Liquidity Services EBITDA Jumps 38% on AI-Driven Efficiency

Date of Call: Feb 5, 2026

Financials Results

• Revenue: $121.2 million, down 1% YOY
• EPS: GAAP EPS $0.23, up 28% YOY; Non-GAAP adjusted EPS $0.39, up 39% YOY

Guidance:

• Q2 FY2026 GMV expected to range from $375M to $415M.
• GAAP diluted EPS expected in the range of $0.20 to $0.29 per share.
• Non-GAAP adjusted diluted EPS estimated in the range of $0.29 to $0.38 per share.
• Non-GAAP adjusted EBITDA expected to range from $14M to $17M, reflecting continued double-digit growth versus prior year.
• Expect consolidated revenue as a percent of GMV to be slightly below 30%.
• Expect segment direct profit as a percent of consolidated revenue to be in the mid- to high 40% range.
• Expect consignment GMV to continue to be in the low 80s as a percent of total GMV.

Business Commentary:

Strong Financial Performance and Profitability:

• Liquidity Services reported a 38% increase in non-GAAP adjusted EBITDA for Q1 2026, amounting to $18.1 million, and a 39% growth in adjusted EPS to $0.39 per share.
• This was driven by disciplined execution across business segments, increased buyer and seller engagement, and operational efficiencies.

Growth in Gross Merchandise Volume (GMV):

• The company's consolidated gross merchandise volume reached $398 million, marking a 3% increase year-over-year.
• The growth was primarily fueled by GovDeals' 7% GMV growth and strong performance in the heavy equipment category, which saw 27% organic GMV growth.

Segment Performance and Direct Profit:

• GovDeals reported a 13% increase in direct profit, driven by market share expansion and improved commission rates.
• The Retail segment (RSCG) saw a 16% increase in direct profit despite a 6% decline in revenue, attributed to a favorable product mix with higher volumes of lower-touch purchase flows.

Technological Advancements and Efficiency:

• Liquidity Services leveraged AI and automation to enhance buyer conversion and operational efficiency, resulting in a significant increase in direct profit per labor hour by 48%.
• These technologies improved asset listing accuracy and efficiency, contributing to higher recovery rates and better customer conversion.

Strategic Expansion and New Client Acquisition:

• The company added over 500 new agency clients in GovDeals, including major entities like the Pennsylvania Department of Transportation and the New York Port Authority.
• This growth was facilitated by the platform's ability to handle large asset sales efficiently and its strong buyer base, which provides value and reduces supply chain costs for sellers.

Sentiment Analysis:

Overall Tone: Positive

• "We began fiscal year 2026 with strong momentum... our profitability expanded meaningfully." "Our performance reflects disciplined execution..." "Looking ahead to the second quarter, we anticipate double-digit adjusted EBITDA growth versus the prior year..." "We are well positioned to build on our early momentum and deliver another year of profitable growth."

Q&A:

• Question from George Sutton (Craig-Hallum Capital Group LLC): Nice results. So Bill, you mentioned multiple times in your prepared comments that you're seeing tech-enabled growth, you're leveraging technology. I wondered if you could call out some of the bigger drivers that you're referring to there.
  Response: Key drivers include automated buyer conversion and signaling, asset scanning and description automation, and automated sales lead scoring and drip campaigns, which have improved productivity and seller acquisition.

• Question from George Sutton (Craig-Hallum Capital Group LLC): Well, I did want to focus on that last comment specifically because it was impressive that you called out the growing number of CAG and GovDeal clients. Obviously, that would give a sense of the durability of growth. Any sense on sort of how significant the impact of bringing in these new clients are in these verticals? And any plans or any sort of suggestions for growth and continued additions there?
  Response: Management sees a significant runway in both government and commercial markets, citing structural improvements in buyer/seller acquisition, and expects continued large-scale client wins in 2026.

• Question from Gary Prestopino (Barrington Research Associates, Inc.): Following up on George's question and the theme that you set forth in terms of using technology to increase efficiencies. Have you been increasing your sales force commensurate with the ability to drive growth in new client acquisition? Or is a lot of this just really coming from the tech investments that you're making that are making it easier to drive new business?
  Response: Growth is primarily driven by tech investments in automation, but targeted sales resources have been added in key areas like GovDeals and heavy equipment to support outreach and win large mandates.

• Question from Gary Prestopino (Barrington Research Associates, Inc.): So okay. That's great. So -- and you also mentioned your heavy equipment sales were up 20% or GMV was up 20%. You're offering more or less a sell-in-place solution, right, with heavy equipment? And I guess the question I would have is, what -- are you looking at niches that are not currently covered by some of the larger players in the market? I guess what would be the competitive advantage that you have that you're able to gain this kind of share?
  Response: Competitive advantages include lower net commission rates, lower transportation costs, flexible sale terms, data-driven reserve prices, and high recovery rates, enabling differentiation and market share gains.

• Question from Gary Prestopino (Barrington Research Associates, Inc.): Okay. Is it -- are you -- and I remember speaking to you about this, so when you're talking about heavy equipment, does that include yellow iron?
  Response: Yes, heavy equipment includes yellow iron.

• Question from Gary Prestopino (Barrington Research Associates, Inc.): And then lastly, where do we stand with the Retail Rush product?
  Response: Retail Rush is live in a prototype location (Columbus, Ohio), ramping week-over-week, with higher recovery rates observed in the consumer channel, and potential for future licensing to B2B buyers.

Contradiction Point 1

Retail Rush Expansion Timeline and Status

Contradiction on the current testing phase and plans for nationwide expansion.

What is the status of the Retail Rush product? - Gary Prestopino (Barrington Research Associates, Inc.)

2026Q1: Retail Rush is live in a prototype pickup location in Columbus, Ohio. It is ramping week-over-week/month-over-month... The long-term vision includes licensing the B2C auction model to B2B buyers... - William Angrick(CEO)

Are you expanding Retail Rush from Columbus nationwide? - Gary Prestopino (Barrington Research Associates, Inc.)

2025Q4: The Retail Rush consumer auction channel is currently being tested in a single fulfillment location in Columbus, Ohio... The company is working on a prototype and will consider expansion to other locations after the test. - William Angrick(CEO)

Contradiction Point 2

Retail Rush (Consumer Auction) Product Status & Deployment Strategy

Contradiction on whether the consumer auction model is a direct operation or a licensing play.

What is the current status of the Retail Rush product? - Gary Prestopino (Barrington Research Associates, Inc.)

2026Q1: The long-term vision includes licensing the B2C auction model to B2B buyers on the liquidation.com platform for broader deployment. - William Angrick(CEO)

Can you provide more details on the e-commerce program in Columbus and plans for national expansion? - George Sutton (Craig-Hallum)

2025Q3: Beyond the direct operation, there is a strategy to license the software and playbook to other businesses, creating a network of partners... - William Angrick(CEO)

Contradiction Point 3

Timeline and Impact of New Client Acquisition

Contradiction on the immediacy of revenue contribution from new client wins.

How significant is the impact of new CAG and GovDeals clients on growth durability, and are there plans for continued additions? - George Sutton (Craig-Hallum Capital Group LLC)

2026Q1: The company expects to continue winning large, structural mandates in 2026. - William Angrick(CEO)

Do new business wins like GovDeals contribute immediately to Q4, or is there a lag? - Gary Prestopino (Barrington)

2025Q3: There can be a lag from a few months to 4-5 months depending on the client's setup complexity... The company is permanently shifting the market online and expects to realize growth from recent wins in the coming months. - William Angrick(CEO)

Contradiction Point 4

Growth Strategy Composition

Contradiction on primary driver of growth—technology vs. sales force expansion.

Is growth driven by tech investments or sales force expansion? - Gary Prestopino (Barrington Research Associates, Inc.)

2026Q1: The **majority of growth comes from automated lead scoring and targeted messaging**. - William Angrick(CEO)

How does a tariff increase affecting new items impact your used equipment market? - George Sutton (Craig-Hallum)

2025Q2: They cited record activity in heavy equipment and used vehicle segments as evidence. - William Angrick(CEO)

Contradiction Point 5

Heavy Equipment Market Dynamics

Contradiction on market stimulus from new equipment cost increases.

With a 27% increase in heavy equipment GMV, are you focusing on untapped niches and what sets your competitive advantage apart? - Gary Prestopino (Barrington Research Associates, Inc.)

2026Q1: Key competitive advantages include: Lower net commission and take rates, Lower out-of-pocket transportation/make-ready costs... - William Angrick(CEO)

How does a tariff increase, by raising new item costs, affect your used equipment market? - George Sutton (Craig-Hallum)

2025Q2: Historically, during periods of higher new equipment costs or scarcity... stimulates activity in their marketplaces. - William Angrick(CEO)