .
We generated GMV of $1.2 billion and revenue of $314.5 million through multiple sources, including transaction fees from sellers and buyers, proceeds from the sale of products we purchased from sellers, and value-added service charges during the year ended September 30, 2023. Our GMV has grown at a compound annual growth rate of 13.9% since 2018.
We generated GMV of $1.4 billion and revenue of $363.3 million through multiple sources, including transaction fees from sellers and buyers, proceeds from the sale of products we purchased from sellers, and value-added service charges during the year ended September 30, 2024. Over the prior 5 years, our GMV has grown at a compound annual growth rate of 16.4%.
We pursue the registration of our domain names in the U.S. and internationally. We have no patents or registered copyrights. Effective patent, copyright, trademark, service mark, trade secret, and domain name protection are expensive to maintain and may require litigation to enforce.
We have no patents or registered copyrights. Effective patent, copyright, trademark, service mark, trade secret, and domain name protection are expensive to maintain and may require litigation to enforce.
We engage with our local communities across the globe. Supporting community outreach, disaster relief, zero-waste initiatives, youth mentoring, military families and veterans, and access to higher education. Flexible Workspace We are a remote-first work environment.
Each of our team members is part of our global initiative to make a difference in the communities where we live and work. We engage with our local communities across the globe supporting community outreach, disaster relief, zero-waste initiatives, youth mentoring, military families and veterans, and access to higher education. Flexible Workspace We are a remote-first work environment.
Our sales team brings our global scale and specialist knowledge to an ecosystem of auction partners, leveraging our expertise to create additional opportunities for us to participate in purchase and consignment transaction model projects across the globe. In addition, we have a lead generation team which tracks relevant media around the world.
Our sales team brings our global scale and specialist knowledge to an ecosystem of auction partners, leveraging our expertise to create additional opportunities for us to participate in purchase and consignment transaction model projects across the globe.
The core verticals in which CAG operates include industrial manufacturing, oil and gas, heavy equipment, biopharma, and electronics. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing.
The CAG reportable segment enables commercial businesses to sell surplus assets on our AllSurplus marketplace. The core verticals in which CAG operates include industrial manufacturing, oil and gas, heavy equipment, biopharma, and electronics. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing.
We rely on contractual restrictions and copyright and trade secret laws to protect our proprietary rights, know-how, information, and technology. We currently are the registered owners of several Internet domain names, including www.liquidation.com, www.govdeals.com, www.allsurplus.com, www.secondipity.com, www.go-dove.com (GoIndustry DoveBid is moving to the AllSurplus.com marketplace beginning in fiscal year 2024), www.machinio.com, www.machineryhost.com, and www.bid4assets.com.
We rely on contractual restrictions and copyright and trade secret laws to protect our proprietary rights, know-how, information, and technology. We currently are the registered owners of several Internet domain names, including www.liquidation.com, www.govdeals.com, www.allsurplus.com, www.secondipity.com, www.machinio.com, www.machineryhost.com, and 16 www.bid4assets.com. We pursue the registration of our domain names in the U.S. and internationally.
For any given asset, our buyers have access to a detailed product description, product manifest, digital images, relevant transaction history regarding the seller, and, where appropriate, the shipping weights, product dimensions and estimated shipping costs to the buyer's location.
For any given asset, our buyers have access to a detailed product description, product manifest, digital images, relevant transaction history regarding the seller, and, where appropriate, 5 the shipping weights, product dimensions and estimated shipping costs to the buyer's location. This enables our solutions to become an important source for surplus assets for many of our professional buyers and end-users.
We intend to grow our volume within the retail supply chain by leveraging the self-directed service model, continuing to grow our network of warehouses, and expanding our AllSurplus Deals marketplace, offering consumers deals for curbside pick-up. We will continue to provide flexible pricing models that allow our sellers to use either a consignment or a purchase-based model.
We intend to grow our volume within the retail supply chain by leveraging the self-directed service model, expanding our AllSurplus Deals marketplace offering consumers deals for curbside pick-up, and continuing to grow our network of warehouses.
Human Capital Management In order to achieve our goal to build the world’s leading marketplace for surplus assets to benefit buyers, sellers, and the planet, it is crucial that we attract, develop, and retain employees who deliver outstanding performance.
Human Capital Management To achieve our goal to build the world’s leading marketplace for surplus assets to benefit buyers, sellers, and the planet, it is crucial that we attract, develop, and retain employees who deliver outstanding performance. We strive to make Liquidity Services a rewarding place to work by promoting diversity based on experiences, perspectives and skills.
Our marketing team also manages our marketplace brands and seller lead generation efforts that support the sales team. Sales Our sales personnel develop seller relationships, contract to provide our services and manage the business accounts on an ongoing basis. Our sales team focuses on building long-term relationships with sellers that we believe will generate recurring transactions.
Sales Our sales personnel develop seller relationships, contract to provide our services and manage the business accounts on an ongoing basis. Our sales team focuses on building long-term relationships with sellers that we believe will generate recurring transactions and position the Company as an integral partner helping them to achieve their goals.
Health and Well-Being We value the health and well-being of our employees and provide generous benefit options to our employees and their families. Our plans are designed to enhance employee wellness by focusing on health, financial security, life, and learning. Our health benefits include multiple medical plans, dental and vision coverage, and paid parental leave.
Our plans are designed to enhance employee wellness by focusing on health, financial security, life, and learning. Our health benefits include multiple medical plans, dental and vision coverage, and paid parental leave. In the U.S., we pay a significant portion of the benefit premiums related to our health benefits.
GMV is the total sales value of all merchandise sold by us or our sellers through our marketplaces or by us through other channels during a given period of time. During the year ended September 30, 2023, the number of registered buyers grew from 4.9 million to 5.1 million, or 5%.
GMV is the total sales value of all transactions for which we earned compensation upon their completion through our marketplaces or other channels during a given period of time. During the year ended September 30, 2024, the number of registered buyers grew from 5.1 million to 5.5 million, or 7%.
Our services leverage the scale and power of Amazon Web Services and Microsoft’s Azure Public Cloud platforms enabling us to efficiently respond to increased traffic. Our applications are designed with resiliency and fault tolerance in mind. Since January 1, 2003, we have experienced no financially material service interruptions on our e-commerce marketplaces.
We have designed our websites and supporting infrastructure to leverage the full power of the leading cloud providers. Our services leverage the scale and power of Amazon Web Services and Microsoft’s Azure Public Cloud platforms enabling us to efficiently respond to increased traffic. Our applications are designed with resiliency and fault tolerance in mind.
These include, but are not limited to, e-commerce providers, B2B online marketplace platforms, auction websites, retailers, distributors, liquidators, import and export companies, auctioneers, and government agencies that have created websites to sell surplus.
These include, but are not limited to, e-commerce providers, B2B online marketplace platforms, auction websites, retailers, distributors, liquidators, import and export companies, auctioneers, and government agencies that have created websites to sell surplus. As our product offerings continue to broaden into new categories of surplus items, we expect to face additional competition from other online, mobile, and offline channels.
For example, according to Allied Market Research ( Reverse Logistics Market by Return Type: Global Opportunity and Industry Forecast 2021-2028 (July 2021) ), the global reverse logistics market is expected to reach $958 billion by 2028, growing at a compound annual growth rate of 5.6% from 2021 to 2028.
For example, according to Allied Market Research ( Reverse Logistics Market Size, Share, Competitive Landscape and Trend Analysis Report, by Return Type, by End User : Global Opportunity Analysis and Industry Forecast, 2023-2032 (April 2024) ), the global reverse logistics market is expected to reach $948 billion by 2032, growing at a compound annual growth rate of 4.3% from 2023 to 2032.
By coupling an intuitive, mobile-optimized design with site search and recommendations driven by machine learning, the platform is optimized to assist buyers in quickly finding the assets that meet their needs. Our sellers benefit from the unique nature of our unified platform by having their assets available, simultaneously, on multiple marketplaces while guaranteeing the integrity of the cross-site auction bidding.
By coupling an intuitive, mobile-optimized design with site search and recommendations driven by AI and machine learning, the platform is optimized to assist buyers in quickly finding the assets that meet their needs.
Sales and Marketing We use sales and marketing activities to acquire and manage our seller and buyer accounts. Our sales activities are focused on acquiring new sellers and expanding existing sellers' use of our solutions. Our marketing activities are focused on acquiring and activating new buyers and increasing existing buyers' participation.
Our sales activities are focused on acquiring new sellers and expanding existing sellers' use of our solutions. Our marketing activities are focused on acquiring and activating new buyers and increasing existing buyers' participation. Our marketing team also manages our marketplace brands and seller lead generation efforts that support the sales team.
Service Expansion We intend to grow our services with recurring revenue characteristics that leverage our technology platform, domain expertise, data, and marketplace channels.
We will continue to provide flexible pricing models that allow our sellers to use either a consignment or a purchase-based model. 8 Service Expansion We intend to grow our services with recurring revenue characteristics that leverage our technology platform, domain expertise, data, and marketplace channels.
We also utilize temporary workers to augment staffing during peak business cycles and to fill certain open positions on a temporary basis. 17 Diversity, Equity, and Inclusion We believe our employees are key to achieving our business goals and growth strategy. Our human capital objective is to attract, retain, develop, and motivate talented employees.
As of September 30, 2024, our number of employees by region were as follows: We also utilize temporary workers to augment staffing during peak business cycles and to fill certain open positions on a temporary basis. Importance of our Employees We believe our employees are key to achieving our business goals and growth strategy.
As of September 30, 2023, we had 5.1 million registered buyers in our marketplaces. We had access to millions of additional end-users through a range of external consumer marketplaces.
We believe our marketplaces benefit over time from greater scale and adoption by our constituents creating a continuous flow of goods benefiting our buyers and sellers. As of September 30, 2024, we had 5.5 million registered buyers in our marketplaces. We had access to millions of additional end-users through a range of external consumer marketplaces.
We reinforce, monitor, and assess our culture through a variety of programs which include performance management, succession planning, and employee engagement surveys, all of which serve to further our human capital objectives. Each of our team members is part of our global initiative to make a difference in the communities where we live and work.
Our culture expresses our expansive vision and fervor for community and collaboration and is honed by the following core values: We reinforce, monitor, and assess our culture through a variety of programs which include performance management, succession planning, and employee engagement surveys, all of which serve to further our human capital objectives.
We have multiple vendor contracts with Amazon.com, Inc. under which we acquire and sell commercial merchandise.
The Internet facilitates competitive entry and comparison shopping, and increased competition may reduce our sales and profits. Our Vendor Contracts with Amazon.com, Inc. We have multiple vendor contracts with Amazon.com, Inc. under which we acquire and sell commercial merchandise.
In the U.S., we pay a significant portion of the benefit premiums related to our health benefits. Employees are offered certain benefits at no charge to them or their families, e.g., Life and AD&D insurance, short- and long-term disability insurance, and Health Savings Account contributions.
Employees are offered certain benefits at no charge to them or their families, e.g., Life and AD&D insurance, short- and long-term disability insurance, and Health Savings Account contributions. The financial security benefits program includes a 401(k) plan with discretionary employer match and access to health savings accounts and health and dependent care flexible spending accounts.
The financial security benefits program includes a 401(k) plan with discretionary employer match and access to health savings accounts and health and dependent care flexible spending accounts. We provide a range of insurance products and employee assistance programs. Internationally, we also offer a variety of benefit plans customized to reflect local conditions.
We provide a range of insurance products and employee assistance programs. Internationally, we also offer 17 a variety of benefit plans customized to reflect local conditions.
We believe we have integrated the required operational processes into our solution to efficiently and to effectively support our buyers and sellers.
Operations Supporting large organizations that have a recurring need to sell surplus assets requires systematic processes to enhance the financial value and convenience received by our sellers. We believe we have integrated the required operational processes into our solution to efficiently and to effectively support our buyers and sellers.
Assets handled by reverse supply chain solutions generally consist of retail consumer returns, overstock products and idle goods or capital assets from both corporate and government sectors.
Liquidity Services estimates that at least $100 billion of these returns are moved through secondary markets, with the remaining volume returning to retailer shelves or being sold through discount retailers. Assets handled by reverse supply chain solutions generally consist of retail consumer returns, overstock products and idle goods or capital assets from both commercial and government sectors.
Our goal is to lead the industry in several distinct areas over the long term, which we expect will translate to sustained growth. We are investing significant resources in: • Our marketplace user experiences. • Our seller tools - optimizing the interface for key industry verticals. • Leveraging generative AI and other automation technologies to create efficiencies across the enterprise.
Our goal is to lead the industry in several distinct areas over the long term, which we expect will translate to sustained growth.
As our product offerings continue to broaden into new categories of surplus items, we expect to face additional competition from other online, mobile, and offline channels. 16 Our markets may become even more competitive as traditional and online liquidators and auctioneers continue to develop online and offline services for disposition, redeployment, and remarketing of surplus assets.
Our markets may become even more competitive as traditional and online liquidators and auctioneers continue to develop online and offline services for disposition, redeployment, and remarketing of surplus assets. In addition, manufacturers, retailers and government agencies may create their own websites to sell their own surplus assets and those of third parties.
In addition, manufacturers, retailers and government agencies may create their own websites to sell their own surplus assets and those of third parties. Competition may intensify as our competitors enter into business combinations or alliances and established companies in other market segments expand to become competitive with our business.
Competition may intensify as our competitors enter into business combinations or alliances and established companies in other market segments expand to become competitive with our business. In addition, new and enhanced technologies, including search, web and infrastructure computing services, artificial intelligence, digital content, and electronic devices, may increase our competition.
Liquidity Services was incorporated in Delaware in November 1999 as Liquidation.com, Inc. and commenced operations in early 2000. On November 1, 2021, our GovDeals segment acquired Bid4Assets, Inc. (Bid4Assets), a Maryland corporation based in Silver Spring, MD. Bid4Assets is a leading online marketplace focused on conducting real property auctions for government entities, including tax foreclosure sales and sheriff's sales.
See Note 4 – Sierra Acquisition for more information regarding this transaction. On November 1, 2021, our GovDeals segment acquired Bid4Assets, Inc. (Bid4Assets), a Maryland corporation based in Silver Spring, MD. Bid4Assets is a leading online marketplace focused on conducting foreclosed real estate auctions. See Note 3 - Bid4Assets Acquisition for more information regarding this transaction.
We use online search tools, specialized recruiting firms, employee referral programs, job postings in various media platforms, and university recruiting to identify and attract talented candidates. By doing so, we aim to leverage the variety of skills and perspectives inherent in a diverse workforce, improve our problem-solving abilities, and bring innovative solutions to a wider range of clients and customers.
By leveraging the variety of experiences, skills and perspectives inherent in a diverse workforce, we aim to improve our problem-solving abilities and bring innovative solutions to a wider range of clients and customers. Health and Well-Being We value the health and well-being of our employees and provide generous benefit options to our employees and their families.
Placing the assets on multiple sites enables the marketing organization to directly target unique buyer segments that resonate with an asset’s unique audience niche. Our data infrastructure and analytics continue to provide near real-time operational insights.
Our sellers benefit from the unique nature of our unified platform by having their assets available, simultaneously, on multiple marketplaces while guaranteeing the integrity of the cross-site auction bidding. Placing the assets on multiple sites enables the marketing organization to directly target unique buyer segments that resonate with an asset’s unique audience niche.
This segment uses multiple selling channels across our network of marketplaces and others to optimize the best combination of velocity, volume, and value. • CAG . The CAG reportable segment provides solutions to sellers and consists of marketplaces that enable commercial businesses to sell surplus assets.
This segment uses multiple selling channels across our network of marketplaces and others to optimize the best combination of velocity, volume, and value. This segment primarily conducts its business-to-business sales on its Liquidation.com marketplace and through Direct Sales, and direct-to-consumer sales on its AllSurplus Deals and Secondipity marketplaces and other third-party sales channels. 3 • CAG .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe currently 23 expend, and we may be required to expend, significant additional capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches. Our insurance coverage may be inadequate to compensate us for any related losses we incur.
Biggest changeThe actions and controls we and our third-party service providers have implemented and are implementing, may not be sufficient to protect our systems, information, or other property. We currently expend, and we may be required to expend in the future, significant additional capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches.
Service interruptions or system failures could negatively affect the demand for our services and our ability to grow our revenue. Any system interruptions that affect our websites or our transaction systems could impair the services we provide to our sellers and buyers.
Service interruptions or system failures could negatively affect the demand for our services and our ability to grow our revenue. Any system interruptions that affect our websites or our transaction systems could impair the services we provide to our buyers and sellers.
Any disruption to either the outsourced systems or the communication links between us and the outsourced supplier could negatively affect our ability to operate our websites or our transaction systems and could impair our ability to provide services to our sellers and buyers.
Any disruption to either the outsourced systems or the communication links between us and the outsourced supplier could negatively affect our ability to operate our websites or our transaction systems and could impair our ability to provide services to our buyers and sellers.
Factors that may, among others, affect our quarterly operating results include the following: • our ability to increase sales to existing buyers, attract and retain new buyers, and satisfy buyer demands; • our ability to retain and expand our base of sellers; • entry into, or the modification, termination, or expiration of, contracts; • the volume, size, timing, and completion rate of transactions in our marketplaces, including variability due to the timing of large, project-based activities; 24 • changes in the supply and demand for and the volume, price, mix, and quality of our supply of surplus assets, including vehicles and real estate; • introduction of new or enhanced websites, services, or product offerings by us or our competitors, which may affect our margins; • implementation costs of new contracts, particularly those requiring custom integrations and value-added services; • changes in our pricing policies or the pricing policies of our competitors; • changes in the conditions and economic prospects of the e-commerce industry or the economy generally, which could alter current or prospective buyers' and sellers' priorities; • the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; • fiscal policies or inaction at the U.S. federal government level that may lead to federal government shutdowns or negative impacts on the U.S. economy; • event-driven disruptions such as war, terrorism, armed hostilities, disease, and natural disasters; • changes in energy and commodities prices, including the timing and speed of recovery in energy sector macro conditions; • seasonal patterns in selling and purchasing activity; and • costs related to acquisitions of technology or equipment.
Factors that may, among others, affect our quarterly operating results include the following: • our ability to increase sales to existing buyers, attract and retain new buyers, and satisfy buyer demands; • our ability to retain and expand our base of sellers; • entry into, or the modification, termination, or expiration of, contracts; • the volume, size, timing, and completion rate of transactions in our marketplaces, including variability due to the timing of large, project-based activities; • changes in the supply and demand for and the volume, price, mix, and quality of our supply of surplus assets, including vehicles and real estate; • introduction of new or enhanced websites, services, or product offerings by us or our competitors, which may affect our margins; • implementation costs of new contracts, particularly those requiring custom integrations and value-added services; • changes in our pricing policies or the pricing policies of our competitors; • changes in the conditions and economic prospects of the e-commerce industry or the economy generally, which could alter current or prospective buyers' and sellers' priorities; • the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; • fiscal policies or inaction at the U.S. federal government level that may lead to federal government shutdowns or negative impacts on the U.S. economy; • event-driven disruptions such as war, terrorism, armed hostilities, disease, and natural disasters; • changes in energy and commodities prices, including the timing and speed of recovery in energy sector macro conditions; • seasonal patterns in selling and purchasing activity; and • costs related to acquisitions of technology or equipment.
In addition to the risks described elsewhere in this section, our international operations are subject to several risks, including: • local economic and political conditions, or civil unrest that may disrupt economic activity in affected countries; 26 • government regulation of e-commerce and other services, competition, and restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs), nationalization, and restrictions on foreign ownership; • restrictions on sales or distribution of certain assets or services and uncertainty regarding liability for assets and services, including uncertainty because of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the enforcement of intellectual property rights; • business licensing or certification requirements, such as for imports, exports, and web services; • limitations on the repatriation and investment of funds and foreign currency exchange restrictions; • shorter payable and longer receivable cycles and the resultant negative impact on cash flow; • laws and regulations regarding consumer and data protection, privacy, network security, encryption, payments, and restrictions on pricing or discounts; • lower levels of consumer spending and fewer opportunities for growth compared to the U.S.; • lower levels of credit card usage and increased payment risk; • different employee/employer relationships and the existence of works councils; • compliance with the U.S.
In addition to the risks described elsewhere in this section, our international operations are subject to several risks, including: • local economic and political conditions, or civil unrest that may disrupt economic activity in affected countries; • government regulation of e-commerce and other services, competition, and restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs), nationalization, and restrictions on foreign ownership; • restrictions on sales or distribution of certain assets or services and uncertainty regarding liability for assets and services, including uncertainty because of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the enforcement of intellectual property rights; • business licensing or certification requirements, such as for imports, exports, and web services; • limitations on the repatriation and investment of funds and foreign currency exchange restrictions; • shorter payable and longer receivable cycles and the resultant negative impact on cash flow; • laws and regulations regarding consumer and data protection, privacy, network security, encryption, payments, and restrictions on pricing or discounts; • lower levels of consumer spending and fewer opportunities for growth compared to the U.S.; 27 • lower levels of credit card usage and increased payment risk; • different employee/employer relationships and the existence of works councils; • compliance with the U.S.
In addition, our reputation or prospects may be significantly damaged by adverse publicity or negative information regarding us, whether or not true, that may be posted on social media, non-mainstream news services or other parts of the Internet, and this risk can be magnified by the speed and pervasiveness with 32 which information is disseminated through those channels.
In addition, our reputation or prospects may be significantly damaged by adverse publicity or negative information regarding us, whether or not true, that may be posted on social media, non-mainstream news services or other parts of the Internet, and this risk can be magnified by the speed and pervasiveness with which information is disseminated through those channels.
Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations and financial condition. Business and Operating Risks The success of our business depends on our ability to source a sufficient supply of assets from sellers to attract and retain active professional buyers, who in turn attract more sellers.
Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations and financial condition. Business and Operating Risks 19 The success of our business depends on our ability to source a sufficient supply of assets from sellers to attract and retain active professional buyers, who in turn attract more sellers.
Obtaining financing to fund such acquisitions will increase our costs, which will decrease any profits we receive from the sale of the acquired assets. As we grow our business, we may increase the assets we purchase directly from sellers, resulting in increased inventory levels and related risks, including increased risk of losses on the sale of the inventory acquired.
Obtaining financing to fund such acquisitions will increase our costs, which will decrease any profits we receive from the sale of the acquired assets. 24 As we grow our business, we may increase the assets we purchase directly from sellers, resulting in increased inventory levels and related risks, including increased risk of losses on the sale of the inventory acquired.
Our practices and policies to promote compliance with such laws and regulations may not be effective and violations of anti-corruption laws or regulations by our 30 employees or by intermediaries acting on our behalf may result in severe criminal or civil sanctions, disrupt our business, and adversely affect our reputation, business, and results of operations or financial condition.
Our practices and policies to promote compliance with such laws and regulations may not be effective and violations of anti-corruption laws or regulations by our employees or by intermediaries acting on our behalf may result in severe criminal or civil sanctions, disrupt our business, and adversely affect our reputation, business, and results of operations or financial condition.
Sometimes, our management must use judgment to select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet may cause us to report materially different results than would have been reported under a different alternative.
Sometimes, our management must use judgment to select the accounting policy or 33 method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet may cause us to report materially different results than would have been reported under a different alternative.
In addition, we may not adequately staff our network of warehouses during these peak periods. If we cannot staff warehouses adequately, we may not be able to process assets quickly enough which, in turn, could mean dissatisfaction of sellers or increased third-party storage costs and reduced profitability.
In addition, we may not or may be unable to adequately staff our network of warehouses during these peak periods. If we cannot staff warehouses adequately, we may not be able to process assets quickly enough which, in turn, could mean dissatisfaction of sellers or increased third-party storage costs and reduced profitability.
These provisions could discourage, delay or prevent a transaction involving a change in control of our Company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take other corporate actions you desire.
These provisions could discourage, delay or prevent a transaction involving a change in control of our Company. These provisions could also discourage proxy contests and may make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take other corporate actions you may desire.
For example, when the demand for used vehicles increases, the prices are 28 also likely to increase, making it more costly for potential buyers to find suitable replacements for their existing vehicles. As a result, potential buyers may retain their existing vehicles for longer periods of time, further decreasing supply.
For example, when the demand for used vehicles increases , the prices are also likely to increase, making it more costly for potential buyers to find suitable replacements for their existing vehicles. As a result, potential buyers may retain their existing vehicles for longer periods of time, further decreasing supply.
Laws adopted prior to the advent of the Internet may not contemplate or address the unique issues of the Internet and related technologies and it is not clear how they will apply. Current and future laws and regulations could increase our cost of doing business and/or decrease the demand for our services.
Current and future laws and regulations could increase our cost of doing business and/or decrease the demand for our services. Laws adopted prior to the advent of the Internet may not contemplate or address the unique issues of the Internet and related technologies and it is not clear how they may apply.
These laws generally prohibit companies and their intermediaries from making improper payments or providing anything of value to improperly influence foreign government officials to obtain or retain business or obtain an unfair advantage. Global enforcement of these laws has increased substantially in recent years.
These laws generally prohibit companies and their intermediaries from making 31 improper payments or providing anything of value to improperly influence foreign government officials to obtain or retain business or obtain an unfair advantage. Global enforcement of these laws has increased substantially in recent years.
Our operating results may fall below the expectations of market analysts and investors in some future periods. If this occurs, even temporarily, it could cause volatility in our stock price. Our stock price has been volatile, and your investment in our common stock could decline in value.
Our operating results may fall below the expectations of market analysts and investors in some future periods. If this occurs, even temporarily, it could cause volatility in our stock price. 25 Our stock price has been volatile, and your investment in our common stock could decline in value.
If adequate funds are not available or are not available on acceptable terms, our ability to enhance our services, fund strategic initiatives, respond to competitive pressures, take advantage of business opportunities, or grow our business would be limited, and we might need to restrict our operations and initiatives.
If adequate funds are not available or are 28 not available on acceptable terms, our ability to enhance our services, fund strategic initiatives, respond to competitive pressures, take advantage of business opportunities, or grow our business would be limited, and we might need to restrict our operations and initiatives.
Any claims related to our intellectual property or confusion related to our marketplaces could damage our reputation and negatively affect the growth of our business. 31 Assertions that we infringe on intellectual property rights of others could result in significant costs and substantially harm our business and operating results.
Any claims related to our intellectual property or confusion related to our marketplaces could damage our reputation and negatively affect the growth of our business. Assertions that we infringe on intellectual property rights of others could result in significant costs and substantially harm our business and operating results.
The general economic and capital market conditions in the United States and other parts of the world can deteriorate significantly, limiting access to capital and increasing the cost of capital. A large degree of economic uncertainty remains both domestically and abroad, which can adversely affect access to capital, and the cost of capital.
Additionally, the general economic and capital market conditions in the United States and other parts of the world can deteriorate significantly, limiting access to capital and increasing the cost of capital. A large degree of economic uncertainty remains both domestically and abroad, which can adversely affect access to capital, and the cost of capital.
We cannot be certain that our design for internal control over financial reporting, or any changes to be made, will enable management to determine that our internal controls are effective for any period.
We cannot be certain that our design for internal controls over financial reporting, or any changes to be made, will enable management to determine that our internal controls are effective for any period.
We use, among others, the following: Akamai, Algonomy, Amazon Web Services, Google, Postmark, HubSpot, Jenkins, LeaseQuery, Liferay, Microsoft Azure and M365, MuleSoft, MySQL, Oracle Fusion, and various Linux distributions, and we may use additional open-source software. Licenses to third-party software may not continue to be available on terms that are acceptable to us, or at all.
We use, among others, the following: [Akamai, Algonomy, Amazon Web Services, Google, Postmark, HubSpot, Jenkins, LeaseQuery, Liferay, Microsoft Azure and Microsoft 365, MuleSoft, MySQL, Oracle Fusion, and various Linux distributions, and we may use additional open-source software. Licenses to third-party software may not continue to be available on terms that are acceptable to us, or at all.
If Amazon stopped selling inventory to us on acceptable terms or adversely changed the mix and quantity of the inventory that they make available to us for purchase, we likely could not procure alternative inventory from other vendors in a timely and efficient manner and on acceptable terms, or at all, which could have a material adverse effect on our revenues and operating results.
If Amazon stopped selling inventory to us on acceptable terms or adversely changed the mix and quantity of the inventory that they make available to us for purchase, we likely could not procure alternative inventory from other vendors in a timely and efficient manner and on acceptable terms, or at all, which could have a material adverse effect on our revenue and operating results.
Royalty or licensing agreements, if required, may be unavailable on terms acceptable to us, or at all. Incurrence of any of these costs could negatively impact our operating results. General Risk Factors Failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business, operating results, and stock price.
Royalty or licensing agreements, if required, may be unavailable on terms acceptable to us, or at all. Incurring of any of these costs could negatively impact our operating results. General Risk Factors Failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business, operating results, and stock price.
These factors include our ability to: offer sellers liquid marketplaces for their assets; offer buyers desirable assets; develop and implement effective seller and buyer marketing strategies; comply with regulatory and corporate seller requirements affecting marketing and disposition of certain assets; efficiently catalog, handle, store, ship, and track delivery of assets; and achieve high levels of seller and buyer satisfaction.
These factors include our ability to: offer sellers liquid marketplaces for their assets; offer buyers desirable assets; develop and implement effective seller and buyer marketing strategies; comply with regulatory and commercial seller requirements affecting marketing and disposition of certain assets; efficiently catalog, handle, store, ship, and track delivery of assets; and achieve high levels of seller and buyer satisfaction.
Like many other e-commerce marketplaces, Apple’s recent upgrades to provide greater transparency as to Identifier for Advertisers (IDFA) has, with respect to some categories of assets, made it harder and more expensive for us to target customers with the interest in purchasing those categories of assets.
Like many other e-commerce marketplaces, Apple’s recent upgrades to provide greater transparency as to Identifier for Advertisers (IDFA) has, with respect to some categories of assets, made it harder and more expensive for us to target customers with an interest in purchasing those categories of assets.
Compliance with regulations regarding privacy, security, and protection of user and employee data, increased government or private enforcement, and changing public attitudes about data privacy, may increase the cost of growing our business and require us to expend significant capital and other 29 resources.
Compliance with regulations regarding privacy, security, and protection of user and employee data, increased government or private enforcement, and changing public attitudes about data privacy, may increase the cost of growing our business and require us to expend significant capital and other 30 resources.
If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our existing stockholders would be reduced, and these securities may have rights, preferences, 27 or privileges senior to those of our common stock.
If, alternatively, we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our existing stockholders would be reduced, and these securities may have rights, preferences, or privileges senior to those of our common stock.
How companies collect, process, use, store, share, or transmit personal and employee data is subject to increasing scrutiny by governments and the public, which could accelerate the adoption of additional legislation or regulation.
How companies collect, process, use, store, share, or transmit personal and employee data is subject to increasing scrutiny by governments and the public, which could accelerate the adoption of additional legislation or regulations.
We have recorded goodwill impairment charges in the past, and such charges materially affected our historical results of operations. For additional information, see Note 7 - Goodwill to the accompanying consolidated financial statements.
We have recorded goodwill impairment charges in the past, and such charges materially affected our historical results of operations. For additional information, see Note 8 - Goodwill to the accompanying consolidated financial statements.
We may incur additional costs to remedy the damages caused by these disruptions. 22 Our inability to use software licensed from third parties, open-source software, SAAS, and PAAS offerings under current license or contractual terms could interfere with our proprietary rights disrupt our business.
We may incur additional costs to remedy the damages caused by these disruptions. 22 Our inability to use software licensed from third parties, open-source software, SAAS, and PAAS offerings under current license or contractual terms could interfere with our proprietary rights thereby disrupting our business.
Recently completed initiatives, as well as other changes in our business (including initiatives to invest in information systems, transition particular functions to third-party providers, and acquire new businesses such as Bid4Assets) have necessitated, and will continue to necessitate, modifications to our internal controls.
Recently completed initiatives, as well as other changes in our business (including initiatives to invest in information systems, transition particular functions to third-party providers, and acquire new businesses such as Sierra Auction) have necessitated, and will continue to necessitate, modifications to our internal controls.
Effective patent, copyright, trademark, service mark, trade secret, and domain name protection are expensive to maintain and may require litigation to enforce. We have licensed in the past, and expect to license in the future, certain of our proprietary rights, such as trademarks or copyrighted material, to others.
We have no patents or registered copyrights. Effective patent, copyright, trademark, service mark, trade secret, and domain name protection are expensive to maintain and may require litigation to enforce. We have licensed in the past, and expect to license in the future, certain of our proprietary rights, such as trademarks or copyrighted material, to others.
Any changes in accounting policies or methods could reduce our net income, which reductions may be independent of changes in our operations. These reductions in reported net income could cause our stock price to decline. Damage to our reputation could harm our business.
Any changes in accounting policies or methods could reduce our net income, and such reductions may be independent of changes in our operations. These reductions in reported net income could cause our stock price to decline. Damage to our reputation could harm our business.
If we fail to respond to technological change or to adequately maintain, expand, upgrade, and develop our systems and infrastructure promptly, our ability to grow could be limited and our revenue could decrease. We may not realize the anticipated benefits from our recent initiatives.
If we fail to respond to technological change or to adequately maintain, expand, upgrade, and develop our systems and infrastructure promptly, our ability to grow and remain competitive could be limited and our revenue could decrease. We may not realize the anticipated benefits from our continuing initiatives.
We have multiple vendor contracts with Amazon.com, Inc., under which we acquire and then resell assets. $5.8 million and $8.1 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Inventory balances on our Consolidated Balance Sheets as of September 30, 2023, and 2022, respectively.
We have multiple vendor contracts with Amazon.com, Inc., under which we acquire and then resell assets. $12.2 million and $5.8 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Inventory balances on our Consolidated Balance Sheets as of September 30, 2024 and 2023, respectively.
We increasingly may compete in other countries with local competitors that have advantages we do not, such as a greater ability to operate within the local regulatory environment. In addition, we may face competition from certain of our retail clients and smaller actors.
We increasingly may compete in other geographies with local competitors that have advantages we do not, such as a greater ability to operate within the local regulatory and political environments. In addition, we may face competition from certain of our retail clients and smaller actors.
If we can obtain financing, the terms may be onerous and restrict our operations. Further, certain acquisitions may be subject to regulatory approval, which can be time-consuming and costly to obtain, and the terms of such regulatory approvals may impose limitations on our ongoing operations or require us to divest assets or lines of business.
Further, certain acquisitions may be subject to regulatory approval, which can be time-consuming and costly to obtain, and the terms of such regulatory approvals may impose limitations on our ongoing operations or require us to divest assets or lines of business.
Other factors that could cause fluctuation in our stock price may include: • actual or anticipated variations in quarterly operating results; • changes in financial estimates by us or by a securities analyst who covers our stock; • publication of research reports about our Company or industry; • conditions or trends in our industry; • stock market price and volume fluctuations of other publicly traded companies and, in particular, those whose business involves the Internet and e-commerce; • announcements by us or our competitors of significant contracts (or the amendment or loss of such contracts), acquisitions, commercial relationships, strategic partnerships, or divestitures; • announcements by us or our competitors of technological innovations, new services or service enhancements; • announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; • the passage of legislation or other regulatory developments that adversely affect us, our sellers or buyers, or our industry; • additions or departures of key personnel; • sales of our common stock, including sales of our common stock by our directors and officers or specific stockholders; and • general global economic and/or political conditions and slow or negative growth of related markets. 25 Volatility in the market price of shares may prevent investors from being able to sell their shares of common stock at prices they view as attractive.
Other factors that could cause fluctuation in our stock price may include: • actual or anticipated variations in quarterly operating results; • changes in financial estimates by us or by a securities analyst who covers our stock; • publication of research reports about our Company or industry; • conditions or trends in our industry; • stock market price and volume fluctuations of other publicly traded companies and, in particular, those whose business involves the Internet and e-commerce; • announcements by us or our competitors of significant contracts (or the amendment or loss of such contracts), acquisitions, commercial relationships, strategic partnerships, or divestitures; • announcements by us or our competitors of technological innovations, new services or service enhancements; • announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; • the passage of legislation or other regulatory developments that adversely affect us, our sellers or buyers, or our industry; • additions or departures of key personnel; • sales of our common stock, including sales of our common stock by our directors and officers or specific stockholders; and • general global economic and/or political conditions and slow or negative growth of related markets.
In addition, our systems and data centers may be vulnerable to damage from a variety of other sources, including: damage to, or failure of, our computer software or hardware, or our connections to, and outsourced service arrangements with, third parties; failure of, or defects in, the third-party systems, software, or equipment on which we rely to access our data centers and other systems; errors in the processing of data; computer viruses, malware, or software defects; physical or electronic break-ins, sabotage, distributed denial of service, or DDoS, penetration attacks, intentional acts of vandalism, and similar events; and telecommunications failures, power outages, pandemics, political unrest, malicious human acts, and natural disasters.
Our systems rely on the availably and scalability of the public cloud providers in which they are hosted. these systems may be vulnerable to damage from a variety of other sources, including: damage to, or failure of, our computer software or hardware, or our connections to, and outsourced service arrangements with, third parties; failure of, or defects in, the third-party systems, software, or equipment on which we rely to access our hosted systems and other systems; errors in the processing of data; computer viruses, malware, or software defects; physical or electronic break-ins, sabotage, distributed denial of service, or DDoS, penetration attacks, intentional acts of vandalism, and similar events; and telecommunications failures, power outages, pandemics, political unrest, malicious human acts, and natural disasters.
We use a combination of licensed and opensource software, software as a service (SAAS), and platform as a service (PAAS) offerings from multiple third parties.
We use a combination of licensed and open-source software, software as a service (SAAS), and platform as a service (PAAS) offerings from multiple third parties.
The success of any future growth strategy involving acquisitions will depend on our ability to identify, and the availability of, suitable acquisition targets. We may incur costs in connection with a potential acquisition but may ultimately be unable or unwilling to consummate the proposed transaction for various reasons.
We may continue to do so. The success of any future growth strategy involving acquisitions will depend on our ability to identify, and the availability of, suitable acquisition targets. We may incur costs, perhaps significant costs, in connection with evaluating a potential acquisition but may be unable or unwilling to consummate the proposed transaction for various reasons.
Legal and Regulatory Risks We face legal uncertainties relating to the Internet in general and to the e-commerce industry in particular and may become subject to costly government regulation. The laws and regulations related to the Internet and e-commerce are evolving.
Legal and Regulatory Risks 29 We face legal uncertainties relating to our technology systems and to the e-commerce industry in particular and may become subject to costly government regulation. The laws and regulations related to the Internet and e-commerce are evolving.
Any damage to our reputation could impair our ability to retain existing or attract new customers, investors and employees. We carry a significant amount of goodwill on our balance sheet. As of September 30, 2023, we had goodwill of $89.4 million.
Any damage to our reputation could impair our ability to retain existing or attract new customers, investors and employees. We carry a significant amount of goodwill on our balance sheet. As of September 30, 2024, we had goodwill of $97.8 million.
We have vendor contracts with Amazon.com, Inc. in our RSCG segment under which we acquire a significant portion of our purchased inventory, and if our relationship with Amazon is disrupted, there could be a material adverse effect on our revenues and operating results.
We have vendor contracts with Amazon.com, Inc. in our RSCG segment under which we acquire a significant portion of our purchased inventory, and a disruption in our relationship with Amazon could have a material adverse effect on our revenues and operating results.
The e-commerce industry is rapidly changing. If competitors introduce new assets and services using new technologies or if new industry standards and practices emerge, our existing online marketplaces and our proprietary technology and systems may become obsolete.
The e-commerce industry is rapidly changing. If competitors introduce new assets and services using new technologies, such as generative artificial intelligence (AI), or if new industry standards and practices emerge, our existing online marketplaces and our proprietary technology and systems may become obsolete.
If we cannot achieve these objectives in a cost-effective and timely manner, we may not realize the anticipated benefits of the acquisition, or it may take us longer to realize the benefits of the acquisition than we expect.
If, as a result of these or other integration risks, we cannot achieve our acquisition objectives in a cost-effective and timely manner, we may not realize the anticipated benefits of the acquisition, or it may take us longer to realize the benefits of the acquisition than we expect.
We compete with other retail and non-retail businesses for these employees and invest significant resources in training and motivating them. There is no assurance that we will be able to attract or retain highly qualified employees in the future, which could have a material adverse effect on our business, financial condition, and results of operations.
We compete with other retail and non-retail businesses for these employees and invest significant resources in training and motivating them. We may not be able to attract or retain highly qualified employees in the future, which could have a material adverse effect on our business, financial condition, and results of operations. We face intense competition.
We may also require additional funds if vendors and other third parties from whom we purchase inventory, other goods or services extend less favorable credit terms to us. Our business may not generate the cash needed to finance such requirements.
We may also require additional funds if vendors and other third parties from whom we purchase inventory, other goods or services extend less favorable credit terms to us. Our business may not generate the cash needed to finance such requirements. We currently maintain a Credit Agreement with Wells Fargo Bank, National Association (the Credit Agreement).
Although we have this existing line of credit facility with Wells Fargo NA from which we may draw funds, there may be situations in which we seek funding through other sources. Further, upon expiration of this line of credit facility, the borrowing amount, interest rates, or related terms may no longer be favorable to the Company.
Although we have this existing Credit Agreement from which we may draw funds, there may be situations in which we seek funding through other sources. Further, upon expiration of this line of credit facility, commercial terms for subsequent credit facilities (such as the borrowing amount, interest rates, or related terms) may no longer be favorable to the Company.
Item 1A. Ris k Factors. You should carefully consider the risks described below, together with all of the other information in this Annual Report on Form 10-K, including the consolidated financial statements and related notes, before making an investment decision regarding our common stock. If any of the following risks occur, our business, financial condition or operating results could suffer.
Item 1A. Ris k Factors. You should carefully consider the risks described below, together with all of the other information in this Annual Report on Form 10-K, including the consolidated financial statements and related notes thereto, before making an investment decision regarding our common stock.
As a result, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock. The risks and uncertainties described below are not the only significant risks we may face.
If any of the following risks occur, our business, financial condition or operating results could suffer. As a result, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock. The risks and uncertainties described below are not the only significant risks we may face.
If this competition continues to intensify, it may become progressively more difficult to attract enough buyers and sellers to our marketplaces to sustain growth without significant increases in resources. In some countries, we have competitors that may have a better understanding of local culture and commerce.
This heightened focus on e-commerce has increased the competition we face. If this competition continues to intensify, it may become progressively more difficult to attract enough buyers and sellers to our marketplaces to sustain growth without significant increases in resources. In some geographies, we have competitors that may have a better understanding of local culture, commerce, and market dynamics.
We expect that our recent initiatives will increase our efficiency and productivity, the functionality of our marketplaces, and our cross-selling opportunities, as well as decrease the cost of our systems infrastructure, all of which we expect will drive our scale and growth and have a positive effect on our business, competitive position, and results of operations over time.
We expect that our continuing initiatives to increase our efficiency and productivity, the functionality of our marketplaces, and our cross-selling opportunities, will drive our scale and growth and have a positive effect on our business, competitive position, and results of operations over time.
They may devote greater financial resources to marketing and promotional campaigns, secure better terms from sellers and vendors, adopt more aggressive pricing or inventory availability policies, and devote substantially more resources to technology and infrastructure than we do.
They may devote greater financial resources to marketing and promotional campaigns, secure better terms from sellers and vendors, adopt more aggressive pricing or inventory availability policies, or devote substantially more resources to technology and infrastructure than we do. Several of our competitors have upgraded aspects of their core information and marketing technology stacks.
In addition, the expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational, and technical resources, with no assurance our business will grow as a result.
In addition, the expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational, and technical resources, with no assurance our business will grow as a result. We may lack sufficient resources to continue to make the significant investments in information technology to compete with our competitors.
These threats pose a risk to the security of our systems and networks and the confidentiality, integrity, and availability of our data. It is possible that our IT systems and networks, or those managed by third parties such as cloud providers or suppliers that otherwise host confidential information, could have vulnerabilities, which could go unnoticed for a period of time.
In addition, it is possible that our IT systems and networks, or those managed by third parties such as cloud providers or suppliers that otherwise host confidential information, could have vulnerabilities, which could go unnoticed for a period of time.
We may not be able to compete successfully against competitors and our financial condition and results of operations may be adversely impacted and we may not be able to achieve long-term earnings growth targets. Our operating results depend on our websites, network infrastructure, and transaction processing systems, and our software runs on public clouds.
If our strategy to compete against our many competitors is not effective, we may lose market share and our financial condition, results of operations, and long-term earnings growth may be negatively affected. Our operating results depend on our websites, network infrastructure, and transaction processing systems, and our software runs on public clouds.
Worldwide financial crises have led to an increase in the overall volatility of the stock market. Increased volatility and other broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance.
Volatility in the global financial markets and other broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance.
Furthermore, a smaller competitor may achieve scale by means of competitive advantage over our company, resulting in their ability to directly compete with us for the same source of inventory that we currently acquire. If our strategy to compete against our many competitors is not effective, we may lose market share and our results of operations may be negatively affected.
Furthermore, a smaller competitor may achieve scale by means of competitive advantage over our company, resulting in their ability to directly compete with us for the same source of inventory that we currently acquire.
Our future success also depends on our ability to continue to attract, retain, and motivate highly skilled employees, particularly employees with technology, sales, marketing, operations, and administrative technical expertise. Competition for employees in our industry is intense. We have experienced occasional difficulty in attracting personnel to support the growth of our business, and we may experience similar difficulties.
Our future success also depends on our ability to continue to attract, retain, and motivate highly skilled employees, particularly employees with technology, sales, marketing, operations, and administrative technical expertise. Competition for employees in our industry is intense.
If we cannot effectively manage increased demand, or the increased flow of goods we typically experience during these times, it could adversely affect our revenue and our future growth.
As a result, we expect a disproportionate number of transactions on our marketplaces to occur at certain times during the year. If we cannot effectively manage increased demand, or the increased flow of goods we typically experience during these times, it could adversely affect our revenue and our future growth.
In addition, our bylaws provide that the Delaware Court of Chancery will be the exclusive forum for certain types of legal action (or, if the Court of Chancery does not have jurisdiction, another state court or a federal court within Delaware). This provision may make it more difficult for you and other stockholders to challenge certain corporate actions we take.
In addition, our bylaws provide that the Delaware Court of Chancery will be the exclusive forum for certain types of legal action (or, if the Court of Chancery does not have jurisdiction, another state court or a federal court within Delaware).
We continue to decommission non-scalable legacy IT platform technology with modular technology including key modules for unified management of sellers and buyers, property handling, transaction processing and finance functions across our entire Company.
The information technology and digital marketing improvements that are core to our strategy place a significant strain on our management, operational, financial and other resources. 20 We continue to decommission non-scalable legacy IT platform technology with modular technology including key modules for unified management of sellers and buyers, property handling, transaction processing and finance functions across our entire Company.
An interruption in the operations of our buyer and seller support service system or our warehouses could significantly harm our business and operating results. Our business depends, to a large degree, on the provision of effective support services to our buyers and sellers, and on effective warehouse operations (including leased commercial warehouse space).
Our business depends, to a large degree, on the provision of effective support services to our buyers and sellers, and on effective warehouse operations (including leased commercial warehouse space).
Some of our other current and potential competitors have longer operating histories, larger seller and buyer bases, greater brand recognition and greater financial, marketing, and other resources than we do.
Competitive pressures could affect our ability to attract and retain buyers and sellers, which could decrease our revenue and negatively affect our operating results. 21 Some of our current and potential competitors have longer operating histories, larger seller and buyer bases, greater brand recognition and greater financial, marketing, and other resources than we do.
Where due to local laws and regulations, maximizing returns, or effectively managing our operational cash flows, among other business influences, we may acquire inventory with one or more external partners.
To satisfy local laws and regulations, maximize returns, or effectively manage our operational cash flows, among other business factors, we may acquire inventory in partnership with one or more third parties.
Iterative information technology and digital marketing improvements require management time and resources to educate employees, redesign internal processes, and implement new ways of conducting business with our sellers and buyers.
We continue to expand our AllSurplus direct-to-consumer channel for returned and overstock inventory from retailers and manufacturers, which is referred to as AllSurplus Deals . Iterative information technology and digital marketing improvements require management time and resources to educate employees, redesign internal processes, and implement new ways of conducting business with our sellers and buyers.
We face intense competition. 21 Our businesses operate in intensely competitive markets. We have many competitors in different industries, including the online services market for auctioning or liquidating surplus assets and retail markets. Competitive pressures could affect our ability to attract and retain buyers and sellers, which could decrease our revenue and negatively affect our operating results.
Our businesses operate in intensely competitive markets. We have many competitors in different industries, including the online services market for auctioning or liquidating surplus assets and retail markets.
The integration process could cause the loss of key employees, buyers, sellers, or other vendors, increase our operating or other costs, decrease our profit margins, or disrupt our other businesses, each of which could impair our ability to achieve the anticipated benefits of the acquisition.
The integration process could cause the loss of key employees, buyers, sellers, or other vendors, increase our operating or other costs, decrease our profit margins, disrupt our other businesses, or divert management’s 26 attention and Company’s resources from our existing businesses.
In addition, if there is any perception that we cannot protect our users’ confidential information, we may lose the ability to retain existing, and attract new, sellers and buyers, and therefore our revenue could decline. Increased remote work has also increased the possible attack surfaces.
In addition, if there is any perception that we cannot protect our users’ confidential information, we may lose the ability to retain existing, and attract new, sellers and buyers, and therefore our revenue could decline. 23 Threats designed to gain unauthorized access to systems, networks and data, both ours and third parties with whom we work, are increasing in frequency and sophistication.
In addition, the dedication of resources to sustain and enhance our existing sites constrains the ability to undertake transformation initiatives focused on growth opportunities. The continuous improvement of our new aggregated marketplace initiative limits the resources we have available to devote to other initiatives or growth opportunities, or to invest in the maintenance of our internal systems.
In addition, the dedication of resources to sustain, secure, and enhance our existing sites constrains the ability to undertake transformation initiatives focused on growth opportunities.
We currently are the registered owners of several Internet domain names, including www.liquidation.com, www.govdeals.com, www.allsurplus.com, www.secondipity.com, www.go-dove.com, www.machinio.com, www.machineryhost.com, and www.bid4assets.com. We pursue the registration of our domain names in the U.S. and internationally. We have no patents or registered copyrights.
Despite these protections, a third party could copy or otherwise obtain and use our intellectual property without authorization or independently develop similar intellectual property. 32 We currently are the registered owners of several Internet domain names, including www.liquidation.com, www.govdeals.com, www.allsurplus.com, www.secondipity.com, www.machinio.com, www.machineryhost.com, and www.bid4assets.com. We pursue the registration of our domain names in the U.S. and internationally.
Acquired operations outside the U.S. may present unique challenges or increase our exposure to risks associated with foreign operations, including foreign currency risks and risks associated with local regulatory regimes.
Additionally, businesses that we acquire outside the U.S. may present unique challenges or increase our exposure to risks associated with foreign operations, including foreign currency risks and risks associated with local regulatory regimes. We have expanded our business in part through acquisitions such as that of Sierra Auction Management, Inc. (Sierra Auction) in January 2024.
Acquisitions could cause dilutive issuances of equity securities, the incurrence of debt, one-time write-offs of goodwill, and substantial amortization expenses of other intangible assets. We may not obtain any required acquisition financing on favorable terms, or at all, which could make it impossible or costlier to acquire other businesses.
We may not obtain any required acquisition financing on favorable terms, or at all, which could make it impossible or costlier to acquire other businesses. If we can obtain financing, the terms may be onerous and restrict our operations.
We rely on contractual restrictions and copyright and trade secret laws to protect our proprietary rights, know-how, information and technology. Despite these protections, a third party could copy or otherwise obtain and use our intellectual property without authorization or independently develop similar intellectual property.
We rely on contractual restrictions and copyright and trade secret laws to protect our proprietary rights, know-how, information and technology.
Our efforts to integrate acquired businesses will divert management's attention and resources from our other businesses. Any failure to timely and cost-effectively realize the anticipated benefits of the acquisition could have a material adverse effect on our revenues, expenses, and operating results.
Any failure to timely and cost-effectively realize the anticipated benefits of the acquisition could have a material adverse effect on our revenues, expenses, and operating results Acquisitions could cause dilutive issuances of equity securities, the incurrence of debt, one-time write-offs of goodwill, and substantial amortization expenses of other intangible assets.
Our AllSurplus marketplace is designed to provide our buyers with access to all the property available in our CAG and GovDeals marketplaces, provides a common account experience for sellers, and simplifies our operations. We expanded our AllSurplus marketplace to include an online, direct-to-consumer channel for returned and overstock inventory from retailers and manufacturers, which is referred to as AllSurplus Deals.
Our AllSurplus marketplace is designed to provide our buyers with access to all of the property listed directly on AllSurplus as well as the GovDeals marketplaces, This provides our sellers with a common account experience, and simplifies our operations.
In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources. The seasonality of our business places increased strain on our operations.
This type of litigation could result in substantial costs and divert our management's attention and resources. The seasonality of our business places increased strain on our operations. We experience seasonality in each portion of our business at various times during the year.
These laws and regulations relate to issues such as user privacy, freedom of expression, pricing, fraud, quality of assets and services, taxation, advertising, intellectual property rights, and information security.
There are numerous federal, state, local and international laws, regulations, rules, industry codes of conduct, policies and standards regarding data privacy and security, including user privacy, freedom of expression, pricing, fraud, quality of assets and services, taxation, advertising, intellectual property rights, and information security.
If we fail to identify, finance, and integrate acquisitions, our future operating results may be materially adversely affected. We have expanded our business in part through acquisitions such as the acquisition of Bid4Assets, Inc. in November 2021. We may continue to do so.
If we fail to identify, finance, and integrate acquisitions, our future operating results may be materially adversely affected. Our ability to successfully integrate the acquired businesses and operations with our existing businesses plays a significant role in realizing the anticipated benefits of any acquisitions.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company leases the following properties as of September 30, 2023: Purpose Location Segment Square Feet Lease Expiration Date Corporate Headquarters Bethesda, Maryland, USA Corporate & Other 4,027 January 31, 2029 Warehouse Atlanta, Georgia, USA GovDeals 47,636 May 31, 2024 Warehouse Brampton, Canada RSCG 53,621 August 31, 2025 Warehouse E.
Biggest changeThe Company leases the following properties as of September 30, 2024: Purpose Location Segment Square Feet Lease Expiration Date Corporate Headquarters Bethesda, Maryland, USA Corporate & Other 4,027 January 31, 2029 Warehouse Brownsburg, Indiana, USA RSCG 204,206 May 31, 2029 Warehouse Garland, Texas, USA RSCG 127,144 January 31, 2026 Warehouse Pittston, Pennsylvania, USA RSCG 108,536 January 7, 2027 Warehouse North Las Vegas, Nevada, USA RSCG 102,400 June 30, 2026 Warehouse Hebron, Kentucky, USA RSCG 101,614 July 31, 2025 Warehouse Phoenix, Arizona, USA RSCG 84,690 January 31, 2027 Warehouse Brampton, Canada RSCG 53,621 August 31, 2025 Warehouse Atlanta, Georgia, USA GovDeals 47,636 May 31, 2025 Warehouse Kenilworth, NJ, USA CAG 10,507 December 31, 2026 Warehouse E.
Brunswick, NJ, USA CAG 4,800 December 31, 2025 Warehouse Garland, Texas, USA RSCG 127,144 January 31, 2026 Warehouse Hebron, Kentucky, USA RSCG 101,614 July 31, 2025 Warehouse Kenilworth, NJ, USA CAG 10,507 December 31, 2026 Warehouse North Las Vegas, Nevada, USA RSCG 102,400 June 30, 2026 Warehouse Phoenix, Arizona, USA RSCG 84,690 January 31, 2027 Warehouse Pittston, Pennsylvania, USA RSCG 108,536 January 7, 2027 Warehouse Plainfield, Indiana, USA RSCG 187,704 April 30, 2024 Administrative Montgomery, Alabama, USA GovDeals 19,762 December 31, 2023 Administrative Plano, Texas USA Corporate & Other 2,280 November 30, 2025 In addition, we lease various administrative spaces in North America totaling 5,074 square feet, in Europe totaling 500 square feet, and in Asia totaling 3,747 square feet.
Brunswick, NJ, USA CAG 4,800 December 31, 2025 Lot Phoenix, Arizona USA GovDeals 10,760 January 31, 2029 Lot Tuscon, Arizona USA GovDeals 5,150 September 30, 2025 35 Administrative Plano, Texas USA Corporate & Other 2,280 November 30, 2025 In addition, we lease various administrative spaces in North America totaling 5,074 square feet, in Europe totaling 845 square feet, and in Asia totaling 3,976 square feet.
Removed
Item 2. Properties. As a remote-first organization, the Company continues to reduce or eliminate its leases of administrative spaces where practicable, including a 48% reduction to the size of the Company's Corporate Headquarters during the year ended September 30, 2023.
Added
Item 2. Properties. As a remote-first organization, the Company maintains a minimal amount of administrative spaces.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. From time to time, we may become involved in litigation relating to claims arising in the ordinary course of the business. Information regarding the Company's legal proceedings can be found in Note 15 - Legal Proceedings , of the accompanying Notes to the Consolidated Financial Statements. 33
Biggest changeItem 3. Legal Proceedings. From time to time, we may become involved in litigation relating to claims arising in the ordinary course of the business. Information regarding the Company's legal proceedings can be found in Note 16 - Legal Proceedings , of the accompanying Notes to the Consolidated Financial Statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn September 8, 2023, the Company's Board of Directors authorized a new stock repurchase plan of up to $15.2 million. As of September 30, 2023, the Company had $17.0 million of remaining authorization to repurchase shares through December 31, 2025. Item 6 . [Reserved] 36
Biggest changeAs of September 30, 2024, the Company had $7.6 million of remaining authorization to repurchase shares through December 31, 2025. On December 9, 2024, the Company's Board of Directors authorized the repurchase of up to an additional $10.0 million of the Company's outstanding shares of common stock through December 31, 2026. Item 6 . [Reserved] 39
All rights reserved. 35 Issuer Repurchases of Equity Securities The following table presents information about our repurchases of common stock that were made during the three months ended September 30, 2023 (in millions, except share and per share amounts): Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as a Part of a Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) July 1 to July 31, 2023 9 $ 15.53 9 $ 1.8 August 1 to August 31, 2023 490 18.64 — 1.8 September 1 to September 30, 2023 — — — 17.0 Total 499 9 (1) Separate from the share repurchase program, our stock incentive plans allow for participants to exercise stock options by surrendering shares of common stock equivalent in value to the exercise price due.
Stock Performance Graph 38 Issuer Repurchases of Equity Securities The following table presents information about our repurchases of common stock that were made during the three months ended September 30, 2024 (in millions, except share and per share amounts): Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as a Part of a Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (2) July 1 to July 31, 2024 — $ — — $ 7.6 August 1 to August 31, 2024 17,564 22.58 — 7.6 September 1 to September 30, 2024 — — — 7.6 Total 17,564 — (1) Separate from the share repurchase program, our stock incentive plans allow for participants to exercise stock options by surrendering shares of common stock equivalent in value to the exercise price due.
Holders As of November 13, 2023, there were approximately 10,345 beneficial holders of our common stock and 26 holders of record of our common stock. Dividends We have not paid any cash dividends on our common stock, and we have no present intention to do so.
Holders As of November 15, 2024, there were approximately 12,682 beneficial holders of our common stock and 25 holders of record of our common stock. 37 Dividends We have not paid any cash dividends on our common stock, and we have no present intention to do so.
Payment of cash dividends, if any, will be determined by our Board of Directors after consideration of our financial condition, operating results, current and anticipated cash needs and other relevant factors. Recent Sales of Unregistered Securities None. Stock Performance Graph *$100 invested on 9/30/18 in stock or index, including reinvestment of dividends. Fiscal year ending September 30.
Payment of cash dividends, if any, will be determined by our Board of Directors after consideration of our financial condition, operating results, current and anticipated cash needs and other relevant factors. Recent Sales of Unregistered Securities None.
During the three months ended September 30, 2023, participants surrendered 490 shares of common stock in the exercise of stock options. Any shares surrendered to the Company in this manner are not available for future grant.
During the three months ended September 30, 2024, participants surrendered 17,564 shares of common stock in the exercise of stock options. Any shares surrendered to the Company in this manner are not available for future grant. (2) On September 8, 2023, the Company's Board of Directors authorized a new stock repurchase plan of up to $15.2 million.
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Copyright© 2023 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2023 Russell Investment Group.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe believe adjusting for these acquisition related expenses is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year. • We believe adjusting for business realignment expense is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year, as these expenses are outside our ordinary course of business. • We believe isolating non-cash charges, such as amortization and depreciation, and other items, such as impairment costs incurred outside our ordinary course of business, provides additional information about our cost structure, and, over time, helps track our performance. • We believe Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA are important indicators of our operational strength and the performance of our business because they provide a link between profitability and operating cash flow. • We also believe that analysts and investors use Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA as supplemental measures to evaluate the overall operating performance of companies in our industry.
Biggest changeWe believe adjusting for these acquisition related expenses is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year. • We believe adjusting for litigation settlement expenses that are not expected to reoccur is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year. • We believe adjusting for business realignment expense is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year, as these expenses are outside our ordinary course of business. • We believe isolating other non-cash charges, such as impairment costs or other costs incurred outside our ordinary course of business, provides additional information about our cost structure, and, over time, helps track our performance. • We believe Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA are important indicators of our operational strength and the performance of our business because they provide a link between profitability and operating cash flow. • We also believe that analysts and investors use Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA as supplemental measures to evaluate the overall operating performance of companies in our industry. 50 Our management uses Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA: • as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis as they remove the impact of items not directly resulting from our core operations; • for planning purposes, including the preparation of our internal annual operating budget; • to allocate resources to enhance the financial performance of our business; • to evaluate the effectiveness of our operational strategies; and • to evaluate our capacity to fund capital expenditures and expand our business.
Segment direct profit as a percentage of total revenue remained relatively consistent between the periods. 43 Consolidated Results The following table sets forth, for the periods indicated, our operating results (dollars in thousands): Year Ended September 30, Change (in thousands) 2023 2022 $ % Purchase revenues $ 172,089 $ 151,271 $ 20,818 13.8 % Consignment and other fee revenues 142,373 128,779 13,594 10.6 % Total revenue 314,462 280,050 34,412 12.3 % Costs and expenses from operations: Cost of goods sold (excludes depreciation and amortization) 142,322 119,407 22,916 19.2 % Technology and operations 57,078 55,522 1,556 2.8 % Sales and marketing 49,443 43,224 6,219 14.4 % General and administrative 28,074 28,282 (208 ) (0.7 )% Depreciation and amortization 11,255 10,322 933 9.0 % Fair value adjustment of acquisition earn-outs — (24,500 ) 24,500 NM Other operating expenses, net 186 388 (202 ) (52.1 )% Total costs and expenses 288,358 232,645 55,713 23.9 % Income from operations 26,105 47,405 (21,300 ) (44.9 )% Interest and other income, net (2,912 ) (248 ) (2,664 ) NM Income before provision for income taxes 29,016 47,653 (18,636 ) (39.1 )% Provision for income taxes 8,039 7,329 710 9.7 % Net income $ 20,978 $ 40,324 $ (19,346 ) (48.0 )% NM = not meaningful Total revenues.
Segment direct profit as a percentage of total revenue remained relatively consistent between the periods. 48 Consolidated Results The following table sets forth, for the periods indicated, our operating results (dollars in thousands): Year Ended September 30, 2023 2022 $ Change % Change Purchase revenues $ 172,089 $ 151,271 $ 20,818 13.8 % Consignment and other fee revenues 142,373 128,779 13,594 10.6 % Total revenues 314,462 280,050 34,412 12.3 % Costs and expenses from operations: Cost of goods sold (excludes depreciation and amortization) 142,322 119,407 22,916 19.2 % Technology and operations 57,078 55,522 1,556 2.8 % Sales and marketing 49,443 43,224 6,219 14.4 % General and administrative 28,074 28,282 (208 ) (0.7 )% Depreciation and amortization 11,255 10,322 933 9.0 % Fair value adjustment of acquisition earn-outs — (24,500 ) 24,500 NM Other operating expenses, net 186 388 (202 ) (52.1 )% Total costs and expenses 288,358 232,645 55,713 23.9 % Income from operations 26,105 47,405 (21,300 ) (44.9 )% Interest and other income, net (2,912 ) (248 ) (2,664 ) NM Income before provision for income taxes 29,016 47,653 (18,636 ) (39.1 )% Provision for income taxes 8,039 7,329 710 9.7 % Net income $ 20,978 $ 40,324 $ (19,346 ) (48.0 )% NM = not meaningful Total revenues .
The amount of cash received and settled will be substantially higher than our take rate on such transactions, and the timing of auction events, cash collection period, and payment of settlements relative to period end dates can potentially drive substantial cash movements to the extent the timing of such activities cross fiscal periods.
The amount of cash received and settled will be substantially higher than our take-rate on such transactions, and the timing of auction events, cash collection period, and payment of settlements relative to period end dates can potentially drive substantial cash movements to the extent the timing of such activities cross fiscal periods.
Critical Accounting Policies and Estimates The Company's consolidated financial statements, included in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K with their accompanying notes, have been prepared in accordance with GAAP, which requires management of the Company to make assumptions, judgments and estimates that affect amounts reported in its consolidated financial statements.
Critical Accounting Policies and Estimates 43 The Company's consolidated financial statements, included in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K with their accompanying notes, have been prepared in accordance with GAAP, which requires management of the Company to make assumptions, judgments and estimates that affect amounts reported in its consolidated financial statements.
In addition, Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA: (a) do not represent net income (loss) or cash flows from operating activities as defined by GAAP; (b) are not necessarily indicative of cash available to fund our cash flow needs; and (c) should not be considered as alternatives to net income (loss), income (loss) from operations, cash provided by (used in) operating activities, or our other financial information as determined under GAAP.
In addition, Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA: (a) do not represent net income or cash flows from operating activities as defined by GAAP; (b) are not necessarily indicative of cash available to fund our cash flow needs; and (c) should not be considered as alternatives to net income, income from operations, cash provided by (used in) operating activities, or our other financial information as determined under GAAP.
These expenses are generally more fixed in nature than our other operating expenses and do not vary as significantly in response to the volume of merchandise sold through our marketplaces. 41 Depreciation and amortization. Depreciation and amortization consist of depreciation of property and equipment, amortization of internally developed software, and amortization of intangible assets. Fair value adjustment of acquisition earn-outs.
These expenses are generally more fixed in nature than our other operating expenses and do not vary as significantly in response to the volume of merchandise sold through our marketplaces. Depreciation and amortization. Depreciation and amortization consist of depreciation of property and equipment, amortization of internally developed software, and amortization of intangible assets. Fair value adjustment of acquisition earn-outs.
Provision (benefit) for income taxes increased $0.7 million to an expense of $8.0 million from an expense of $7.3 million due to the increase in state and deferred income taxes resulting from higher income in the current year compared to prior year, exclusive of the $24.5 million non-cash gain from the fair-market value adjustment of the Bid4Assets acquisition earn-out liability.
Provision for income taxes increased $0.7 million to an expense of $8.0 million from an expense of $7.3 million due to the increase in state and deferred income taxes resulting from higher income in the current year compared to prior year, exclusive of the $24.5 million non-cash gain from the fair-market value adjustment of the Bid4Assets acquisition earn-out liability.
New Accounting Pronouncements Information regarding our adoption of new accounting and reporting standards is discussed in Note 2 - Summary of Significant Accounting Policies , to the consolidated financial statements included in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K.
New Accounting Pronouncements Information regarding our adoption of new accounting and reporting standards is discussed in Note 2 - Summary of Significant Accounting Policies , to the consolidated financial statements included in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K. 54
Revenues Substantially all of our revenue is earned through the following transaction models: 38 Purchase model. Under our purchase transaction model, we recognize revenue within the Purchase revenues line item on the Consolidated Statements of Operations from the resale of inventory that we purchased from sellers. We consider these sellers to be our vendors.
Revenues Substantially all of our revenue is earned through the following transaction models: Purchase model. Under our purchase transaction model, we recognize revenue within the Purchase revenues line-item on the Consolidated Statements of Operations from the resale of inventory that we purchased from sellers. We consider these sellers to be our vendors.
CAG benefits from a global base of buyers and sellers enabling the sale and redeployment of assets wherever they’re most likely to generate the best value and highest use across the world. This segment primarily uses the AllSurplus and GovDeals marketplaces. 37 • Machinio .
CAG benefits from a global base of buyers and sellers enabling the sale and redeployment of assets wherever they’re most likely to generate the best value and highest use across the world. This segment primarily uses the AllSurplus and GovDeals marketplaces. • Machinio .
There have been no other significant changes to the working capital requirements for the Company. 50 Net cash used in investing activities was $11.4 million and $21.1 million for the years ended September 30, 2023, and 2022, respectively.
There have been no other significant changes to the working capital requirements for the Company. Net cash used in investing activities was $11.4 million and $21.1 million for the years ended September 30, 2023, and 2022, respectively.
The global financial markets have experienced volatility subsequent to the invasion of Ukraine by Russia in February 2022, a conflict which remains ongoing, as well as the recent conflict in and adjacent to Israel.
The global financial markets have experienced volatility subsequent to the invasion of Ukraine by Russia in February 2022, a conflict which remains ongoing, as well as the ongoing conflict in and adjacent to Israel.
Fair value adjustment of acquisition earn-outs consists of the change in fair value of earn-out consideration following a business combination. Other operating expenses, net. Other operating expenses, net includes impairment of long-lived and other assets, impacts of lease terminations, as well as business realignment expenses, including those associated with restructuring initiatives and the exit of certain business operations.
Fair value adjustment of acquisition earn-outs consists of the change in fair value of earn-out consideration following a business combination. Other operating expenses, net. Other operating expenses, net includes acquisition-related costs, impairment of long-lived and other assets, impacts of lease terminations, as well as business realignment expenses, including those associated with restructuring initiatives and the exit of certain business operations.
As of September 30, 2023, the Company was in full compliance with the terms and conditions of the Credit Agreement. Working Capital Management Most of our sales are recorded subsequent to receipt of payment authorization, utilizing credit cards, wire transfers, and PayPal, an Internet-based payment system, as methods of payments.
As of September 30, 2024, the Company was in full compliance with the terms and conditions of the Credit Agreement. Working Capital Management Most of our sales are recorded subsequent to receipt of payment authorization, utilizing credit cards, wire transfers, and PayPal, an Internet-based payment system, as methods of payments.
Components of Revenue and Expenses Revenue. Refer to the discussion in the Our revenue section above, and to Note 2 - Summary of Significant Accounting Policies to the Company's consolidated financial statements in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K for discussion of the Company's related accounting policies. Cost of goods sold.
Refer to the discussion in the Our revenue section above, and to Note 2 - Summary of Significant Accounting Policies to the Company's consolidated financial statements in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K for discussion of the Company's related accounting policies. Cost of goods sold.
Machinio also offers the Machinio System service that provides equipment sellers with a suite of online marketing tools that includes website hosting, email marketing, and inventory management, to support and enable equipment sellers’ online business. Macroeconomic Conditions Supply chain challenges and shifting consumer sentiment .
Machinio also offers the Machinio System service that provides equipment sellers with a suite of software tools that includes website hosting, email marketing, and inventory management, to support and enable equipment sellers’ online business. Macroeconomic Conditions Supply chain challenges and consumer sentiment .
The result of this cycle is a continuous flow of goods that becomes increasingly valuable as more participants join the platforms, thereby creating positive network effects that benefit sellers, buyers, and shareholders. During the past three fiscal years, we have conducted over 2.6 million online transactions generating $3.2 billion in gross merchandise volume or GMV.
The result of this cycle is a continuous flow of goods that becomes increasingly valuable as more participants join the platforms, thereby creating positive network effects that benefit sellers, buyers, and shareholders. During the past three fiscal years, we have conducted over 2.9 million online transactions generating $3.7 billion in gross merchandise volume or GMV.
In addition, if we become aware of registered buyers that are no longer in business, we remove them from our database. As of September 30, 2023, 2022, and 2021, we had 5.1 million, 4.9 million, and 4.0 million, registered buyers, respectively. None of our buyers represented more than 10% of our revenue during the year ended September 30, 2023.
In addition, if we become aware of registered buyers that are no longer in business, we remove them from our database. As of September 30, 2024, 2023, and 2022, we had 5.5 million, 5.1 million, and 4.9 million, registered buyers, respectively. None of our buyers represented more than 10% of our revenue during the year ended September 30, 2024.
The GovDeals reportable segment provides solutions that enable government entities including city, county, state and federal agencies located in the United States and Canada and related commercial businesses to sell surplus property and real estate assets through our GovDeals and Bid4Assets marketplaces (see Note 3 - Bid4Assets Acquisition ). • RSCG .
The GovDeals reportable segment provides solutions that enable government entities including city, county, state and federal agencies located in the United States and Canada and related commercial businesses to sell surplus property and real estate assets through our GovDeals, Bid4Assets and Sierra marketplaces; see Note 3 - Bid4Assets Acquisition and Note 4 - Sierra Acquisition , respectively. • RSCG .
As a marketplace operator, the GMV, revenues and costs of revenues that result from our primarily auction-based sales may be influenced by macroeconomic factors, including but not limited to inflation, whose impacts may vary across each of our individual asset classes. International armed conflicts .
As a marketplace operator, the GMV, revenues and costs of revenues that result from our primarily auction-based sales may be influenced by macroeconomic factors, including but not limited to inflation, the impacts of which may vary across each of our individual asset classes. International armed and geopolitical conflicts .
GMV also provides a means to evaluate the effectiveness of investments that we have made and continue to make, including in the areas of buyer and seller support, value-added services, product development, sales and marketing, and operations. Our GMV for the year ended September 30, 2023, was $1.203 billion. Total registered buyers.
GMV also provides a means to evaluate the effectiveness of investments that we have made and continue to make, including in the areas of buyer and seller support, value-added services, product development, sales and marketing, and operations. Our GMV for the year ended September 30, 2024, was $1.4 billion. Total registered buyers.
For the year ended September 30, 2023, the Company's total revenues directly associated with Russia, Ukraine, and Israel were not material to our consolidated financial results. We will continue monitoring these armed conflicts around the world and any potential future impacts on our business.
For the years ended September 30, 2024 and 2023, the Company's total revenues directly associated with Russia, Ukraine, and Israel were not material to our consolidated financial results. We will continue monitoring these armed and geopolitical conflicts around the world and any potential future impacts on our business.
While purchase model transactions account for less than 20% of our total GMV, the cost of inventory for purchase model transactions is the most significant component of our consolidated Costs of goods sold. $5.8 million and $8.1 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Inventory balances on our Consolidated Balance Sheets as of September 30, 2023 and 2022, respectively.
While purchase model transactions account for less than 20% of our total GMV, the cost of inventory for purchase model transactions is the most significant component of our consolidated Costs of goods sold. $12.2 million and $5.8 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Inventory balances on our Consolidated Balance Sheets as of September 30, 2024 and 2023, respectively.
Interest and other income, net increased $2.7 million, due to the effect of rising interest rates on our cash equivalent and short-term investment holdings. 44 Provision (benefit) for income taxes .
Interest and other income, net increased $2.7 million, due to the effect of rising interest rates on our cash equivalent and short-term investment holdings. 49 Provision for income taxes .
In addition, we measure total auction participants on a periodic basis to evaluate the activity level of our base of registered buyers and to measure the performance of our marketing and promotional efforts. During the years ended September 30, 2023, 2022, and 2021, 3.3 million, 3.1 million, and 2.3 million participants participated in auctions on our marketplaces, respectively. Completed transactions.
In addition, we measure total auction participants on a periodic basis to evaluate the activity level of our base of registered buyers and to measure the performance of our marketing and promotional efforts. During the years ended September 30, 2024, 2023, and 2022, 4.0 million, 3.3 million, and 3.1 million participants participated in auctions on our marketplaces, respectively. Completed transactions.
Rising inflation in both the U.S. and internationally has weighed on the global economy, increasing prices for energy, shipping, and labor, among other areas of the macroeconomic environment. These events have caused a rise in borrowing costs as well, partly driven by actions taken by central banks to curb rising inflation.
Inflation in both the U.S. and internationally has weighed on the global economy, increasing prices for energy, shipping, and labor, among other areas of the macroeconomic environment. These events have caused a rise in borrowing costs as well, partly driven by actions taken by central banks to curb rising inflation, which has impacted buyer qualification and transaction timelines.
Other fee revenues accounted for 7.5%, 7.6%, and 7.2% of our total revenues for the years ended September 30, 2023, 2022, and 2021, respectively Our Vendor Agreements Commercial agreements. We have multiple vendor contracts with Amazon.com, Inc. under which we acquire and sell commercial merchandise.
Other fee revenues accounted for 7.3%, 7.5%, and 7.6% of our total revenues for the years ended September 30, 2024, 2023, and 2022, respectively 42 Our Vendor Agreements Commercial agreements. We have multiple vendor contracts with Amazon.com, Inc. under which we acquire and sell commercial merchandise.
However, all of the GMV associated with the purchase model transaction is generally able to be recognized as revenue, causing purchase revenues to account for 54.7%, 54.0%, and 56.8% of our total revenues for the years ended September 30, 2023, 2022, and 2021, respectively.
However, all of the GMV associated with the purchase model transaction is generally able to be recognized as revenue, causing purchase revenues to account for 57.7%, 54.7%, and 54.0% of our total revenues for the years ended September 30, 2024, 2023, and 2022, respectively.
We believe adjusting for this stock-based compensation expense is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year. • The authoritative guidance related to business combinations requires the initial recognition of contingent consideration at fair value with subsequent changes in fair value recorded through the Consolidated Statements of Operations and disallows the capitalization of transaction costs.
We believe adjusting for this stock-based compensation expense is useful to investors when evaluating the operating performance of our business on a consistent basis from year to year. • The authoritative guidance related to business combinations requires the initial recognition of contingent consideration at fair value based upon information known or knowable as of the acquisition date, with subsequent changes in fair value recorded through the Consolidated Statements of Operations and disallows the capitalization of transaction costs.
The Machinio reportable segment operates a global search engine platform for listing used equipment for sale in the construction, machine tool, transportation, printing and agriculture sectors.
The Machinio reportable segment operates a global search engine platform for listing equipment for sale in the construction, machine tool, processing, transportation, printing, agriculture and laboratory/medical sectors.
We intend to indefinitely reinvest the earnings of our foreign subsidiaries outside the United States. As a result, we did not record a provision for deferred U.S. tax expense on the $10.6 million of undistributed foreign earnings as of September 30, 2023.
We intend to indefinitely reinvest the earnings of our foreign subsidiaries outside the United States. As a result, we did not record a provision for deferred U.S. tax expense on the $9.8 million of undistributed foreign earnings as of September 30, 2024.
Most of our transactions are conducted under the consignment model, which represented 85.8%, 86.3%, and 83.6% of our consolidated GMV for the years ended September 30, 2023, 2022, and 2021, respectively; however, only the consignment fee, representing a small portion of the consignment GMV, is recognized as revenue, causing consignment revenues to account for 37.7%, 38.4%, and 36.0% of our total revenues for the years ended September 30, 2023, 2022, and 2021, respectively.
Most of our transactions are conducted under the consignment model, which represented 85.1%, 85.8%, and 86.3% of our consolidated GMV for the years ended September 30, 2024, 2023, and 2022, respectively; however, only the consignment fee, representing a small portion of the consignment GMV, is recognized as revenue, causing consignment revenues to account for 34.9%, 37.7%, and 38.4% of our total revenues for the years ended September 30, 2024, 2023, and 2022, respectively.
Purchase model transactions are a smaller proportion of our consolidated GMV, representing 14.2%, 13.7%, and 16.4% of our consolidated GMV for the years ended September 30, 2023, 2022, and 2021, respectively.
Purchase model transactions are a smaller proportion of our consolidated GMV, representing 14.9%, 14.2%, and 13.7% of our consolidated GMV for the years ended September 30, 2024, 2023, and 2022, respectively.
The Russia-Ukraine conflict specifically resulted in numerous countries, including the United States, imposing significant new sanctions and export controls against Russia, Russian banks, and certain Russian individuals. These armed conflicts have further heightened global supply chain disruptions and impacted the international trade markets.
The Russia-Ukraine conflict specifically resulted in numerous countries, including the United States, imposing significant new sanctions and export controls against Russia, Russian banks, and certain Russian individuals. These sanctions and export controls and international responses to the ongoing conflict in and adjacent to Israel, have further heightened global supply chain disruptions and impacted the international trade markets.
The Company repurchased 408,211 shares for $5.4 million during the year ended September 30, 2022. On December 6, 2022, March 13, 2023 and September 8, 2023, the Company's Board of Directors authorized new stock repurchase plans of up to $8.4 million, $8.0 million and $15.2 million, respectively.
The Company repurchased 1,567,277 shares for $25.4 million during the year ended September 30, 2022. On December 6, 2022, March 13, 2023, and September 8, 2023, the Company's Board of Directors authorized new stock repurchase plans of up to $8.4 million, $8.0 million and $15.2 million, respectively.
Interest and other income, net . Interest and other income, net consists of interest income on interest-bearing checking accounts, money market funds, the prior promissory note issued to JTC, interest and unused commitment fees in connection with the Company's Credit Agreement, the components of net periodic pension (benefit) other than the service component, and impacts of foreign currency fluctuations.
Interest and other income, net . Interest and other income, net consists of interest income on interest-bearing checking accounts, money market funds, interest and unused commitment fees in connection with the Company's Credit Agreement, the components of net periodic pension cost (benefit) other than the service component and impacts of foreign currency fluctuations. Income taxes.
Because our marketplaces and support systems require frequent upgrades and enhancements to maintain viability, we have determined that the useful life for certain internally developed software is less than one year. As a result, we expense those costs as incurred.
Because our marketplaces and support systems require frequent upgrades and enhancements to maintain viability, we have determined that the useful life for certain internally developed software is less than one year.
The Company's effective tax was 27.7% for the twelve months ended September 30, 2023. The 2023 effective tax rate differed from the statutory federal rate of 21.0% primarily as a result of the impact of foreign, state, and local income taxes and permanent adjustments. Year Ended September 30, 2022 Compared to Year Ended September 30, 2021 Segment Results GovDeals .
The 2024 effective tax rate differed from the statutory federal rate of 21.0% primarily as a result of the impact of foreign, state, and local income taxes and permanent adjustments. Year Ended September 30, 2023 Compared to Year Ended September 30, 2022 Segment Results GovDeals .
Industry Trends We believe there are several industry trends positively impacting the long-term growth of our business including: • the increase in volume of returned merchandise handled both online and in stores as online and omni-channel retail grow as a percentage of overall retail sales; • the increase in government regulations and the need for corporations to have sustainability solutions with verifiable recycling and remarketing of surplus assets; • the increase in outsourcing surplus disposition and end-of-life assets by corporations and government entities as they focus on reducing costs, improving transparency, compliance and working capital, and increasingly prefer service providers with proven track records, innovative scalable solutions, and the ability to make a strategic impact in the reverse supply chain; • an increase in buyer demand for surplus merchandise as consumers trade down by purchasing less expensive goods and seek greater value from their purchases, which could impact our long term growth; • the increase in demand from sellers and buyers to transact in a low touch, online solution as compared to live, in-person auctions or public sale events; and • in the long-term we expect innovation in the retail supply chain will increase the pace of product obsolescence and, therefore, increase the supply of surplus assets.
Industry Trends We believe there are several industry trends positively impacting the long-term growth of our business including: • the increase in volume of returned merchandise handled both online and in stores as online and omni-channel retail grow as a percentage of overall retail sales; • the increase in government regulations and the need for corporations to have sustainability solutions with verifiable recycling and remarketing of surplus assets; • the increase in outsourcing surplus disposition and end-of-life assets by corporations and government entities as they focus on reducing costs, improving transparency, compliance and working capital, and increasingly prefer service providers with proven track records, innovative scalable solutions and the ability to make a strategic impact in the reverse supply chain; 41 • an increase in buyer demand for surplus merchandise as consumers aspire to make more environmentally conscious decisions, while also seeking greater value through purchasing less expensive goods, both of which could impact our long-term growth; • the increase in demand from sellers and buyers to transact in an online solution ensuring assets are sold for fair market value; and • in the long-term we expect innovation in the retail supply chain will increase the pace of product obsolescence and, therefore, increase the supply of surplus assets.
During the years ended September 30, 2023, 2022, and 2021, we completed 925,000, 933,000 and 703,000 transactions, respectively.
During the years ended September 30, 2024, 2023, and 2022, we completed 1,081,000, 925,000 and 933,000 transactions, respectively.
Our business delivers value to shareholders by unleashing the intrinsic value of surplus through our online marketplace platforms. These platforms ignite and enable a self-reinforcing cycle of value creation where buyers and sellers attract one another in greater numbers.
Our comprehensive solutions enable the transparent, efficient, sustainable recovery of value from excess items owned by business and government sellers. Our business delivers value to shareholders by unleashing the intrinsic value of surplus through our online marketplace platforms. These platforms ignite and enable a self-reinforcing cycle of value creation where buyers and sellers attract one another in greater numbers.
See Note 3 - Bid4Assets Acquisition for more information regarding this transaction. Operating Segments The Company has four reportable segments under which we conduct business: GovDeals, Capital Assets Group (CAG), Retail Supply Chain Group (RSCG), and Machinio. Further information and operating results of our reportable segments can be found in Note 16 - Segment Information . • GovDeals .
Reportable Segments The Company has four operating and reportable segments under which we conduct business: GovDeals, Retail Supply Chain Group (RSCG), Capital Assets Group (CAG), and Machinio. Further information and operating results of our reportable segments can be found in Note 17 - Segment Information . • GovDeals .
Refer to Note 2 - S ummary of Significant Accounting Policies to the Company's consolidated financial statements for further details on these accounting policies. 40 We consider the following accounting estimates to be critical: valuation of goodwill (Note 7), and income taxes (Note 10).
We consider the following accounting policies to be critical: revenue recognition, business combinations, valuation of goodwill and intangible assets, and income taxes. Refer to Note 2 - S ummary of Significant Accounting Policies to the Company's consolidated financial statements for further details on these accounting policies.
Total consolidated revenue increased $22.5 million, or 8.7%. Refer to the discussion of Segment Results above for discussion of the decrease in revenue. Cost of goods sold (excludes depreciation and amortization) .
Total consolidated revenue increased $48.9 million, or 15.5%. Refer to the discussion of Segment Results above for discussion of the increase in revenue. Cost of goods sold (excludes depreciation and amortization).
We generated GMV of $1.203 billion and revenue of $314.5 million through multiple sources, including transaction fees from sellers and buyers, proceeds from the sale of products we purchased from sellers, and value-added service charges during the year ended September 30, 2023. Our GMV has grown at a compound annual growth rate of 13.9% since 2018.
We generated GMV of $1.4 billion and revenue of $363.3 million through multiple sources, including transaction fees from sellers and buyers, proceeds from the sale of products we purchased from sellers, and value-added service charges during the year ended September 30, 2024. Over the prior 5 years, our GMV has grown at a compound annual growth rate of 16.4%.
Our working capital accounts are subject to natural variations depending on the rate of change of our transaction volumes, the timing of cash receipts and payments, and variations in our transaction volumes related to settlements between our buyers and sellers.
The settlements to the sellers for these sales will occur in the first quarter of fiscal 2025. 53 Our working capital accounts are subject to natural variations depending on the rate of change of our transaction volumes, the timing of cash receipts and payments, and variations in our transaction volumes related to settlements between our buyers and sellers.
The interest rate on borrowings under the Credit Agreement is a variable rate per annum equal to the Daily Simple Secured Overnight Financing Rate (SOFR) in effect plus a margin ranging from 1.25% to 1.75%. Interest is payable monthly. During the year ended September 30, 2023, the Company did not make any draws under the Credit Agreement.
The interest rate on borrowings under the Credit Agreement is a variable rate per annum equal to the Daily Simple Secured Overnight Financing Rate (SOFR) in effect plus a margin ranging from 1.25% to 1.75%. Interest is payable monthly.
Our actual results could vary materially from those indicated, implied, or suggested by these forward-looking statements as a result of many factors, including those discussed under "Risk Factors" and elsewhere in this Annual Report on Form 10-K. Overview About us. Liquidity Services, Inc.
Our actual results could vary materially from those indicated, implied, or suggested by these forward-looking statements as a result of many factors, including those discussed under "Risk Factors" and elsewhere in this Annual Report on Form 10-K. Overview About us. Liquidity Services is a leading global commerce company providing trusted online marketplace platforms that power the circular economy.
The core verticals in which CAG operates include industrial manufacturing, oil and gas, heavy equipment, biopharma, and electronics. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing.
The CAG reportable segment enables commercial businesses to sell surplus assets on our AllSurplus marketplace. The core verticals in which CAG operates include industrial manufacturing, oil and gas, heavy equipment, biopharma, and electronics. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing.
As a result of the increase in revenues, segment direct profit increased 19.9%, or $9.4 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods. RSCG .
As a result of the increase in revenues, Segment direct profit increased 17.2%, or $2.3 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the period.
Non-GAAP Financial 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 (loss) plus Interest and other expense (income), net excluding the non-service components of net periodic pension (benefit); Provision (benefit) for income taxes; and Depreciation and amortization.
Non-GAAP EBITDA is a supplemental non-GAAP financial measure and is equal to Net income plus Interest and other (income) expense, net excluding the non-service components of net periodic pension cost (benefit); Provision for income taxes; and Depreciation and amortization. Interest and other (income) expense, net, can include non-operating gains and losses, such as from foreign currency fluctuations.
As of September 30, 2023, we had no significant outstanding commitments for capital expenditures. 48 Our future capital requirements will depend on many factors including our rate of revenue growth, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the development and deployment of new marketplaces, the introduction of new value-added services and the costs to expand our network of warehouses.
Our future capital requirements will depend on many factors including our rate of revenue growth, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the development and deployment of new marketplaces, the introduction of new value-added services and the costs to expand our network of warehouses including our new lease for warehouse space in Brownsburg, Indiana which commenced during the year ended September 30, 2024.
GMV is the total sales value of all merchandise sold by us or our sellers through our marketplaces or by us through other channels during a given period of time. During the year ended September 30, 2023, the number of registered buyers grew from 4.9 million to 5.1 million.
GMV is the total sales value of all transactions for which we earned compensation upon their completion through our marketplaces or other channels during a given period of time. During the year ended September 30, 2024, the number of registered buyers grew from 5.1 million to 5.5 million.
Refer to these individually referenced notes and Note 2 - Summary of Significant Accounting Policies to the Company's consolidated financial statements for further details on these accounting estimates. The following discussion is a supplement to the disclosures referenced. Valuation of goodwill . Goodwill is allocated to our reporting units.
We consider the following accounting estimates to be critical: business combinations (Note 4), and income taxes (Note 11). Refer to these individually referenced notes and Note 2 - Summary of Significant Accounting Policies to the Company's consolidated financial statements for further details on these accounting estimates. The following discussion is a supplement to the disclosures referenced. Intangible assets .
As GovDeals real estate sales with settlement services increase through the integration with Bid4Assets, operating cash flow fluctuations from accounts payable and payables to sellers are expected to become more variable.
As RSCG's purchase volumes increase in fiscal 2025, operating cash flow fluctuations from Accounts payable and Inventory may increase. As GovDeals real estate sales with settlement services increase, operating cash flow fluctuations from Accounts payable and Payables to sellers may become more variable.
However, where we determine that the useful life of the internally developed software will be greater than one year, we capitalize development costs in accordance with ASC 350-40, Internal-use software. As such, we are capitalizing certain development costs associated with our marketplaces and support systems, as well as other software development activities.
As a result, we expense those costs as incurred. 44 However, where we determine that the useful life of the internally developed software will be greater than one year, we capitalize development costs in accordance with ASC 350-40, Internal-use software.
Year ended September 30, 2023 2022 2021 Net income $ 20,978 $ 40,324 $ 50,949 Interest and other (income) expense, net (1) (2,859 ) 126 (76 ) Provision (benefit) for income taxes 8,039 7,329 (23,370 ) Depreciation and amortization 11,255 10,322 6,969 Non-GAAP EBITDA $ 37,412 $ 58,101 $ 34,472 Stock compensation expense 8,191 8,482 6,947 Acquisition costs and impairment of goodwill and long-lived and other non-current assets (2) 252 473 1,464 Business realignment expenses (2,3) — 191 5 Fair value adjustments to acquisition earn-outs — (24,500 ) — Non-GAAP Adjusted EBITDA $ 45,855 $ 42,747 $ 42,888 (1) Interest and other (income) expense, net excludes non-services pension and other postretirement benefit expense.
Year ended September 30, 2024 2023 2022 Net income $ 19,991 $ 20,978 $ 40,324 Interest and other (income) expense, net (1) (4,048 ) (2,859 ) 126 Provision for income taxes 7,269 8,039 7,329 Depreciation and amortization 12,120 11,255 10,322 Non-GAAP EBITDA $ 35,332 $ 37,412 $ 58,101 Stock compensation expense 11,087 8,191 8,482 Acquisition-related costs and litigation settlement expense (2) 1,830 252 473 Business realignment expenses (3) 251 — 191 Fair value adjustments to acquisition earn-outs — — (24,500 ) Non-GAAP Adjusted EBITDA $ 48,500 $ 45,855 $ 42,747 1 Interest and other (income) expense, net excludes non-services pension and other postretirement expense (benefit). 2 Acquisition-related costs are included in Other operating expenses (income), net on the Consolidated Statements of Operations.
Results of Operations The following table presents reportable segment GMV, revenue, segment direct profit (which is calculated as total revenue less cost of goods sold (exclusive of depreciation and amortization)), and segment direct profit as a percentage of total revenue for the periods indicated ($ in thousands): Year Ended September 30, (dollars in thousands 2023 2022 2021 GovDeals: GMV $ 726,124 $ 720,323 $ 498,742 Total revenue $ 62,010 $ 59,352 $ 49,579 Segment direct profit $ 58,810 $ 56,408 $ 47,030 Segment direct profit as a percentage of total revenue 94.8 % 95.0 % 94.9 % RSCG: GMV $ 285,574 $ 236,236 $ 229,290 Total revenue $ 200,218 $ 166,100 $ 158,806 Segment direct profit $ 68,068 $ 63,704 $ 64,564 Segment direct profit as a percentage of total revenue 34.0 % 38.4 % 40.7 % CAG: GMV $ 191,333 $ 188,813 $ 158,736 Total revenue $ 38,476 $ 42,575 $ 39,645 Segment direct profit $ 32,215 $ 29,120 $ 29,324 Segment direct profit as a percentage of total revenue 83.7 % 68.4 % 74.0 % Machinio: GMV — — — Total revenue $ 13,821 $ 12,083 $ 9,559 Segment direct profit $ 13,110 $ 11,471 $ 8,992 Segment direct profit as a percentage of total revenue 94.9 % 94.9 % 94.1 % Consolidated: GMV $ 1,203,031 $ 1,145,372 $ 886,768 Total revenue $ 314,462 $ 280,050 $ 257,531 NM = not meaningful 42 Year Ended September 30, 2023 Compared to Year Ended September 30, 2022 Segment Results GovDeals .
During the years ended September 30, 2024, 2023 and 2022, the Company had an effective income tax rate of 26.7%, 27.7% and 15.4%, respectively, which included federal, state, and foreign income taxes. 45 Results of Operations The following table presents reportable segment GMV, revenue, segment direct profit (which is calculated as total revenue less cost of goods sold (exclusive of depreciation and amortization)), and segment direct profit as a percentage of total revenue for the periods indicated ($ in thousands): Year Ended September 30, (dollars in thousands 2024 2023 2022 GovDeals: GMV $ 836,288 $ 726,124 $ 720,323 Total revenue $ 76,557 $ 62,010 $ 59,352 Segment direct profit $ 71,727 $ 58,810 $ 56,408 Segment direct profit as a percentage of total revenue 93.7 % 94.8 % 95.0 % RSCG: GMV $ 320,683 $ 285,574 $ 236,236 Total revenue $ 233,003 $ 200,218 $ 166,100 Segment direct profit $ 66,873 $ 68,068 $ 63,704 Segment direct profit as a percentage of total revenue 28.7 % 34.0 % 38.4 % CAG: GMV $ 209,661 $ 191,333 $ 188,813 Total revenue $ 37,668 $ 38,476 $ 42,575 Segment direct profit $ 31,268 $ 32,215 $ 29,120 Segment direct profit as a percentage of total revenue 83.0 % 83.7 % 68.4 % Machinio: GMV — — — Total revenue $ 16,157 $ 13,821 $ 12,083 Segment direct profit $ 15,364 $ 13,110 $ 11,471 Segment direct profit as a percentage of total revenue 95.1 % 94.9 % 94.9 % Consolidated: GMV $ 1,366,632 $ 1,203,031 $ 1,145,372 Total revenue $ 363,318 $ 314,462 $ 280,050 NM = not meaningful Year Ended September 30, 2024 Compared to Year Ended September 30, 2023 Segment Results GovDeals .
Interest and other income, net increased $0.2 million, due to the effect of rising interest rates on our cash, cash equivalent and short-term investment holdings. 46 Provision (benefit) for income taxes .
Interest and other income, net increased $0.9 million, or 32.4%, due to higher balances held in cash equivalent and short-term investments and the effect of rising interest rates. 47 Provision for income taxes .
The Company may draw upon the Credit Agreement for general corporate purposes. Repayments of any borrowings under the Credit Agreement shall become available for redraw at any time by the Company.
No other changes, including regarding the borrowing terms or capacities, were made to the Credit Agreement as a result of the First Amendment or the Second Amendment. The Company may draw upon the Credit Agreement for general corporate purposes. Repayments of any borrowings under the Credit Agreement shall become available for redraw at any time by the Company.
On November 1, 2021, our GovDeals segment acquired Bid4Assets, Inc. (Bid4Assets), a Maryland corporation based in Silver Spring, MD. Bid4Assets is a leading online marketplace focused on conducting real property auctions for the government, including tax foreclosure sales and sheriff's sales. The results of Bid4Assets' operations are included within our GovDeals reportable segment.
On November 1, 2021, our GovDeals segment purchased all of the issued and outstanding shares of stock of Bid4Assets. Bid4Assets is a leading online marketplace focused on conducting real property auctions for the government, including tax foreclosure sales and sheriff's sales.
The Company repurchased 1,607,141 shares for $21.2 million during the year ended September 30, 2023. As of September 30, 2023, the Company had $17.0 million of remaining share repurchase authorization through December 31, 2025. Off-Balance Sheet Arrangements . We do not have any transactions, agreements or other contractual arrangements that could be considered material off-balance sheet arrangements.
The Company repurchased 1,607,141 shares for $21.2 million during the year ended September 30, 2023. As of September 30, 2023, the Company had $17.0 million of remaining share repurchase authorization through December 31, 2025. The Company repurchased 564,887 shares for $9.4 million during the year ended September 30, 2024.
Our vendor contracts with respect to sourcing or consigning merchandise for our RSCG segment generally reflect the concentration dynamics inherent to the retail industry. 39 Key Business Metrics Our management periodically reviews certain key business metrics for operational planning purposes and to evaluate the effectiveness of our operational strategies, allocation of resources, and our capacity to fund capital expenditures and expand our business.
Key Business Metrics Our management periodically reviews certain key business metrics for operational planning purposes and to evaluate the effectiveness of our operational strategies, allocation of resources, and our capacity to fund capital expenditures and expand our business. These key business metrics include: Gross merchandise volume (GMV).
In addition to seller commissions, we also collect buyer premiums. Other — fee revenue. We also earn non-consignment fee revenue from Machinio's subscription services, as well as other services including asset valuation, product handling, and storage fees. Non-consignment fee revenue is recorded within the Consignment and other fee revenues line item on the Consolidated Statements of Operations.
In addition to seller commissions, we also collect buyer premiums. Other — fee revenue. We also earn non-consignment fee revenue from Machinio's subscription services, auction listing service fees for foreclosed real estate at our GovDeals segment (payable regardless of whether or not an auction is completed), as well as other services including asset valuation, product handling, and storage fees.
Bid4Assets is a leading online marketplace focused on conducting real property auctions for the government, including tax foreclosure sales and sheriff's sales. Our investment through the acquisition of Bid4Assets will support continued growth in the GovDeals reportable segment, particularly in our real estate vertical.
Our investment through the acquisition of Bid4Assets will support continued growth in the GovDeals reportable segment, particularly in our real estate vertical.
During the year ended September 30, 2023, the Credit Agreement was amended to extend the maturity date by 12 months to March 31, 2025 (the First Amendment). No other changes, including with respect to the borrowing terms or capacities, were made to the Credit Agreement as a result of the First Amendment).
During the year ended September 30, 2023, the Credit Agreement was amended to extend the maturity date by 12 months to March 31, 2025 (the First Amendment). During the six months ended March 31, 2024, the Credit Agreement was amended to extend the maturity date by an additional 12 months to March 31, 2026 (the Second Amendment).
As of September 30, 2023, and September 30, 2022, $19.1 million and $20.3 million, respectively, of cash and cash equivalents was held outside of the U.S. 49 Other Uses of Capital Resources Bid4Assets, Inc. Acquisition. On November 1, 2021, our GovDeals segment purchased all of the issued and outstanding shares of stock of Bid4Assets.
As of September 30, 2024 and 2023, $25.7 million and $19.1 million, respectively, of cash and cash equivalents was held outside of the U.S. 52 Other Uses of Capital Resources Sierra Acquisition . On January 1, 2024, the Company acquired all the issued and outstanding equity securities associated with Sierra Auction Management, Inc.
We review GMV because it provides a measure of the volume of goods being sold in our marketplaces and thus the activity of those marketplaces.
GMV is the total sales value of all transactions for which we earned compensation upon their completion through our marketplaces or other channels during a given period of time. We review GMV because it provides a measure of the volume of goods being sold in our marketplaces and thus the activity of those marketplaces.
The $2.7 million decrease in cash used by financing activities was primarily driven by $5.7 million of lower common stock repurchases in the current year and a $1.1 million decrease in taxes paid associated with net settlement of stock compensation awards. These were offset by an earn-out payment of $3.5 million in connect with the Bid4Assets acquisition.
The $10.9 million decrease in cash used in financing activities was primarily driven by an $11.8 million decrease in share repurchases, offset slightly by $1.0 million in higher taxes paid associated with the net settlement of stock compensation awards.
As of September 30, 2023, we had $110.3 million in cash and cash equivalents, which we believe is sufficient to meet the Company’s anticipated cash needs one year from issuance of these financial statements. Capital Expenditures Our capital expenditures consist primarily of capitalized software, warehouse equipment, computers and purchased software, office equipment, furniture and fixtures, and leasehold improvements.
As of September 30, 2024, we had $153.2 million in Cash and cash equivalents and $2.3 million in Short-term investments, which we believe is sufficient to meet the Company’s anticipated cash needs for at least one year from the date of these financial statements.
(3) Business realignment expense includes the amounts accounted for as exit costs under ASC 420, Exit or Disposal Cost Obligations, and the related impacts of business realignment actions subject to other accounting guidance.
For further information see Note 16 - Legal Proceedings, discussing the litigation settlement that occurred during the fiscal year ended September 30, 2024. 3 Business realignment expenses, included as a component of Other operating expenses (income), net on the Consolidated Statements of Operations, includes the amounts accounted for as exit costs under ASC 420, Exit or Disposal Cost Obligations, and the related impacts of business realignment actions subject to other accounting guidance.
We connect millions of buyers and thousands of sellers through our leading e-commerce auction marketplaces, search engines, asset management software, and related services. Our comprehensive solutions enable the transparent, efficient, sustainable recovery of value from excess items owned by business and government sellers.
We create a better future for organizations, individuals, and the planet by using technology to capture and unleash the intrinsic value of surplus. We connect millions of buyers and thousands of sellers through our leading e-commerce auction marketplaces, search engines, asset management software, and related services.
The timing and volume of such capital expenditures in the future will be affected by the addition of new sellers or buyers or expansion of existing seller or buyer relationships. We intend to fund those expenditures primarily from our existing cash balances and operating cash flows. Our capital expenditures for the year ended September 30, 2023, were $5.4 million.
We intend to fund those expenditures primarily from our existing cash balances and operating cash flows. Our capital expenditures for the year ended September 30, 2024, were $8.9 million. As of September 30, 2024, we had no significant outstanding commitments for capital expenditures.
The 2022 effective tax rate differed from the statutory federal rate of 21.0% primarily as a result of the impact of foreign, state, and local income taxes and permanent adjustments, the most significant of which was the exclusion of the $24.5 million non-cash from the fair-market value adjustment of the Bid4Assets acquisition earn-out liability.
The Company's effective tax was 27.7% for the twelve months ended September 30, 2023. The 2023 effective tax rate differed from the statutory federal rate of 21.0% primarily as a result of the impact of foreign, state, and local income taxes and permanent adjustments. Non-GAAP Financial Measures Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA.
Income taxes. Income taxes include current and deferred income tax expense for the U.S. federal, state, and foreign jurisdictions. During the years ended September 30, 2023, 2022 and 2021, the Company had an effective income tax rate of 27.7%, 15.4% and (84.7)%, respectively, which included federal, state, and foreign income taxes.
Income taxes include current and deferred income tax expense for the U.S. federal, state, and foreign jurisdictions.
This segment uses multiple selling channels across our network of marketplaces and others to optimize the best combination of velocity, volume, and value. • CAG . The CAG reportable segment provides solutions to sellers and consists of marketplaces that enable commercial businesses to sell surplus assets.
This segment uses multiple selling channels across our network of marketplaces and others to optimize the best combination of velocity, volume, and value. This segment primarily conducts its business-to-business sales on its Liquidation.com marketplace and through Direct Sales, and direct-to-consumer sales on its AllSurplus Deals and Secondipity marketplaces and other third-party sales channels. 40 • CAG .
Revenue from our RSCG reportable segment increased 4.6%, or $7.3 million due to a 3.0%, or $6.9 million, increase in GMV as it continues to diversify its client programs, sales channels, and its network of warehouses.
RSCG . Revenue from our RSCG reportable segment increased by $32.8 million, or 16.4%, due to a $35.1 million, or 12.3%, increase in GMV due to expansion in our purchase programs and sell-in place consignment solutions.
Changes in Cash Flows: 2022 Compared to 2021 Net cash provided by operating activities was $44.8 million and $65.4 million for the years ended September 30, 2022, and 2021, respectively.
We do not have any transactions, agreements or other contractual arrangements that could be considered material off-balance sheet arrangements. Changes in Cash Flows: 2024 Compared to 2023 Net cash provided by operating activities was $70.2 million and $47.0 million for the years ended September 30, 2024 and 2023, respectively.
Cost of goods sold increased $11.7 million, or 10.9%, which changed at a higher rate than Revenue primarily due to an increase in purchase transactions at CAG and RSCG, which also contained a more favorable mix of higher value returned products in the prior year. Technology and operations expenses .
Cost of goods sold increased $35.8 million, or 25.2%, which changed at a higher rate than Revenue primarily due to increased volumes from expanded purchase programs at our RSCG segment, driven by lower-touch general merchandise categories. Technology and operations expenses.
Provision (benefit) for income taxes increased $30.7 million to an expense of $7.3 million from a benefit of $23.4 million due to the release of $27.9 million of our valuation allowance on U.S. deferred tax assets during the fiscal year ended September 30, 2021, and $2.8 million state and foreign income taxes.
Provision for income taxes decreased $0.7 million to an expense of $7.3 million from an expense of $8.0 million due to the decrease in state and deferred income taxes resulting from lower income in the current year compared to prior year. The Company's effective tax rate was 26.7% for the twelve months ended September 30, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed3 unchanged
Biggest changeA hypothetical 100 basis point decline in interest rates would impact our pre-tax earnings by less than $1.0 million on an annualized basis. 51 As of September 30, 2023, we do not have any debt; however, should the Company draw on our Letter of Credit in the future, such draw would incur interest as determined by the Daily Simple Secured Overnight Financing Rate (SOFR) in effect plus a margin ranging from 1.25% to 1.75%.
Biggest changeAs of September 30, 2024, we do not have any debt; however, should the Company draw on our Letter of Credit in the future, such draw would incur interest as determined by the Daily Simple Secured Overnight Financing Rate (SOFR) in effect plus a margin ranging from 1.25% to 1.75%. Exchange rate sensitivity.
Exchange rate sensitivity. Because of the number of countries and currencies we operate in, movements in currency exchange rates may affect our results. We report our operating results and financial condition in U.S. dollars. Our U.S. operations earn revenues and incur expenses primarily in U.S. dollars.
Because of the number of countries and currencies we operate in, movements in currency exchange rates may affect our results. We report our operating results and financial condition in U.S. dollars. Our U.S. operations earn revenues and incur expenses primarily in U.S. dollars. Outside the United States, we generate revenues and incur expenses in both U.S. dollars and local currencies.
When we translate the results and net assets of our international operations into U.S. dollars for financial reporting purposes, movements in exchange rates will affect our reported results.
Our primary foreign exchange exposures include British Pounds, Canadian Dollars, Chinese Yuan, Euros, and Hong Kong Dollars. When we translate the results and net assets of our international operations into U.S. dollars for financial reporting purposes, movements in exchange rates will affect our reported results.
As of September 30, 2023, we hold cash and cash equivalents and short-term investments that are subject to varying interest rates based upon their maturities.
As of September 30, 2024, we hold cash and cash equivalents and short-term investments that are subject to varying interest rates based upon their maturities. A hypothetical 100 basis point decline in interest rates would impact our pre-tax earnings by less than $1.0 million on an annualized basis.
Removed
Outside the United States, we generate revenues and incur expenses in both U.S. dollars and local currencies. Our primary foreign exchange exposures include British Pounds, Canadian Dollars, Chinese Yuan, Euros, and Hong Kong Dollars.

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