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What changed in LIQUIDITY SERVICES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LIQUIDITY SERVICES INC's 2022 and 2023 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 2023 report.

+337 added−323 removedSource: 10-K (2023-12-07) vs 10-K (2022-12-08)

Top changes in LIQUIDITY SERVICES INC's 2023 10-K

337 paragraphs added · 323 removed · 260 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

92 edited+23 added−13 removed67 unchanged
Biggest changeIn certain circumstances, we inspect the merchandise and provide condition descriptions to improve quality and the financial recovery to the seller. ◦ 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 in order to add value to the asset and protect sellers' brand equity and distribution relationships. ◦ 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.
Biggest changeWe 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 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. • 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. 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.
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.
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.
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 and salvage assets.
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.
We also utilize temporary workers to augment staffing during peak business cycles and to fill certain open positions on a temporary basis. 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.
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.
Our efforts encompass the services necessary to prepare retail merchandise for a successful auction and include the following: ◦ 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. ◦ 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. ◦ 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. ◦ 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. 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.
In addition, manufacturers, retailers and government agencies may create their own websites to sell their own surplus and salvage 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.
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.
We operate and enable several marketplaces, including the following: • Our GovDeals marketplace provides self-directed service solutions in which sellers list their own assets, and enables local and state government entities including city, county and state agencies, located in the United States and Canada to sell surplus and salvage assets.
We operate and enable several marketplaces, including the following: • Our GovDeals marketplace provides self-directed service solutions in which sellers list their own assets, and enables local and state government entities including city, county and state agencies, located in the United States and Canada to sell surplus assets.
Traditional methods of surplus and salvage asset disposition include ad-hoc sales, negotiated direct sales, utilization of individual brokers or sales agents and live on-site auctions. We believe these solutions are generally highly fragmented, geographically dispersed and poorly integrated with supply chain operations.
Traditional methods of surplus asset disposition include ad-hoc sales, negotiated direct sales, utilization of individual brokers or sales agents and live on-site auctions. We believe these solutions are generally highly fragmented, geographically dispersed and poorly integrated with supply chain operations.
We compete with: • other e-commerce platforms; • auction, reverse auction, and direct sale websites; • government agencies that have created websites to sell surplus and salvage assets; and • traditional liquidators and fixed-site auctioneers. In our marketplaces for surplus and salvage assets, we compete with a variety of online, mobile, and offline channels.
We compete with: • other e-commerce platforms; • auction, reverse auction, and direct sale websites; • government agencies that have created websites to sell surplus assets; and • traditional liquidators and fixed-site auctioneers. In our marketplaces for surplus assets, we compete with a variety of online, mobile, and offline channels.
We also seek the optimal methods to maximize our sellers' net recovery using channel strategies and dedicated programs to deliver transparent, sustained value. Through our relationships with our sellers, we provide our buyers with convenient access to a substantial and continuous flow of surplus and salvage assets.
We also seek the optimal methods to maximize our sellers' net recovery using channel strategies and dedicated programs to deliver transparent, sustained value. Through our relationships with our sellers, we provide our buyers with convenient access to a substantial and continuous flow of surplus assets.
Our invoicing and reporting tools can be integrated with the seller's information system, providing a more efficient flow of data. ◦ Seller support and dispute resolution—we provide full support throughout the transaction process and dispute resolution for our buyers and sellers if needed. Buyer services.
Our invoicing and reporting tools can be integrated with the seller's information system, providing a more efficient flow of data. o Seller support and dispute resolution - we provide full support throughout the transaction process and dispute resolution for our buyers and sellers if needed. Buyer services.
Professional buyers seek surplus and salvage 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 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.
We seek to exceed our customers’ expectations every day. 16 • Continuous Improvement. We embrace change and are motivated to constantly improve our individual and collective performance. • Innovation. We continually seek out, develop, and implement new ideas to enhance our position as industry leader. • Mutual Trust and Accountability.
We seek to exceed our customers’ expectations every day.​ • Continuous Improvement . We embrace change and are motivated to constantly improve our individual and collective performance.​ • Innovation . We continually seek out, develop, and implement new ideas to enhance our position as industry leader. • Mutual Trust and Accountability .
The AllSurplus platform will continually evolve as we enhance our marketplace technology and add new seller and buyer services. • Our Liquidation.com marketplace enables corporations located in the United States and Canada to sell surplus and salvage consumer goods and retail capital assets.
The AllSurplus platform will continually evolve as we enhance our marketplace technology and add new seller and buyer services. • Our Liquidation.com marketplace enables corporations located in the United States and Canada to sell surplus consumer goods and retail capital assets.
Settlement and seller support services are designed for successful and reliable completion of transactions and include: ◦ Buyer qualification—we qualify buyers to ensure their compliance with government or seller mandated terms of sale, as well as to confirm their ability to complete a transaction. ◦ Collection and settlement—we collect payments on behalf of sellers prior to delivery of any merchandise and disburse the proceeds to the seller after the satisfaction of all conditions of a sale. ◦ Transaction tracking and reporting—we enable sellers and buyers to track and monitor the status of their transactions throughout the sales process.
Settlement and seller support services are designed for successful and reliable completion of transactions and include: o Buyer qualification - we qualify buyers to ensure their compliance with government or seller mandated terms of sale, as well as to confirm their ability to complete a transaction. o Collection and settlement - we collect payments on behalf of sellers prior to delivery of any merchandise and disburse the proceeds to the seller after the satisfaction of all conditions of a sale. o Transaction tracking - we enable sellers and buyers to track and monitor the status of their transactions throughout the sales process.
As our product offerings continue to broaden into new categories of surplus and salvage items, we expect to face additional competition from other online, mobile, and offline channels. 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 and salvage assets.
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.
This enables our solutions to become an important source for surplus and salvage assets for many of our professional buyers and end-users. 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.
This enables our solutions to become an important source for surplus assets for many of our professional buyers and end-users. 5 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.
In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content, and electronic devices, may increase our competition. The internet facilitates competitive entry and comparison shopping, and increased competition may reduce our sales and profits. Our Vendor Contracts with Amazon.com, Inc.
In addition, new and enhanced technologies, including search, web and infrastructure computing services, artificial intelligence, digital content, and electronic devices, may increase our competition. 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 connect millions of buyers and thousands of sellers through our leading 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 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.
As corporate and governmental entities are increasingly pressured to enhance efficiencies while also using fewer resources, they are looking to the liquidation of surplus and salvage capital assets as a source of funds. The management and remarketing of surplus assets traditionally has been an inefficient process.
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.
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 2.2 million online transactions generating $2.7 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 2.6 million online transactions generating $3.2 billion in gross merchandise volume or GMV.
Our solution eliminates the need for sellers and buyers to rely on the highly fragmented and geographically dispersed group of traditional liquidators. Instead, sellers and buyers access our global e-commerce marketplaces for their entire surplus and salvage asset needs.
Our solution eliminates the need for sellers and buyers to rely on the highly fragmented and geographically dispersed group of traditional liquidators and auctioneers. Instead, sellers and buyers access our global e-commerce marketplaces for their entire surplus asset needs.
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, 2022, we had approximately 3.1 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 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.
We provide our sellers access to a network of liquid marketplaces with over 4.9 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 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.
In the US, 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.
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.
The lead generation team uses several sources to research information relevant to our marketplaces, which sources include news aggregators, trade journals, industry specific web sites and business reports on a global basis. We organize our sellers into two distinct groups: full-service sellers, and self-directed sellers.
The lead generation team uses several sources to research information relevant to our marketplaces, which sources include news aggregators, trade journals, industry-specific websites and business reports on a global basis. We organize our sellers into two distinct groups: full-service sellers, and self-directed sellers.
Increase Volume We intend to grow the volume of transacted surplus on our marketplaces with flexible service offerings and pricing models to meet the needs of existing and new sellers.
Increased Volume We intend to grow the volume of transacted surplus on our marketplaces with flexible service offerings and pricing models to meet the needs of existing and new sellers.
We provide end-to-end management of returning products to vendors, charities, or channels outside of our leading marketplace solutions. ◦ Outbound fulfillment—we can arrange for domestic or international shipping for all merchandise, whether it is a small item or container load for export located in one of our distribution centers or at a seller's facility. • Settlement and seller support .
We provide end-to-end management of returning products to vendors, charities, or channels outside of our leading marketplace solutions. o Outbound fulfillment - we can arrange for domestic or international shipping for all merchandise, whether it is a small item or container load for export located in one of our warehouses or at a seller's facility. • Settlement and seller support .
There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements apply only as of the date of this Annual Report and are expressly qualified in their entirety by the cautionary statements included in this document.
There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements apply only as of the date of this Annual Report on Form 10-K and are expressly qualified in their entirety by the cautionary statements included in this document.
The information in any such publication, report, survey or article is not incorporated by reference in this Annual Report on Form 10-K. 18
The information in any such publication, report, survey, or article is not incorporated by reference in this Annual Report on Form 10-K. 19
To do so, we strive to make Liquidity Services a rewarding place to work and an environment where we promote diversity, equity, and inclusion. As of September 30, 2022, we had 735 employees worldwide, of which 91% were located in North America, 6% in the EMEA region, and 3% in the Asia-Pacific region.
To do so, we strive to make Liquidity Services a rewarding place to work and an environment where we promote diversity, equity, and inclusion. As of September 30, 2023, we had 716 employees worldwide, of which 91% were located in North America, 6% in the EMEA region, and 3% in the Asia-Pacific region.
Lastly, we are leveraging our Machinio segment to expand our capabilities with respect to technology-enabled advertising. This is a natural adjunct to our self-service and full-service solutions available in our marketplaces. 8 Expense Leverage We intend to improve operating expense leverage by controlling costs and through technology innovation that increases productivity.
Lastly, we are leveraging our Machinio segment to expand our capabilities with respect to technology-enabled advertising. This is a natural adjunct to the self-service and full-service solutions available in our marketplaces. Expense Leverage We intend to improve operating expense leverage by controlling costs coupled with technology innovation that increases productivity.
Forecasting inaccuracies, manufacturer overruns, canceled orders, evolving market preferences, discontinued product lines, merchandise packaging changes and seasonal fluctuations result in the growth of surplus assets. Organizations that manufacture, distribute, sell or use finished goods regularly dispose of excess inventory or returned merchandise. • Growth of e-commerce.
Forecasting inaccuracies, manufacturer overruns, canceled orders, evolving market preferences, realignments in response to macroeconomic events, discontinued product lines, merchandise packaging changes and seasonal fluctuations result in the growth of surplus assets. Organizations that manufacture, distribute, sell or use finished goods regularly dispose of excess inventory or returned merchandise. • Growth of e-commerce.
Our business strives to deliver value to shareholders by unleashing the intrinsic value of surplus through our 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 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.
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 CAGR of 5.6% from 2021 to 2028.
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.
Our distribution center 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 and salvage assets is competitive and growing rapidly.
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.
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, 2022, the number of registered buyers grew from 4.0 million to 4.9 million, or 22%.
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%.
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 and salvage 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.
We 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.
In addition, our shipping coordinators monitor the performance and service level of our network of carriers to help ensure speed and quality of service. Distribution center and field service operations Our distribution center and field service operations group perform selected pre-sale and post-sale value-added services at our distribution centers 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 group perform selected pre-sale and post-sale value-added services across our network of warehouses and at seller locations globally.
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.
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.
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 and third-party service 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 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.
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.
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.
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.
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.
We support the successful completion of each transaction on behalf of the buyer and seller. We provide a range of comprehensive reporting services to sellers upon the completion of a transaction.
We support the successful completion of each transaction on behalf of the buyer and seller. o Reporting - we provide a range of comprehensive reporting services to sellers throughout the sales process.
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.
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.
As of September 30, 2022, we had 4.9 million registered buyers in our marketplaces. We had access to millions of additional end-users through a range of external consumer marketplaces.
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.
The retail industry, as per an Appriss Retail and National Retail Federation Q4 2021 returns survey ( Customer Returns in the Retail Industry 2021 ), estimates that approximately $761 billion of merchandise is returned on an annual basis, representing almost 17% of total sales.
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 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.
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.
We generated GMV of $1,145 million and revenue of $280.1 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, 2022. Our GMV has grown at a compound annual growth rate of 12.5% since 2006.
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.
Our Solutions Our solutions include e-commerce marketplaces, self-directed auction listing tools, and value-added services. Our marketplaces and services provide sellers a comprehensive solution to quickly bring surplus assets to market and enhance the financial value realized from the sale of their surplus assets while providing buyers with confidence in the reliable flow of goods they purchase.
Our marketplaces and services provide sellers a comprehensive solution to quickly bring surplus assets to market and enhance the financial value realized from the sale of their surplus assets while providing buyers with confidence in the reliable flow of goods they purchase.
We offer value-added services to sellers in three areas: (1) merchandising and channel optimization; (2) logistics; and (3) settlement and seller support, including compliance services. • Merchandising and Channel Optimization.
We offer value-added services to sellers in three areas: (a) merchandising and channel optimization; (b) logistics; and (c) settlement and seller support, including compliance services. • Merchandising and Channel Optimization.
Item 1. Business. Overview Liquidity Services, Inc. (Liquidity Services, the Company) is a leading global commerce company providing trusted marketplace platforms that power the circular economy. We create a better future for organizations, individuals, and the planet by capturing and unleashing the intrinsic value of surplus.
Item 1. B usiness. Overview Liquidity Services, Inc. (Liquidity Services, the Company) is a leading global commerce company providing trusted online marketplace platforms that power the circular economy. We create a better future for organizations, individuals, and the planet by using technology to capture and unleash the intrinsic value of surplus.
These risks and other factors include but are not limited to, statements regarding the Company’s business outlook; anticipated economic and operational impacts of the COVID-19 global pandemic, especially if there is a rise in COVID-19 deaths that precipitates re-closures or extended restrictions on international travel; the migration of our retail marketplace to our core e-commerce technology platform; expected future effective tax rates; and trends and assumptions about future periods, the numerous factors that influence the supply of and demand for used equipment; economic and other conditions in local, regional and global sectors; and those listed in Part I, Item 1A ("Risk Factors") and in our other filings with the SEC from time to time.
These risks and other factors include but are not limited to, statements regarding the Company’s business outlook; anticipated economic and operational impacts as a result of global macro-trends and events; the migration of our retail marketplace to our core e-commerce technology platform; expected future effective tax rates; trends and assumptions about future periods, the numerous factors that influence the supply of and demand for used equipment; economic and other conditions in local, regional and global sectors; and those listed in Part I, Item 1A (Risk Factors) and in our other filings with the SEC from time to time.
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, 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 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.
In addition, we provide buyers 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, for the majority of transactions, or support buyer arranged transportation. • Secure settlement and buyer support—besides qualifying sellers, providing several electronic payment options and serving as a trusted market intermediary, we verify transaction completion, which enhances buyer confidence.
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.
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 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.
Traditional methods are inefficient for buyers due to the lack of: • global access to an available continuous supply of desired goods and assets; • efficient and inexpensive sourcing processes; • a professionally managed central marketplace with transparent, high quality services; • detailed information and product description for the offered goods; and • pricing transparency or ability to compare asset prices. 5 We believe professional buyers of surplus and salvage assets will increasingly use these business to business (B2B) platforms to identify and source goods available for immediate online purchase.
Traditional methods are inefficient for buyers due to the lack of: • global access to an available continuous supply of desired goods and assets; • efficient and inexpensive sourcing processes; • a professionally managed central marketplace with transparent, high-quality services; • detailed information and product description for the offered goods; and • pricing transparency or ability to compare asset prices.
Except as may be required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances occurring after the date of this Annual Report or to reflect the occurrence of unanticipated events. 17 Use of Market and Industry Data Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning our industry and the markets in which we operate, including our general expectations about our industry, market position, market opportunity and market size, is based on data from various sources including internal data and estimates as well as third party sources widely available to the public such as independent industry publications, government publications, reports by market research firms or other published independent sources and on our assumptions based on that data and other similar sources.
Use of Market and Industry Data Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning our industry and the markets in which we operate, including our general expectations about our industry, market position, market opportunity, and market size, is based on data from various sources including internal data and estimates as well as third-party sources widely available to the public such as independent industry publications, government publications, reports by market research firms, or other published independent sources and on our assumptions based on that data and other similar sources.
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. Estimates based on Bureau of Economic Analysis (BEA), U.S.
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. Estimates based on Bureau of Economic Analysis, U.S. Census, and World Bank reports, indicate that the global used equipment market is valued at approximately $350 billion.
Our collaborative environment values open communication, mutual respect, teamwork, and acknowledging our successes and failures. • Shared Success. Everyone in our organization acts as leaders with a shared sense of pride in our accomplishments. • Doing Well and Doing Good. By continuing to positively impact our clients and the environment, we make Liquidity Services a rewarding place to work.
Our collaborative environment values open communication, mutual respect, teamwork, and acknowledging our successes and failures. • Shared Success . Everyone in our organization acts as leaders with a shared sense of pride in our accomplishments. • Doing Well and Doing Good .
With our solution, we manage each step of the transaction and reverse supply chain for our sellers, reducing complexity while providing the ability to optimize the seller's net financial return in the sale of surplus goods and assets.
For many of these sellers, asset disposition is not a core business function to which they desire to dedicate internal resources. With our solution, we manage each step of the transaction and reverse supply chain for our sellers, reducing complexity while providing the ability to optimize the seller's net financial return in the sale of surplus goods and assets.
Our technology systems enable us to automate and streamline many of the manual processes associated with finding, evaluating, bidding on, paying for, and shipping surplus and salvage assets, retail overstocks and returns, and government owned real-estate. The technology and content behind our marketplaces and integrated value-added services were developed by us, providing us with flexibility and control over the marketplaces.
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.
Competitive Factors We have created liquid marketplaces for virtually any type, quantity or condition of surplus or salvage assets. The strengths of our business model include: Aggregation of supply and demand for surplus and salvage assets The strength of our business model rests on our ability to aggregate sellers and buyers through our marketplaces.
The strengths of our business model include: Aggregation of supply and demand for surplus assets The strength of our business model rests on our ability to aggregate sellers and buyers through our marketplaces.
AllSurplus Deals provides a convenient, local pickup solution connecting our retail supply directly to consumers in our target markets. In addition to our e-commerce marketplaces, we have dedicated sales teams supporting the needs of our established global buyer base that seeks items in larger quantities than are offered through our standard auction platforms.
In addition to our e-commerce marketplaces, we have dedicated sales teams supporting the needs of our established global buyer base that seek items in larger quantities than are offered through our standard auction platforms.
Integrated and comprehensive solution Our marketplaces provide sellers and buyers with a comprehensive solution for the online sale and purchase of surplus and salvage assets. We offer marketplaces with full-service and self-directed solutions.
Integrated and comprehensive solution Our marketplaces provide sellers and buyers with a comprehensive solution for the online sale and purchase of surplus assets. We offer marketplaces with full-service and self-directed solutions. Our self-directed solutions provide transaction settlement and marketing support while allowing sellers to undertake the work of photographing, cataloging, and building their auctions.
We make a difference by our words and actions in our company, our community, and our world. 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 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.
Sellers simply make goods available at their facilities or deliver them to our distribution centers and we deliver the sale proceeds, less our portion of such proceeds and/or our commissions or fees, after the sale is completed.
Sellers simply make goods available at their facilities or deliver them to our warehouses and we deliver the sale proceeds, less our portion of such proceeds and/or our commissions or fees, after the sale is completed. We have also expanded our capabilities to process individual items, pallets, less-than-truckload (LTL) and full-truckload (FTL) auctions.
Our sales team focuses on building long-term relationships with sellers that we believe will generate recurring transactions. They also leverage our years of experience and market data of completed transactions to identify which of our various services would be beneficial to each new or existing seller.
They also leverage our years of experience and market data of completed transactions to identify which of our various services would be beneficial to each new or existing seller.
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.
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.
In addition, we provide full reliable buyer support throughout the transaction process. 12 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.
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.
We have also expanded our capabilities to process individual items, pallets, less-than-truckload (LTL) and full-truckload (FTL) auctions. This provides our retail sellers with flexible solutions that can scale to solve their unique liquidity challenges while leveraging our various retail channels to maximize their recovery value.
This provides our retail sellers with flexible solutions that can scale to solve their unique liquidity challenges while leveraging our various retail channels to maximize their recovery value.
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 and salvage assets that may otherwise wind up in landfills.
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.
Our RSCG segment has multiple vendor contracts with Amazon.com, Inc., under which we acquire commercial merchandise to sell under the purchase model.
We have multiple vendor contracts with Amazon.com, Inc. under which we acquire and sell commercial merchandise.
We will continue to provide flexible pricing models that allow our sellers to use either a consignment or a Purchase-based model. Service Expansion We intend to grow our services with recurring revenue characteristics that leverage our technology platform, domain expertise, data, and marketplace channels.
Service Expansion We intend to grow our services with recurring revenue characteristics that leverage our technology platform, domain expertise, data, and marketplace channels.
Our sales team works with several auction partners globally for both purchase and consignment transaction model projects. 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. In addition, we have a lead generation team which tracks relevant media around the world.
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. We believe this self-reinforcing cycle results in greater transaction volume and enhances the value of our marketplaces.
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.
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 drives 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 on-going basis.
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.
This leading B2B marketplace and our related value-added services are designed to meet the needs of our sellers by selling their surplus assets to domestic and international buyers.
This leading B2B marketplace and our related value-added services are designed to meet the needs of our sellers by selling their surplus assets to domestic and international buyers. • Our Machinio marketplace provides a global search, advertising, and inventory management platform that connects dealers and sellers of used machinery and equipment in the construction, machine tool, transportation, printing, and agriculture sectors with interested buyers.
We have designed our websites and supporting infrastructure to be robust and to support new services and increased traffic. Our services leverage the scale and power of Amazon Web Services and Microsoft Azure Public Cloud platforms. Our applications are designed with resiliency and fault tolerance in mind.
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe full economic and social impact of the sanctions imposed on Russia (as well as possible future punitive measures that may be implemented), as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia, which could conceivably expand into the surrounding region, remains uncertain; however, both the conflict and related sanctions have resulted and could continue to result in disruptions to trade, commerce, pricing stability and/or supply chain continuity, in both Europe and globally, and has introduced significant uncertainty into global markets.
Biggest changeThese armed conflicts have resulted and could continue to result in, disruptions to trade, commerce, pricing stability, and/or supply chain continuity, in both Europe and globally, and has introduced significant uncertainty into the global markets.
These factors could impact the overall profitability of used vehicle sales on our marketplaces because although used vehicles are selling for higher prices, fewer vehicles are being sold. Climate change initiatives, including significant changes to engine emission standards applicable to certain types of assets, may also adversely affect the supply of, demand for and the market values of such assets.
These factors could impact the overall profitability of used vehicle sales on our marketplaces because although used vehicles are selling for higher prices, fewer vehicles are being sold. Climate change initiatives, including significant changes to engine emission standards applicable to certain types of assets, may also adversely affect the supply of, demand for, and market values of such assets.
If such an audit uncovers improper or illegal activities, we could be subject to civil and criminal penalties, administrative sanctions and could suffer serious harm to our reputation. Government and law enforcement agencies may also investigate our activities under contracts with commercial businesses and governmental entities.
If such an audit uncovers improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions and we could suffer serious harm to our reputation. Government and law enforcement agencies may also investigate our activities under contracts with commercial businesses and governmental entities.
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.; • 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; 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.
These provisions include: a staggered board of directors; a prohibition on actions by our stockholders by written consent; limitations on persons authorized to call a special meeting of stockholders; the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval; advance notice procedures required for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; and the requirement that board vacancies be filled by a majority of our directors then in office.
These provisions include: a staggered Board of Directors; a prohibition on actions by our stockholders by written consent; limitations on persons authorized to call a special meeting of stockholders; the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval; advance notice procedures required for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; and the requirement that Board of Director vacancies be filled by a majority of our directors then in office.
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.
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.
Negative publicity generated because of fraudulent conduct by third parties or failure to satisfactorily settle disputes related to transactions on our websites could damage our reputation, cause us to lose sellers and buyers and hurt our ability to grow our business. 29 Some provisions of our charter, bylaws and Delaware law inhibit potential acquisition bids.
Negative publicity generated because of fraudulent conduct by third parties or failure to satisfactorily settle disputes related to transactions on our websites could damage our reputation, cause us to lose sellers and buyers and hurt our ability to grow our business. Some provisions of our charter, bylaws, and Delaware law inhibit potential acquisition bids.
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.
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.
Improving the reliability and redundancy of our systems may be expensive, reduce our margins and may not be successful in preventing system failures. Our ability to provide services depends substantially on systems provided by third parties, over whom we have little control. We have occasionally experienced interruptions to our services due to system failures.
Improving the reliability and redundancy of our systems may be expensive or reduce our margins and may not be successful in preventing system failures. Our ability to provide services depends substantially on systems provided by third parties, over whom we have little control. We have occasionally experienced interruptions to our services due to system failures.
While our cybersecurity and compliance efforts seek to mitigate such risks, there can be no guarantee that the actions and controls we and our third-party service providers have implemented and are implementing, will be sufficient to protect our systems, information or other property.
While our cybersecurity, governance, and compliance efforts seek to mitigate such risks, there can be no guarantee that the actions and controls we and our third-party service providers have implemented and are implementing, will be sufficient to protect our systems, information, or other property.
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.
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.
Recent economic conditions have caused fluctuations in the supply, mix and market values of surplus and salvage assets available for sale, which has a direct impact on our revenues. In addition, price competition and the availability of surplus and salvage assets directly affect the supply of, demand for, and market value of such assets.
Recent economic conditions have caused fluctuations in the supply, mix, and market values of surplus assets available for sale, which has a direct impact on our revenues. In addition, price competition and the availability of surplus assets directly affect the supply of, demand for, and market value of such 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 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 29 resources.
In addition, we could suffer serious harm to our reputation if allegations of impropriety are made against us, whether or not true. 28 We may be subject to product liability claims if people or property are harmed by the assets we sell.
In addition, we could suffer serious harm to our reputation if allegations of impropriety are made against us, whether or not true. We may be subject to product liability claims if people or property are harmed by the assets we sell.
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.
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.
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 or privileges senior to those of our common stock.
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.
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. 31
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.
Our operations are subject to extensive anti-corruption laws and regulations. Due to the international scope of our operations, we are subject to the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-corruption laws of other countries.
Our operations are subject to extensive anti-corruption laws and regulations. Due to the international scope of our operations, we are subject to the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010 and similar anti-corruption laws of other countries.
Any disruption to our data centers, interruptions or failures of our systems or our ability to communicate with third party systems could negatively affect the demand for our services and our ability to grow our revenue. Many of our information technology systems consist of outsourced, cloud-based infrastructure, platform, and software-as-a-service solutions not under our direct management or control.
Any disruption to the third-party data centers we utilize, interruptions or failures of our systems or our ability to communicate with third-party systems could negatively affect the demand for our services and our ability to grow our revenue. Many of our information technology systems consist of outsourced, cloud-based infrastructure, platform, and software-as-a-service solutions not under our direct management or control.
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 catalogue, 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 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.
Our ability to increase our revenue and earn profits depends on whether we can successfully retain existing sellers, attract new sellers, expand the supply of assets available for sale on our e-commerce marketplaces and, at the same time, attract and retain active professional buyers to purchase the assets in the categories we sell.
Our ability to increase our revenue and earn profits depends on whether we can successfully retain existing sellers, attract new sellers, expand the supply of assets available for sale on our e-commerce marketplaces and, at the same time, attract and retain active qualified buyers to purchase the assets in the categories we sell.
Occasionally, in our CAG marketplace, we make very significant inventory acquisitions, such as the purchase of semi-conductor and oil and gas equipment and biopharma and metal-working machinery, for later resale on our energy and industrial marketplaces. We plan to continue to opportunistically make such acquisitions.
Occasionally, in our CAG segment, we make very significant inventory acquisitions, such as the purchase of semi-conductor and oil and gas equipment and biopharma and metal-working machinery, for later resale on our energy and industrial marketplaces. We plan to continue to opportunistically make such acquisitions.
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 face intense competition.
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.
Similarly, if our buyers and sellers fail to accept our new platform or our new unified process for handling transactions across our marketplaces, it could materially adversely affect our business and results of operations. 19 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.
Similarly, 20 if our buyers and sellers fail to accept our platform or our unified process for handling transactions across our marketplaces, it could materially adversely affect our business and results of operations. 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.
We have no control over any of the factors that affect the supply of, and demand for, surplus and salvage assets, and the circumstances that cause market values to fluctuate - including, among other things, economic uncertainty, global geopolitical climate, disruptions to credit and financial markets, lower commodity prices, and our buyers’ restricted access to capital - are beyond our control.
We have no control over any of the factors that affect the supply of, and demand for, surplus assets, and the circumstances that cause market values to fluctuate including, among other things, economic uncertainty, global geopolitical climate, disruptions to credit and financial markets, lower commodity prices, and our buyers’ restricted access to capital.
These operations could be harmed by several factors, including any material disruption or slowdown at our distribution centers resulting from labor disputes, changes in the terms of our underlying lease agreements, telecommunications failures, power or service outages, human error, terrorist attacks, natural disasters, government mandated business closures and shelter-in-place guidelines designed to contain the spread of epidemic or pandemic disease or other events.
These operations could be harmed by several factors, including any material disruption or slowdown at our network of warehouses resulting from labor disputes, changes in the terms of our underlying lease agreements, telecommunications failures, power or service outages, human error, terrorist attacks, natural disasters, government mandated business closures, and shelter-in-place guidelines designed to contain the spread of epidemic or pandemic disease or other events.
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.
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.
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. 30 General Business Risks 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. 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.
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 and Machinio) have and will 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 Bid4Assets) have necessitated, and will continue to necessitate, modifications to our internal controls.
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.
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.
Decreases in the supply of, demand for, or market values of surplus and salvage assets, could harm our business. Our revenues could decrease if there was significant erosion in the supply of, demand for, or market values of surplus and salvage assets, which could adversely affect our financial condition and results of operations.
Decreases in the supply of, demand for, or market values of surplus assets and real estate, could harm our business. Our revenues could decrease if there was significant erosion in the supply of, demand for, or market values of surplus assets, which could adversely affect our financial condition and results of operations.
Global economic conditions, including those from macro-trends, global events and the COVID-19 pandemic, may harm our business and results of operations. Our overall performance depends in part on worldwide economic conditions. Global financial developments, downturns and global health crises or pandemics may harm us, including due to disruptions or restrictions on our employees’ ability to work and travel.
Global economic conditions, including those from macro-trends and global events, may harm our business and results of operations. Our overall performance depends in part on worldwide economic conditions. Global financial developments, downturns, and global health crises or pandemics may harm us, including due to disruptions or restrictions on our employees’ ability to work and travel.
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 due to the COVID-19 pandemic 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. Increased remote work has also increased the possible attack surfaces.
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 multiple vendor contracts with Amazon.com, Inc., under which we acquire and then resell assets.
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.
These restrictions prohibit us from selling property to (1) persons or entities that appear on lists of restricted or prohibited parties maintained by the United States or other governments or (2) countries, regimes, or nationals that are the target of applicable economic sanctions or other embargoes.
These restrictions prohibit us from selling property to (a) persons or entities that appear on lists of restricted or prohibited parties maintained by the United States or other governments or (b) countries, regimes, or nationals that are the target of applicable economic sanctions or other embargoes.
Item 1A. Risk Factors. You should carefully consider the risks described below, together with all of the other information in this Annual Report, 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, 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.
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 and salvage assets; • 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; • event-driven disruptions such as war, terrorism, armed hostilities, disease and natural disasters; 23 • 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; 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.
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.
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.
For example, inflation rates, particularly in the United States, have increased recently to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs).
For example, inflation rates, particularly in the United States, continue to increase to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs).
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, 2022, we had goodwill of $88.9 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, 2023, we had goodwill of $89.4 million.
These potential scenarios could have a material advise effect on our business. Separately, any factors that reduce cross border trade or make such trade more difficult could harm our business. Increasing costs, such as increasing tariffs and trade wars between nations, may make international trade less profitable and adversely affect our global business.
Separately, any factors that reduce cross border trade or make such trade more difficult could harm our business. Increasing costs, such as increasing tariffs and trade wars between nations, may make international trade less profitable and adversely affect our global business.
The United States and other key international economies have been affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, outbreaks of COVID-19 and the resulting impact on business continuity and travel, supply chain disruptions, inflation and overall uncertainty with respect to the economy, including with respect to tariff and trade issues.
The United States and other key international economies have been affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity, and foreign exchange markets, bankruptcies, labor shortages, labor unrest, pandemics, natural disasters, supply chain disruptions, inflation, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues.
Licenses to third-party software may not continue to be available on terms that are acceptable to us, or at all. 21 Our inability to use third-party software or to enter into agreements on acceptable terms with providers of cloud-based solutions could cause disruptions to our business, or delays in developing future services or enhancements of existing services, which could impair our business.
Our inability to use third-party software or to enter into agreements on acceptable terms with providers of cloud-based solutions could cause disruptions to our business, or delays in developing future services or enhancements of existing services, which could impair our business.
Similarly, our future operating results may vary significantly from quarter to quarter due to many factors, including factors beyond our control. You should not rely on period-to-period comparisons of our operating results as an indication of our future performance.
Our prior operating results have fluctuated due to changes in our business and the e-commerce industry. Similarly, our future operating results may vary significantly from quarter to quarter due to many factors, including factors beyond our control. You should not rely on period-to-period comparisons of our operating results as an indication of our future performance.
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. We may incur additional costs to remedy the damages caused by these disruptions.
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.
We expect to continue to incur costs in complying with these laws and could be subject to fines or other penalties for any failure to comply with these laws.
In addition, certain states have laws or regulations that expressly apply to online auction services. We expect to continue to incur costs in complying with these laws and could be subject to fines or other penalties for any failure to comply with these laws.
If global economic conditions remain uncertain or deteriorate further, including as a result of the Russia-Ukraine conflict, COVID-19 or other disruptions, we could see a reduction in the ability of international buyers and sellers to conduct business due to travel restrictions impacting the ability of: sellers and their agents to travel to prepare assets for sale; buyers travelling to inspect assets; sellers and buyers completing international transactions requiring assets to cross export and import border control points; and the overall willingness of sellers and buyers to decommission capital assets and engage in cross-border transactions.
If global economic conditions remain uncertain or deteriorate further, particularly to the extent such conflicts escalate to involve additional countries, we could see potential scenarios having a material adverse effect on our business such as a reduction in the ability of international buyers and sellers to conduct business due to travel restrictions impacting the ability of: sellers and their agents to travel to prepare assets for sale; buyers travelling to inspect assets; sellers and buyers completing international transactions requiring assets to cross export and import border control points; and the overall willingness of sellers and buyers to decommission capital assets and engage in cross-border transactions.
Many states and other jurisdictions have regulations governing the conduct of traditional "auctions," the liability of traditional "auctioneers" in conducting auctions and handling property by "secondhand dealers", which may apply to online auction services. In addition, certain states have laws or regulations that expressly apply to online auction services.
Our auction business may be subject to a variety of additional costly government regulations. Many states and other jurisdictions have regulations governing the conduct of traditional "auctions," the liability of traditional "auctioneers" in conducting auctions and handling property by "secondhand dealers", which may apply to online auction 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 will apply.
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.
We currently 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.
We 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.
As a result, we expect a disproportionate amount 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.
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.
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. 24 If we fail to identify, finance and integrate acquisitions, our future operating results may be materially adversely affected.
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, the Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks. 26 Additionally, financial markets around the world experienced volatility following the invasion of Ukraine by Russia in February 2022, a conflict which continues to contribute to uncertainty and financial market volatility.
In addition, the Federal Reserve and other central banks have raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks.
Competitive pressures could affect our ability to attract and retain buyers and sellers, which could decrease our revenue and negatively affect our operating results. 20 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.
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.
Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting certain payments to government officials and other third parties; • laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes; and • geopolitical events, including war and terrorism. 25 If we expand internationally through joint ventures or strategic alliances, we will also face counterparty risk in addition to the risks described above.
Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting certain payments to government officials and other third parties; • laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes; and • geopolitical events, including war and terrorism.
This expansion of our AllSurplus marketplace capabilities places significant strain on our management, personnel, operations, systems, technical performance and financial resources and internal financial control and reporting function. 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.
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.
Our business depends, to a large degree, on the provision of effective support services to our buyers and sellers, and on effective distribution center operations (including leased commercial warehouse distribution space).
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 businesses operate in intensely competitive markets. We have many competitors in different industries, including the online services market for auctioning or liquidating surplus and salvage assets and retail markets.
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.
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. The success of any future growth strategy involving acquisitions will depend on our ability to identify, and the availability of, suitable acquisition candidates.
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.
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. Any such increase would require the use of additional working capital and any funds so used would not be available for other purposes.
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.
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. In addition, acquisitions involve numerous risks, including our ability to successfully integrate the acquired businesses and operations with our other businesses and realize the anticipated benefits of the acquisitions.
In addition, acquisitions involve numerous risks, including our ability to successfully integrate the acquired businesses and operations with our other businesses and realize the anticipated benefits of the acquisitions.
We use, among others, the following licensed or open-source software: Akamai, Algonomy, Amazon Web Services, Google, Heroku, HubSpot, Jenkins, LeaseQuery, Liferay, Microsoft, MuleSoft, MySQL, Oracle and Red Hat Enterprise Linux Software, and we may use additional open-source software.
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.
Our inability to use software licensed from third parties or our use of open-source software under license terms that interfere with our proprietary rights could disrupt our business. We use software licensed from third parties, including some open-source software that we use without charge.
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.
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.
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.
Although we do have an existing credit facility with Wells Fargo Bank, National Association from which we may draw funds, there may be situations in which we seek funding through other sources.
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.
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. 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.
Our quarterly operating results have fluctuated in the past and may do so in the future, which could cause volatility in our stock price. Our prior operating results have fluctuated due to changes in our business and the e-commerce industry.
Any such increase would require the use of additional working capital and any funds so used would not be available for other purposes. Our quarterly operating results have fluctuated in the past and may do so in the future, which could cause volatility in our stock price.
We may incur significant costs or be required to modify our business to comply with these requirements.
Such laws could become even more restrictive and cover a wider array of assets in the event of escalations of a conflict between China and Taiwan. We may incur significant costs or be required to modify our business to comply with these requirements.
Removed
Our AllSurplus marketplace launched during fiscal year 2020 and has continued to receive regular capability updates as we leverage customer feedback and data analytics to optimize the user experience.
Added
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.
Removed
The property we purchased under these contracts represented 55%, 61%, and 55% of cost of goods sold for the years ended September 30, 2022, 2021, and 2020, respectively.
Added
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.
Removed
Our insurance coverage may be inadequate to compensate us for any related losses we incur. 22 An interruption in the operations of our buyer and seller support service system or our warehouse distribution centers could significantly harm our business and operating results.
Added
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.
Removed
The risks described above are heightened in these acquisitions due to their size and, at times, the limited market for the assets we acquire. Obtaining financing to fund such acquisitions will increase our costs, which will decrease any profits we receive from the sale of the acquired assets.
Added
In these partnership arrangements, the Company works with one or more third parties to maximize the return on the assets being sold, while utilizing the competitive advantages of all partners involved. The risks described above are heightened in these inventory acquisition transactions due to their size and, at times, the limited market for the assets we acquire.
Removed
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. In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price.
Added
We experience seasonality in each portion of our business at various times during the year. As a result, we expect a disproportionate number of transactions on our marketplaces to occur at certain times during the year.
Removed
In addition, we may not adequately staff our distribution centers during these peak periods.
Added
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.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeBrunswick, 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, 2022 Warehouse Las Vegas, Nevada, USA RSCG 32,000 November 30, 2022 Warehouse Lithia Springs, Georgia, USA GovDeals 13,000 December 31, 2022 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 7,864 square feet and in Asia, 3,747 square feet.
Biggest changeBrunswick, 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.
Item 2. Properties. We lease the following properties as of September 30, 2022: Purpose Location Segment Square Feet Lease Expiration Date Corporate Headquarters Bethesda, Maryland, USA Corporate & Other 7,774 April 30, 2023 Warehouse Atlanta, Georgia, USA GovDeals 47,636 May 31, 2024 Warehouse Brampton, Canada RSCG 53,621 August 31, 2025 Warehouse E.
The 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.
Added
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.

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.
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

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn May 13, 2022, our Board of Directors authorized a new stock repurchase plan of up to $12 million of our outstanding shares of common stock through June 30, 2024 (the May 2022 Repurchase Plan). As of September 30, 2022, the Company had $6.6 million of remaining authorization to repurchase shares under the May 2022 Stock Repurchase Plan.
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
Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2022 Russell Investment Group.
Copyright© 2023 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2023 Russell Investment Group.
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. Stock Performance Graph _______________________________________________________________________________ *$100 invested on 9/30/17 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. Stock Performance Graph *$100 invested on 9/30/18 in stock or index, including reinvestment of dividends. Fiscal year ending September 30.
During the three months ended September 30, 2022, participants surrendered 19,161 shares of common stock in the exercise of stock options, respectively. Any shares surrendered to the Company in this manner are not available for future grant.
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.
Holders As of November 15, 2022, there were approximately 10,748 beneficial holders of our common stock and 26 holders of record of our common stock. 32 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 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.
All rights reserved. 33 Issuer Purchases of Equity Securities The following table presents information about our repurchases of common stock that were made during the three months ended September 30, 2022 (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, 2022 — $ — — $ 6.6 August 1 to August 31, 2022 19,161 19.76 — 6.6 September 1 to September 30, 2022 — — — 6.6 Total 19,161 — (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.
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.
Removed
On December 6, 2022, the Company's Board of Directors authorized the repurchase of up to an additional $8.4 million of the Company's outstanding shares of common stock through December 31, 2024.

Item 7. Management's Discussion & Analysis

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

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Biggest changeDuring the years ended September 30, 2022, 2021 and 2020, the Company had an effective income tax rate of 15.4%, (84.7)% and (26.9)%, respectively, which included federal, state and foreign income taxes. 39 Results of Operations The following table presents reportable segment GMV, revenue, segment gross profit (which is calculated as total revenue less cost of goods sold (exclusive of depreciation and amortization)), and segment gross profit as a percentage of total revenue for the periods indicated ($ in thousands): Year Ended September 30, 2022 2021 2020 GovDeals: GMV $ 720,323 $ 498,742 $ 325,993 Total revenue 59,352 49,579 32,806 Segment gross profit 56,408 47,030 30,721 Segment gross profit as a percentage of total revenue 95.0 % 94.9 % 93.6 % RSCG: GMV 236,236 229,290 181,473 Total revenue 166,100 158,806 136,491 Segment gross profit 63,704 64,564 49,727 Segment gross profit as a percentage of total revenue 38.4 % 40.7 % 36.4 % CAG: GMV 188,813 158,736 112,384 Total revenue 42,575 39,645 29,481 Segment gross profit 29,120 29,324 22,714 Segment gross profit as a percentage of total revenue 68.4 % 74.0 % 77.0 % Machinio: GMV — — — Total revenue 12,083 9,559 7,213 Segment gross profit 11,471 8,992 6,813 Segment gross profit as a percentage of total revenue 94.9 % 94.1 % 94.4 % Corporate & Other, including elimination adjustments: GMV — — — Total revenue (60) (57) (51) Segment gross profit (60) (57) (51) Segment gross profit as a percentage of total revenue NM NM NM Consolidated: GMV 1,145,372 886,768 619,850 Total revenue 280,050 257,531 205,940 NM = not meaningful 40 Year Ended September 30, 2022 Compared to Year Ended September 30, 2021 Segment Results GovDeals .
Biggest changeResults 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 .
For each auction we manage, the number of auction participants represents the total number of registered buyers who have bid one or more times in that auction. As a result, a registered buyer who bids, or participates, in more than one auction is counted as an auction participant in each auction in which he or she participates.
Total auction participants. For each auction we manage, the number of auction participants represents the total number of registered buyers who have bid one or more times in that auction. As a result, a registered buyer who bids, or participates, in more than one auction is counted as an auction participant in each auction in which he or she participates.
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 $27.9 million release of our valuation allowance on U.S. deferred tax assets during the fiscal year ended September 30, 2021, and $2.8 million of state and foreign income tax expense.
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.
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.
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.
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; 35 • 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; • 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.
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.
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; 47 • 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.
On November 1, 2021, we 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 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.
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 gain from the fair-market value adjustment of the Bid4Assets acquisition earn-out liability.
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.
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.
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.
These activities include online marketing campaigns such as paid search advertising, as well as offline marketing efforts, trade shows, and marketing analytics. General and administrative. General and administrative expenses include all corporate and administrative functions that support our operations and provide an infrastructure to facilitate our future growth.
These activities include online marketing campaigns, such as paid search advertising and geofencing campaigns, as well as offline marketing efforts, trade shows, and marketing analytics. General and administrative. General and administrative expenses include all corporate and administrative functions that support our operations and provide an infrastructure to facilitate our future growth.
The $20.1 million increase in cash used in investing activities was driven by $11.2 million in cash paid at closing to acquire Bid4Assets on November 1, 2021, net of cash acquired (see Note 3 - Bid4Assets Acquisition for further information), a non-recurring collection of note receivable principal payments during the year ended September 30, 2021, totaling $4.3 million in connection with the JTC promissory note (see Note 2 - Summary of Significant Accounting Policies for further information), a $2.7 million increase in new property and equipment purchases from expansion of our distribution network, and $1.8 million in purchases of short-term investments.
The $20.1 million increase in cash used in investing activities was driven by $11.2 million in cash paid at closing to acquire Bid4Assets on November 1, 2021, net of cash acquired (see Note 3 - Bid4Assets Acquisition for further information), a non-recurring collection of note receivable principal payments during the year ended September 30, 2021, totaling $4.3 million in connection with the JTC promissory note (see Note 2 - Summary of Significant Accounting Policies for further information), a $2.7 million increase in new property and equipment purchases from expansion of our network of warehouses, and $1.8 million in purchases of short-term investments.
As a result of the increase in revenues, segment gross profit increased 27.6%, or $2.5 million. 41 Consolidated Results The following table sets forth, for the periods indicated, our operating results (dollars in thousands): Year Ended September 30, 2022 2021 $ Change % Change Purchase revenues $ 151,271 $ 146,151 $ 5,120 3.5 % Consignment and other fee revenues 128,779 111,380 17,399 15.6 % Total revenues 280,050 257,531 22,519 8.7 % Costs and expenses from operations: Cost of goods sold (excludes depreciation and amortization) 119,407 107,678 11,729 10.9 % Technology and operations 55,522 47,673 7,849 16.5 % Sales and marketing 43,224 37,635 5,589 14.9 % General and administrative 28,282 28,938 (656) (2.3) % Depreciation and amortization 10,322 6,969 3,353 48.1 % Fair value adjustment of acquisition earn-outs (24,500) — (24,500) NM Other operating expenses, net 388 1,470 (1,082) (73.6) % Total costs and expenses 232,645 230,363 2,282 1.0 % Income (loss) from operations 47,405 27,168 20,237 74.5 % Interest and other income, net (248) (411) 163 (39.7) % Income (loss) before income taxes 47,653 27,579 20,074 72.8 % Provision (benefit) for income taxes 7,329 (23,370) 30,699 NM Net income (loss) $ 40,324 $ 50,949 $ (10,625) (20.9) % NM = not meaningful Total revenues.
As a result of the increase in revenues, segment direct profit increased 27.6%, or $2.5 million. 45 Consolidated Results The following table sets forth, for the periods indicated, our operating results (dollars in thousands): Year Ended September 30, 2022 2021 $ Change % Change Purchase revenues $ 151,271 $ 146,151 $ 5,120 3.5 % Consignment and other fee revenues 128,779 111,380 17,399 15.6 % Total revenues 280,050 257,531 22,519 8.7 % Costs and expenses from operations: Cost of goods sold (excludes depreciation and amortization) 119,407 107,678 11,729 10.9 % Technology and operations 55,522 47,673 7,849 16.5 % Sales and marketing 43,224 37,635 5,589 14.9 % General and administrative 28,282 28,938 (656 ) (2.3 )% Depreciation and amortization 10,322 6,969 3,353 48.1 % Fair value adjustment of acquisition earn-outs (24,500 ) — (24,500 ) NM Other operating expenses, net 388 1,470 (1,082 ) (73.6 )% Total costs and expenses 232,645 230,363 2,282 1.0 % Income from operations 47,405 27,168 20,237 74.5 % Interest and other income, net (248 ) (411 ) 163 (39.7 )% Income before income taxes 47,653 27,579 20,074 72.8 % Provision (benefit) for income taxes 7,329 (23,370 ) 30,699 NM Net income $ 40,324 $ 50,949 $ (10,625 ) (20.9 )% NM = not meaningful Total revenues .
Segment gross profit as a percentage of total revenue decreased 5.6% due to inherent variations in the mix of assets sourced and sold by the CAG segment in any given period, including increased international purchase transaction activity, some of which had lower than average margins due to incremental costs from COVID-19 related delays in conducting cross-border transactions.
Segment direct profit as a percentage of total revenue decreased 5.6% due to inherent variations in the mix of assets sourced and sold by the CAG segment in any given period, including increased international purchase transaction activity, some of which had lower than average margins due to incremental costs from COVID-19 related delays in conducting cross-border transactions.
Depreciation and amortization of capitalized software development costs, purchased software, acquired developed software intangible assets, and computer hardware are included within Depreciation and amortization in the accompanying Consolidated Statements of Operations.
Depreciation and amortization of capitalized software development costs, purchased software, acquired developed software intangible assets, and computer hardware are included within Depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations.
Technology expenses are presented separately from Costs of goods sold (excluding depreciation and amortization) in the Consolidated Statements of Operations, as these expenses provide for the general availability of our 38 marketplace platforms and other business operational systems and are not attributable to specific revenue generating transaction activity occurring on our marketplaces.
Technology expenses are presented separately from Costs of goods sold (excluding depreciation and amortization) in the Condensed Consolidated Statements of Operations, as these expenses provide for the general availability of our marketplace platforms and other business operational systems and are not attributable to specific revenue generating transaction activity occurring on our marketplaces.
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, 2022, 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. During the year ended September 30, 2023, the Company did not make any draws under the Credit Agreement.
These expenses are generally more fixed in nature than our other operating expenses and do not significantly vary 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.
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.
Segment gross profit decreased by 1.3%, or $0.9 million, impacted by certain client returns management programs which provided fewer higher value products than in prior years, including for some of our low touch services. As a result, segment gross profit as a percentage of total revenue decreased by 2.3%. CAG .
Segment direct profit decreased by 1.3%, or $0.9 million, impacted by certain client returns management programs which provided fewer higher value products than in prior years, including for some of our low touch services. As a result, segment direct profit as a percentage of total revenue decreased by 2.3%. CAG .
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties.
Item 7. Management's Discussion a nd Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties.
Sales and marketing expenses increased $5.6 million, or 14.9%, as we are increasing our sales and marketing functions to continue our growth, including promotional efforts to expand our market share in key verticals, and to promote new business initiatives including our AllSurplus Deals consumer marketplace. General and administrative expenses.
Sales and marketing expenses increased $5.6 million, or 14.9%, as we increased our sales and marketing functions to continue our growth, including promotional efforts to expand our market share in key verticals, and to promote new business initiatives including our AllSurplus Deals consumer marketplace. General and administrative expenses .
Operations expenses include both internal and external labor costs, as well as other third-party charges. These costs are expensed as incurred. Sales and marketing. Sales and marketing expenses include the cost of our sales and marketing personnel as well as the cost of marketing and promotional activities, including buyer and seller acquisition, as well as general brand marketing.
Operations expenses include both internal and external labor costs, as well as other third-party charges. These costs are expensed as incurred. Sales and marketing. Sales and marketing expenses include the cost of our sales and marketing personnel as well as the cost of lead generation, marketing and promotional activities, including buyer and seller acquisition, as well as general brand marketing.
Because we are the principal in purchase transaction model sales, we recognize as revenue the sale price paid by the buyer upon completion of a transaction. The proceeds paid by buyers also include transaction fees, referred to as buyer premiums.
Because we are the principal in purchase transaction model sales, we recognize as revenue the sale price paid by the buyer upon completion of a transaction. The proceeds paid by buyers also include transaction fees, referred to as buyer premiums. Consignment model—fee revenue.
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, 2022, was $1.1 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, 2023, was $1.203 billion. Total registered buyers.
Revenues did not increase at the same rate as GMV due to increases in the mix of transactions conducted with partner organizations. Segment gross profit decreased 0.7%, or $0.2 million.
Revenues did not increase at the same rate as GMV due to increases in the mix of transactions conducted with partner organizations. Segment direct profit decreased 0.7%, or $0.2 million.
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, 2022, 2021, and 2020, 3.1 million, 2.3 million, and 1.9 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, 2023, 2022, and 2021, 3.3 million, 3.1 million, and 2.3 million participants participated in auctions on our marketplaces, respectively. Completed transactions.
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. 42 Provision (benefit) for income taxes .
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 .
As a result of the increase in revenues, segment gross profit increased 19.9%, or $9.4 million. Segment gross 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 19.9%, or $9.4 million. Segment direct profit as a percentage of total revenue remained relatively consistent between the periods. RSCG .
New Accounting Pronouncements Information regarding our adoption of new accounting and reporting standards is discussed in Note 2 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.
The preliminary acquisition date fair value of the consideratio n transferred to the former shareholders of Bid4Assets was approximately $42.7 million consisting of $14.7 million in cash (net of working capital adjustments totaling $0.3 million) and earn-out consideration with a preliminary fair value of approximately $28.0 million.
The acquisition date fair value of the consideration transferred to the former shareholders of Bid4Assets was approximately $42.7 million consisting of $14.7 million in cash (net of working capital adjustments totaling $0.3 million) and earn-out consideration with a fair value of $28.0 million.
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 distribution network.
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.
As of September 30, 2022, the Company had no outstanding indebtedness under the Credit Agreement and our borrowing availability was $25.0 million.
As of September 30, 2023, the Company had no outstanding indebtedness under the Credit Agreement and our borrowing availability was $25.0 million.
Operations expenses consist primarily of costs to operate our distribution centers, including shipping logistics, inventory management, refurbishment, and administrative functions; costs to enhance our online auctions listings and provide customer support; and costs associated with field support and preparation and transfer of goods from sellers to buyers.
Operations expenses consist primarily of costs to operate our network of warehouses, including shipping logistics, inventory management, refurbishment, and administrative functions; costs to enhance our online auctions listings and provide customer support; and costs associated with field support and preparation and transfer of goods from sellers to buyers.
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 $8.6 million of undistributed foreign earnings as of September 30, 2022.
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.
(2) Acquisition costs and impairment of goodwill and long-lived assets, as well as Business realignment expenses, are components of Other operating expenses, net on the Consolidated Statements of Operations.
(2) Acquisition costs and impairment of long-lived and other non-current assets, as well as Business realignment expenses, are components of Other operating expenses, net on the Consolidated Statements of Operations.
As of September 30, 2022, 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 t o receipt of payment authorization, utilizing credit cards, wire transfers, and PayPal, an Internet based payment system, as methods of payments.
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.
Other fee revenues accounted for 8%, 7% and 6% of our Total revenues for the years ended September 30, 2022, 2021 and 2020, 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 7.5%, 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.
The result is a continuous flow of goods that becomes increasingly valuable as more participants join the platform, thereby creating positive network effects that benefit sellers, buyers, and shareholders. During the past three fiscal years, we have conducted over 2.2 million online transactions generating $2.7 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 2.6 million online transactions generating $3.2 billion in gross merchandise volume or GMV.
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. Russia-Ukraine Conflict .
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 .
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. 34 During the year ended September 30, 2022, the number of registered buyers grew from 4.0 million to 4.9 million.
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.
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 e-commerce platform, as well as other software development activities.
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.
Technology and operations expenses increased $7.8 million, or 16.5%, as we are increasing our technology and operations functions to continue our growth, including RSCG's expansion of its distribution network, and launching AllSurplus Deals as a new marketplace offering consumers deals for curbside pickup. Sales and marketing expenses.
Technology and operations expenses increased $7.8 million, or 16.5%, as we increased our technology and operations functions to continue our growth, including RSCG's expansion of its network of warehouses, and launching AllSurplus Deals as a new marketplace offering consumers deals for curbside pick-up. Sales and marketing expenses .
Refer to Note 2 - S ummary of Significant Accounting Policies to the Company's consolidated financial statements for further details on these accounting policies. 37 We consider the following accounting estimates to be critical: valuation of goodwill and intangible assets (Notes 7 and 8, respectively), and income taxes (Note 10).
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).
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. 45 We prepare Non-GAAP Adjusted EBITDA by eliminating from Non-GAAP EBITDA the impact of items that we do not consider indicative of our core operating performance.
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.
During the years ended September 30, 2022, 2021, and 2020, we completed 933,000, 703,000 and 553,000 transactions, respectively.
During the years ended September 30, 2023, 2022, and 2021, we completed 925,000, 933,000 and 703,000 transactions, respectively.
Additional debt would result in increased interest expense and could result in covenants that would restrict our operations. There is no assurance that such financing, if required, will be available in amounts or on terms acceptable to us, if at all. 46 Credit Agreement The Company maintains a $25.0 million Credit Agreement due March 31, 2024 (Credit Agreement).
Additional debt would result in increased interest expense and could result in covenants that would restrict our operations. There is no assurance that such financing, if required, will be available in amounts or on terms acceptable to us, if at all. Credit Agreement The Company maintains a $25.0 million Credit Agreement with Wells Fargo Bank, National Associated (the Credit Agreement).
As of September 30, 2022, and September 30, 2021, $20.3 million and $22.4 million, respectively, of cash and cash equivalents was held outside of the U.S. Other Uses of Capital Resources Bid4Assets, Inc. Acquisition. On November 1, 2021, the Company purchased all of the issued and outstanding shares of stock of Bid4Assets.
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.
Further, challenged global supply chains are experiencing heightened disruptions from the Russian invasion of Ukraine and its impacts on international trade and energy markets, COVID-19 and other disruptions, which could limit the volume of assets made available for sale in any period. Machinio .
Further, challenged global supply chains experienced heightened disruptions from the Russian invasion of Ukraine and its impacts on international trade and energy markets, COVID-19 and other disruptions, which limited the volume of assets made available for sale. Machinio .
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 marketplace platforms that power the circular economy.
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.
Year ended September 30, 2022 2021 2020 Net income (loss) $ 40,324 $ 50,949 $ (3,774) Interest and other expense (income), net (1) 126 (76) (577) Provision (benefit) for income taxes 7,329 (23,370) 801 Depreciation and amortization 10,322 6,969 6,290 Non-GAAP EBITDA $ 58,101 $ 34,472 $ 2,740 Stock compensation expense 8,482 6,947 5,660 Acquisition costs and impairment of goodwill and long-lived assets (2) 473 1,464 5 Business realignment expenses (2,3) 191 5 405 Fair value adjustments to acquisition earn-outs (24,500) — 200 Deferred revenue purchase accounting adjustment — — 3 Non-GAAP Adjusted EBITDA $ 42,747 $ 42,888 $ 9,013 (1) Interest and other expense (income), net excludes non-services pension and other postretirement benefit expense.
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.
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. Interest and other expense (income), net, can include non-operating gains and losses, such as from foreign currency fluctuations.
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.
Total consolidated revenue increased $51.6 million, or 25.1% . 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 $34.4 million, or 12.3%. Refer to the discussion of Segment Results above for discussion of the increase in revenue. Cost of goods sold (excludes depreciation and amortization).
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 marketplace platforms. These platforms ignite and enable a self-reinforcing cycle of value creation where buyers and sellers continue to attract one another in ever-increasing numbers.
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.
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 . Intangible assets consist of contract intangibles, brand and technology, and patent and trademarks.
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.
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, 2022, 2021, and 2020, we had 4.9 million, 4.0 million, and 3.8 million , registered buyers, respectively.
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.
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 establish additional distribution centers.
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.
You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. As an analytical tool, Non-GAAP Adjusted EBITDA is subject to all of the limitations applicable to Non-GAAP EBITDA. Our presentation of Non-GAAP Adjusted EBITDA should not be construed as an implication that our future results will be unaffected by unusual or non-recurring items.
We prepare Non-GAAP Adjusted EBITDA by eliminating from Non-GAAP EBITDA the impact of items that we do not consider indicative of our core operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. As an analytical tool, Non-GAAP Adjusted EBITDA is subject to all of the limitations applicable to Non-GAAP EBITDA.
We also earn non-consignment fee revenue from Machinio's Advertising and System subscription services, as well as other services including returns management, refurbishment of assets, and asset valuation services. 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, 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.
The conflict has further heightened global supply chain disruptions and impacted the international trade and energy markets. For the year ended September 30, 2022, the Company's total revenues directly associated with Russia and Ukraine were not material to our consolidated financial results. We will continue monitoring the events in Ukraine and any potential future impacts on our business.
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.
Changes in Cash Flows: 2021 Compared to 2020 Net cash provided by operating activities was $65.4 million and $16.5 million for the year ended September 30, 2021 and 2020, respectively.
Changes in Cash Flows: 2023 Compared to 2022 Net cash provided by operating activities was $47.0 million and $44.8 million for the years ended September 30, 2023, and 2022, respectively.
Currently, the Company is unable to predict the likelihood, magnitude and timing of inflationary risk to our business, if any. However, the Company does not believe inflation has had a material effect on our operating expenses.
Currently, the Company is unable to predict the likelihood, magnitude, and timing of inflationary risk to our business, if any.
However, there have been no significant changes to the working capital requirements for the Company. 48 Net cash provided by (used in) investing activities was $(1.0) million for the year ended September 30, 2021, and $28.6 million for the year ended September 30, 2020.
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.
The global financial markets have experienced volatility subsequent to the invasion of Ukraine by Russia in February 2022, a conflict which remains ongoing. In response to the invasion, numerous countries, including the United States, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals.
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.
We believe the continuous flow of goods in our marketplaces attracts a growing buyer base which creates a self-sustaining cycle for our buyers and sellers. We generated GMV of $1,145.4 million and revenue of $280.1 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.
We believe the continuous flow of goods in our marketplaces attracts a growing buyer base which creates a self-sustaining cycle for our buyers and sellers.
Our agreements with our other sellers are generally terminable at will by either party. 36 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.
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.
The Company is prepared to reimplement these measures should it face conditions consistent with the initial phases of the COVID-19 pandemic. We expect to continue to invest in enhancements to our e-commerce technology platform, marketplace capabilities and tools for data-driven product recommendations, omni-channel behavioral marketing, expanded analytics, and buyer/seller payment optimization.
As a result, we are not subject to significant collection risk, as goods are generally not shipped before payment is received. We expect to continue to invest in enhancements to our e-commerce technology platform, marketplace capabilities, and tools for data-driven product recommendations, omni-channel behavioral marketing, expanded analytics, and buyer/seller payment optimization.
On May 13, 2022, the Company's Board of Directors authorized the May 2022 Repurchase Plan. The Company repurchased 408,211 shares for $5.4 million during the three months ended June 30, 2022. As of September 30, 2022, the Company may repurchase an additional $6.6 million of shares under the May 2022 Repurchase Plan.
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.
As of September 30, 2022, $3.5 million in earn out payments have been made, and the remaining earn-out fair value has been measured to be $0 based upon the expected performance through the final earn-out period ending December 31, 2022.
As part of the acquisition of Bid4Assets, former shareholders of Bid4Assets were eligible to receive earn-out consideration of up to $37.5 million in cash. Through December 31, 2022, $3.5 million in earn-out payments were made. The remaining earn-out fair value was $0 based upon actual performance through the final earn-out measurement period ended December 31, 2022.
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.
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.
Revenue from the CAG segment increased by 34.5%, or $10.2 million due to a 41.2%, or $46.4 million increase in GMV due to continued growth of our industrial and heavy equipment categories, increases in purchase transactions across the EMEA and Asia-Pacific regions, and increased use of the consignment model internationally .
Revenue from the CAG reportable segment decreased by $4.1 million, or 9.6%. GMV increased by $2.5 million, or 1.3%, driven by increased consignment sales in our industrial and heavy equipment categories. Revenue declined despite the increase in GMV due to a lower mix of large spot purchase transactions with international clients.
We create a better future for organizations, individuals, and the planet by capturing and unleashing the intrinsic value of surplus. We connect millions of buyers and thousands of sellers through our leading auction marketplaces, search engines, asset management software, and related services.
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.
Interest and other income, net increased $0.5 million due the effect of changes in foreign exchange rates. (Benefit) provision 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. 44 Provision (benefit) for income taxes .
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, 2022 were $8.1 million. As of September 30, 2022, we had no significant outstanding commitments for capital expenditures.
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.
From time to time, we may use our capital resources for other activities, such as contract start-up costs, joint ventures, share repurchases and acquisitions. As of September 30, 2022, we had $96.1 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.
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.
The 2021 effective tax rate differed from the statutory federal rate of 21.0% primarily as a result of the release of the valuation allowance on deferred tax assets and the impact of foreign, state, and local taxes and permanent tax adjustments. 44 Non-GAAP Financial Measures Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA.
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 repurchase program may be discontinued or suspended at any time and will be funded using our available cash. The Company had no remaining share repurchase authorization as of September 30, 2021.
The repurchase program may be discontinued or suspended at any time and will be funded using our available cash. On December 6, 2021, and May 13, 2022, the Company's Board of Directors authorized new stock repurchase plans of up to $20 million and $12 million, respectively.
The table below reconciles Net income (loss) to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA for the periods presented.
Our presentation of Non-GAAP Adjusted EBITDA should not be construed as an implication that our future results will be unaffected by unusual or non-recurring items. The table below reconciles Net income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA for the periods presented.
Our GMV has grown at a compound annual growth rate of 12.5% since 2006. Results from our operations are organized into four reportable segments: GovDeals, Retail Supply Chain Group (RSCG), Capital Assets Group (CAG), and Machinio. See Note 16 - Segment Information to the consolidated financial statements for more information regarding our segments.
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 .
The $48.9 million increase in cash provided by operations between periods was attributable to $33.2 million of higher net income as adjusted for non-cash items; changes in payables to sellers, driven by increasing transaction volumes; changes to accounts payable, accrued expenses and other liabilities driven by increasing transaction volumes and management of working capital; and partially offset by a $7.0 million increase in inventory driven by the continued growth in our RSCG and CAG segments.
The $2.2 million increase in cash provided by operating activities between periods was attributable to $8.4 million of higher Net income as adjusted for non-cash items; a $9.0 million increase in cash inflows from Accounts receivable driven by the collection of proceeds from large spot purchase transactions with international clients conducted in the prior year; and a $2.9 million decrease in cash outflows from Accrued expenses and other current liabilities driven by changes in other variable compensation targets.
On December 6, 2022, the Company's Board of Directors authorized the repurchase of up to an additional $8.4 million of the Company's outstanding shares of common stock through December 31, 2024. 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. Off-Balance Sheet Arrangements . We do not have any transactions, agreements or other contractual arrangements that could be considered material off-balance sheet arrangements.
General and administrative expenses were consistent between the year ended September 30, 2021 and 2020. Depreciation and amortization . Depreciation and amortization expense increased $0.7 million, or 10.8% , due to an increase in amortization of capitalized software related to the continued development and enhancement of our marketplace platform and tools. Interest and other income, net.
General and administrative expenses were consistent between the years ended September 30, 2023, and 2022. Depreciation and amortization . Depreciation and amortization expense increased $0.9 million, or 9.0%, primarily due to a full year impact of the increase in amortization of intangible assets following our acquisition of Bid4Assets on November 1, 2021. Fair value adjustment of acquisition earn-outs .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of September 30, 2022, 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.
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%.
Volatile market conditions arising from ongoing macroeconomic conditions such as rising interest rates at federal banks and the Russian-Ukraine conflict, may result in significant changes in exchange rates, which could affect our results of operations expressed in U.S. dollars. A hypothetical 10% decrease in foreign exchange rates reduce our total expected revenues by approximately 1%.
Volatile market conditions arising from ongoing macroeconomic conditions such as rising interest rates at federal banks and armed conflicts around the world, may result in significant changes in exchange rates, which could affect our results of operations expressed in U.S. dollars. A hypothetical 10% decrease in foreign exchange rates reduce our total expected revenues by approximately 1%.
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.
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.
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.
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, 2022, 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.
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.
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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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