Liquidity Services’ Miami Auction Valuation and Auction Participant Explanations Clash

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $129.6M, up 8% YOY
• EPS: $0.32 per diluted share, up 39% YOY (GAAP); $0.45 per diluted share (non-GAAP), up 32% YOY

Guidance:

• Q4 GMV expected to range from $415M to $455M.
• Q4 non-GAAP adjusted EBITDA expected to range from $22M to $25M.
• Q4 GAAP diluted EPS expected to range from $0.30 to $0.39; non-GAAP adjusted diluted EPS expected from $0.41 to $0.50.
• Consolidated revenue as a percent of GMV expected in the mid-20s.
• Consolidated direct profit as a percent of revenue expected in the mid-50% range.
• CapEx expected between $2.5M and $3M.
• Full year expected to have highest annual fiscal year adjusted EBITDA in 13 years.

Business Commentary:

Strong Financial Performance:

• Liquidity Services reported a Q3 GAAP diluted earnings per share of $0.32, up 39% year-over-year, with GMV growth of 10% to $453 million, and adjusted EBITDA growth of 30% to $22 million.
• The growth was driven by the successful execution of the RISE strategy, focusing on maximizing recovery for sellers, increasing transaction volume, and leveraging technology for operating efficiency.

Retail Segment Growth:

• The retail segment achieved record GMV of $121.6 million, a 19% year-over-year increase, and record revenue with a 30% increase in direct profit.
• This growth was primarily due to expanding consignment relationships, improved recovery rates, and increased demand on their proprietary D2C online auction platform.

GovDeals Segment Expansion:

• GovDeals set a record GMV of $274 million, up 9% year-over-year, with a 9% increase in direct profit, and achieved record unique seller counts for the seventh consecutive quarter.
• The growth was attributed to increased marketplace adoption, successful large transactions, and strong public sector client reliance on the platform for surplus assets.

Capital Assets Group (CAG) Performance:

• CAG generated $57.5 million in GMV, with a 13% increase in direct profit year-over-year despite a 1% GMV decline due to project timing and market conditions.
• The improvement in direct profit was driven by a favorable mix of high take-rate projects and strong execution in heavy equipment and industrial verticals.

Buyer and Seller Engagement:

• GovDeals reported a 23% increase in buyer registrations, a 42% increase in new bidders, and a 35% improvement in conversion rates even with reduced marketing spend.
• This was achieved through investments in AI-enabled marketing, personalization, and enhanced marketplace experiences, reflecting strong network effects and increased platform usage.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'strong Q3 results', '10th consecutive quarter of year-over-year EBITDA growth', 'record levels of volume and profitability' in Retail and GovDeals, and being 'well positioned to continue delivering profitable growth'. The tone emphasizes successful strategy execution and leadership in the circular economy.

Q&A:

• Question from George Sutton (Craig-Hallum): Great results, guys. So a couple metrics I found interesting. Registered buyers up 9%. Transactions up 17%. but your auction participants were down five. It sort of sounds like an 80-20 rule is in play here, but I'm just curious, looking at that auction participant number particularly, how do you market differently or how do you put more pressure on that statistic going forward?
  Response: Management explained that auction participants can decrease when dealing with fewer, higher-value lots (e.g., large projects) while still driving GMV and efficiency; the focus is on capturing full value per client engagement and maintaining competitive bidding per lot, which has improved recovery rates and yield despite lower marketing spend.

• Question from George Sutton (Craig-Hallum): In your press release, you mentioned the smart use of machine learning, AI, and software to drive a lot of these improvements. I wondered if you could just point to a couple of the more tangible examples where you're seeing that impact.
  Response: AI enables pattern recognition to cross-pollinate buyer interests (e.g., connecting legacy LSI buyers with Machinio's marine assets), improve personalization, increase conversion rates, and drive buyer retention by showing relevant, high-value supply chain items, all while reducing marketing costs.

• Question from George Sutton (Craig-Hallum): Well, the algos are probably picking up that Logan and I have been actively watching the Miami courthouse auction. First, a comment. Make sure you're in front of the Ken Griffin folks. They came into some money recently and may want a place to hang out. But I am curious if you can give us any perspective on that auction specifically. We've seeing the appraisal values, but any sense on that auction from your perspective, it could provide a meaningful bump in Q3.
  Response: Management stated the auction demonstrates earned trust with discerning government clients and the ability to handle high-value institutional assets; it's an example of expanding into valuable real estate verticals and executing a well-designed go-to-market strategy, with results pending the auction's conclusion in August.

Contradiction Point 1

Reason for Decline in Auction Participants

Different explanations for the same metric decline.

George Sutton (Craig-Hallum) - George Sutton (Craig-Hallum)

2026Q3: The company has moved upstream to capture higher-value assignments... which increases the average GMV per lot closed. This can result in fewer lots sold, causing auction participants to tick down... - [Bill Engrick](CEO)

How do you plan to adjust marketing strategies to address the 5% decline in auction participants despite increases in registered buyers (9%) and transactions (17%)? - George Sutton (Craig-Hallum)

2026Q3: The company is focusing on capturing higher value assignments and asset categories... This can result in fewer lots being sold, thereby reducing the number of auction participants... - [Jorge Celaya](CFO)

Contradiction Point 2

Miami Courthouse Auction Valuation

Contradictory figures for the auction's value.

George Sutton (Craig-Hallum) - George Sutton (Craig-Hallum)

2026Q3: The Miami courthouse auction (a 28-story building valued at $265,000 sq ft) demonstrates the trust earned with government clients... - [Bill Engrick](CEO)

Could the Miami courthouse auction provide a meaningful bump to Q3 earnings? - George Sutton (Craig-Hallum)

2026Q3: The auction is for an institutional-quality asset with a $30 million+ value, attracting institutional-quality buyers. - [Bill Angrick](CEO)

Contradiction Point 3

Attribution of AI-Driven Improvements

Different executives take credit for AI-related successes.

George Sutton (Craig-Hallum) - George Sutton (Craig-Hallum)

2026Q3: AI-enabled marketing and personalization use pattern recognition... This increases conversion rates, buyer registration, and retention. - [Bill Engrick](CEO)

Can you share tangible examples of improvements driven by AI, machine learning, and software? - George Sutton (Craig-Hallum)

2026Q3: AI is used for pattern recognition and algorithms to identify lookalike buyers... This cross-pollination of legacy buyers and new dealer customers increases browsing, organic traffic, and conversion rates... - [Jorge Celaya](CFO)

Contradiction Point 4

Growth Strategy for Auction Participants and Marketing Spend

Contradiction on marketing spend's role in growth versus efficiency.

George Sutton (Craig-Hallum) - George Sutton (Craig-Hallum)

2026Q3: Despite limiting marketing spend, better yield and recovery rates are being achieved, which supports a more efficient business model. - [Bill Engrick](CEO)

How do you plan to address the 5% decline in auction participants despite 9% growth in registered buyers and 17% growth in transactions? - Gary Prestopino (Barrington)

2026Q2: To grow the account base, they have increased sales organization size and use AI/software tools for targeted outreach and improved conversion. - [Bill Angrick](CEO)

Contradiction Point 5

Description of Machinio Platform Evolution

Contradiction on the primary function and evolution of the Machinio platform.

What insights does George Sutton (Craig-Hallum) have on the earnings report? - George Sutton (Craig-Hallum)

2026Q3: AI-enabled marketing and personalization... For example, if a buyer looks at a forklift, they are shown similar material handling equipment. - [Bill Engrick](CEO)

Can you provide examples of tangible impacts from using machine learning, AI, and software? - George Sutton (Craig-Hallum)

2026Q2: Machinio has evolved from a lead generation platform to a comprehensive digital solutions platform for dealers, now expanding into the marine vertical. - [Bill Angrick](CEO)